There’s no shortage of discussions today about Millennials, particularly when the conversation topic pertains to technology. But there’s more—much more—to this young consumer group. In fact, now that everyone of this generation is of legal drinking age (LDA), retailers, restaurants and manufacturers have a new and powerful customer that they must get to know—one that now accounts for 24% of the U.S. population.
Not only are Millennials 77 million strong, they will account for almost 30% of total consumer product dollars spent by 2020. So what does that mean for the alcoholic beverage market? In a word, opportunity.
Millennials are a key demographic for the alcoholic beverage market, both because of how big the group is as well as how much it may purchase going forward. And as a result, the battle within the alcoholic beverage industry has begun to win over this group’s hearts, minds and wallets. Tastes within the group, however, vary when it comes to alcoholic beverage preference. For example, Millennials 21-34 represent about one-fourth of adults 21 and over, but they account for 35% of U.S. beer consumption and 32% of spirit consumption. Comparatively, they represent only 20% of wine consumption.
As a group, the Millennial generation includes consumers born between 1977 and 1995. As a result of the diverse age range, consumption habits and preferences vary. In looking at the age variations with the total generation, Nielsen expects younger Millennials, particularly those who are newly of LDA, to present more opportunity for bars, restaurants and other on-premise establishments. Dynamics will shift among older Millennials, particularly as they enter different life stages and establish families. Consequently, older Millennials will, in general, present more of an off-premise opportunity.
So how do marketers reach of-age Millennials in the age of TV everywhere and device proliferation?
Nielsen’s Beverage Alcohol Media Report, which looked at the cross-platform media consumption habits of LDA Millennials, found that the average adult Millennial (21-34 year old) spends over 20 hours per week watching live TV.
While TV is still a very important media channel, advertisers now have additional ways of reaching their best consumers and face some tough budget allocation decisions in regard to their marketing mix. Consider this, adults 21-34 years old spend about 11 hours weekly tuning in to AM/FM radio, and they spend about the same amount of time using an app/Web on a smartphone.
But being able to figure out the best device or platform to reach Millennials doesn’t explicitly activate this oft-fickle group to make purchases. After all, reaching potential imbibers with creative messages and actually having those messages resonate in a world of congestion are two different things entirely.
The recent Beverage Alcohol Media Report looked at the alcoholic beverage creatives that were the most successful in terms of brand memorability and found that the best ones employed a concept and storylines that were unique, had humor and brand cues early on and throughout the spot.
Millennials Shop Differently
As shoppers, Millennials are different from older generations. While they prioritize value like their older counterparts, they are more likely to buy natural and organic products (38% more likely) and they are quicker to jump on new trends. For example, 42% say they bought gluten-free products last year, well above the 29% reported by Baby Boomers.
When it comes to retail shopping, Millennials are value-conscious and particular. They look for good deals, primarily online, and won’t think twice about downloading a store coupon from an app on their smartphone or tablet. While they’re deal seekers, Millennials won’t give up quality or taste when it comes to their alcoholic beverage purchases. And as a result, a large percentage say they will not spend their money on mass-market alcoholic beverages. That’s one factor that has led to the growing popularity of craft beverage alcohol products.
In a survey Nielsen conducted in August, 34% of spirits drinkers said they equate a higher price with higher quality either all or most of the time. Among Millennials, however, the percent was 41%, while only 27% of Boomers associate price and quality. And a craft beverage alcohol survey in May found that consumers 21-34 desire craft beer that is associated with being handcrafted, artisanal and top quality.
Much like their desires to purchase organic and healthy, Millennials are interested in trying new things and experimenting, and this appetite factors into the alcoholic beverages they choose. Millennial Gatekeepers—the primary shopper in a multi-generational household—for example, are 43% more likely than the entire Millennial generation to want to try new and different products. In aggregate, Millennials are fairly brand promiscuous, especially when it comes to beer and wine, as a result of their adventurousness in general and the likelihood that until they “try” different brands, they don’t know yet what they’ll like or not like.
Building Pre-Store Buzz is Critical with Millennials
Because of their affection for technology, Millennials are generally more highly engaged in pre-store buzz than older generations. As a result, trial and pre-store promotions in the overall CPG space are critical to reach this group, whereas Gen X and Boomer consumers are more interested in browsing and investigating labels when they are in the store. So while there’s a great opportunity to influence in-store decisions among older consumers, retailers and manufacturers need to influence Millennial purchase decisions more so before they even get to the store.
Influencing Millennials before they make their shopping trips is even more important because they make fewer trips than their older counterparts. For example, the average Millennial makes 39 trips to the grocery store each year, compared with 48 among Gen X and 58 trips among Boomer consumers. That said, however, they make more out each trip by spending more per visit. Millennials spend an average of $54 per trip, $11 more than Boomers.
But what about alcoholic beverage shopping? Is it different? While this newest generation of full-fledged adults is very planning-oriented when it comes to overall shopping, Millennials plan less than Gen X and Boomer consumers when they shop for alcoholic beverages. This makes them more engaged within the store than when they shop for other categories. As alcoholic beverage shoppers, Millennials are prone to looking at product details, deals and promotions, providing a significant opportunity for retailer and manufacturer influence.
So for retailers and manufacturers looking to engage with Millennials, the bottom line should be about focusing on a few key value propositions: authenticity, originality and value.
The insights in this article were derived from the following sources:
- Nielsen’s Beverage Alcohol Brand Purchase Set study was based on an English-language survey sent to 2,000 age 21+ adults that was conducted Feb. 12-17, 2015
- Nielsen’s Multi-Generational Households study included data from Nielsen Homescan Panel Generations Survey conducted between April-May 2014
- Nielsen’s QuickQuery craft beverage alcohol study was based on an English-language survey conducted by Harris Poll. The survey was conducted online May 15-19, 2015, among more than 2,000 U.S. adults 21+
- The Beverage Alcohol Report, Dec. 12, 2015
- Nielsen Beverage Alcohol Category Shopping Fundamentals Study, December 2014