The study, from investment bank Jefferies and business advisory firm AlixPartners, included a survey of 2,000 consumers. It found that Millennials, born from 1982 to 2001, and Boomers, born from 1946 to 1964, are entering new phases in their lives and their spending patterns.
Managing director and senior equity research analyst covering food and drug retailing and packaged food at Jefferies, Scott Mushkin, said: “The at-home food industry is just beginning to feel the impact of this major demographic shift as Millennials rise in prominence and Baby Boomers adjust to meet the requirements of age and a fixed income. The bottom line for food-at-home industry stalwarts is that big changes are coming, and companies who don’t fully understand those changes risk being marginalized.”
By 2020, Millennials over the age of 25 – with the greater spending power associated with age – are on course to make up about 19% of the US population, up from about 5% in 2010, according to census data cited in the study. Baby Boomers are moving into a period of fixed incomes as they enter retirement, and the researchers suggest that this demographic’s spending on food for at-home consumption could decrease by as much as $15bn a year to 2020.
Meanwhile, Millennials’ at-home food spend could be set to increase $50bn a year to 2020.
Boomers tend to be more brand-loyal than Millennials, while the latter group is focused on convenience, the study’s authors wrote, putting pressure on food manufacturers to differentiate their brands in new ways.
Managing director at AlixPartners David Garfield said: “Convenience is king with Millennials – they expect to get what they want, when and where they want it, and they know they have options for both products and retailers. The emphasis on convenience represents a dramatic shift from Baby Boomers’ priorities, and it also presents big challenges – and opportunities – for companies in the food industry.”
While Millennials were more price sensitive on the whole, they were also more likely to be willing to pay more for certain attributes, namely, convenience, freshness, health, variety, and natural and organic.
For natural/organic products, 58% of Millennials surveyed said they would pay more for this attribute, compared to 43% of Baby Boomers.
The survey found that ‘fresh’ and ‘healthy’ were attributes valued by both segments of the population.