Let's talk about Millennials! How exciting is that conversation? Demographers and researchers are laser focused. It's a feeding frenzy at times because that's the growth opportunity of future retail. Boomers are old news, nothing to write home about and not hardly anywhere near as interesting as Millennials.
Oh ... there is GenX of course but why talk about them? They are a small cohort.... except they are the second largest consumer of fine wine in the U.S. today and the largest growth opportunity for most wineries, but that doesn't matter. Let's talk about Millennials!
Demographers and researchers are digging out facts, some of which are useful, some not really useful, and others I've never quite believed. It's an important discussion because at some point they will be dominant in the labor force as you can see in the above chart. Current Pew estimates show their spending growing 15% per year for the next decade while Boomers spending is expected to drop by 10% a year. That means at some point in the next decade as they grow in purchasing power, they will be the dominant consumer of wine - just not today as I've said many times. That's still years out in my opinion.
Each of the cohorts are shaped by some event that defines them. Personally, I believe the event has to be something emotional because that's what shapes behavior.
The Greatest Generation for instance had to go through the Great Depression and WWII. Those two experiences played a major influence in their behaviors. They didn't spend ahead of their income on consumer credit, they saved and they didn't waste things. They lived more in the moment because good moments didn't always show up early in life. Family too played a far more important role. That was your emotional and economic safety net, versus the government in their day. They were a frugal generation because they had experienced life without resources.
Boomers on the other hand were raised in a time of plenty and were hedonists, shaped by Madison Avenue's constant appealing to our retail needs and desires. (See Timothy Francis Leary, and references to "The Summer of Love" for more color.). We were all about getting "stuff." Materialism and mass luxury came to the fore; Izod, Calvin Klein, BMW, Cartier, Gloria Vanderbilt ... names that we wore to show we were somebody. We didn't trust Governments who went to war for things we didn't believe but mostly, we consumed our way to prosperity.
Then there is GenX which wasn't about anything, and nobody cares about because they are small. They are really a worthless lot; an ignored demographic. They are the Sinefield of cohorts: a demographic about nothing and without any emotional experiences to define them. That's all we need to say about them - oh .... except GenX will experience the greatest growth in Net Worth in America moving from 14% to 31% by 2030 (chart to right) and they are the second largest consumer of fine wine in the U.S., but that doesn't matter. Let's talk about Millennials!
According to everyone, what really matters and unites Millennials is they are the first digital connected generation. They knew how to keyboard by third grade. Even if you were an Hispanic immigrant or a first generation Millennial citizen, you had the internet in high school. So there you have it. The emotional experience that shaped them was the Xbox, MySpace, and Social Media to which I say - MANURE!
GenX might be a shallow insecure cohort, but not Millennials!
I don't believe the youngest consuming generation is anymore defined by digital tools, than the car defined the Greatest Generation, or the color TV defined the Boomers. I don't know what defined GenX, really they are a shallow bunch with no redeeming experiences and they don't really matter - except they are the second largest consumer of fine wine in the U.S. (did I already say that?) and according to my calculations, will overtake Boomers and will become the largest consumer cohort of fine wine by 2021.
What is starting to come out in the more forward thinking studies is a renewed emphasis on the emotional things that have impacted the Millennial generation, and how that's likely to shape their spending tomorrow. What have the Millennials had to emotionally deal with? More divorces than any prior generation. The advent of Terrorism (9/11), the Great Recession, less economic opportunity than at any time post WWII, and crippling student debt. Some articles reflect that here, here, and here.
Millennials = Frugal Hedonists
What I see, and other research is just starting to show is Millennials are hedonists, trained by their Boomer parents to understand what mass and real luxury is, and they desire "good," but they don't desire "stuff."
More like the Greatest Generation who suffered through the Depression, they are frugal. They aren't using consumer credit. They are better savers than their parents. They are green and less wasteful, albeit for different reasons. While material, they don't collect like their Boomer parents. Experiences like music and travel are more important than things, but when they get things, they want good things. Perhaps because of the split up of the family unit, they don't see family as critical to happiness. They do see friends as critical to happiness.
But as far as the digital world goes, is that really going to define their spending habits? Doesn't everyone have access to on-line retail? I shop a lot on-line and I'm a Boomer. Didn't we all end up with cars giving all of us mobility, not just the Greatest Generation. And what about color TVs? It helped sell stuff but didn't define anyone. Stuff doesn't define us. Experiences do, and when it comes to retail, let's not forget the role wealth and income play. You might desire good things, but you have to be able to afford them too.
What does It Mean for Selling Wine Today?
Like the slide from Nielsen to the right and above, I believe Millennials have to be factored into marketing plans today because they are starting to be an important component in wine consumption as we discussed in the Annual State of the Wine Industry Report. They are frugal hedonists and show up most in the $8-$14 price points today but they are the future. Contrary to current discussion in wine circles, they aren't yet the present but by 2026 we believe they will be the dominant consumer of fine wine. Let's hope they don't skip by domestics in favor of great value foreign wine.... but that's a different discussion.
Boomers have to be respected because while declining in consumption and spending power as retirees, they will still dominate net wealth in the US for decades to come, and today are the still the largest consumer of wine in America. That's one fact that after last week that everyone agrees on again.
GenX? Who cares. They are worthless..... except they are the second largest consumer of fine wine in the U.S. today - now I am repeating myself - and are the largest growth opportunity for the next 5 years. They will soon be the top consumer of fine wine, and are forecast they will have the largest increase in net worth out to the year 2030 by Deloitte, but that doesn't matter. Let's just talk about Millennials!
(Apologies to all my GenX friends. You were used as fodder to bring out a point. I know you forgive me. I'm just a hedonistic self-centered boomer.)
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