For full details of this management briefing, click here

How are Millennial consumers changing?

How are Millennial consumers changing?

The penultimate part of this special just-drinks management briefing, which looks at the Millennial consumer, considers how the consumer group has changed in recent years. Richard Woodard investigates.

Comparing 2015 to 2013 data, the BCG report notes certain changes – and consistencies – with the picture from two years ago. Most notably, Millennials' favourite categories, services and experiences are broadly consistent with 2013, with increases in leisure travel and entertainment.

That said, there's a more positive slant to the 2015 results, in that Millennials are described as 'more bullish' about the things on which they expect to spend more, and 'less bearish' when it comes to the things they expect to spend less on.

The general conclusion is that Millennials are not hugely more likely to trade down than other generations, despite the relatively gloomy macroeconomic environment in which they have grown up.

Drilling down into the detail of this, roughly 40% of US consumers report trading down in 2015; the figure for Millennials is 42% (but only 39% if Hispanic Millennials are isolated), versus 41% for Generation X, 37% for Boomers, 35% for Silents, and 39% for under-20s.

Breaking the figures down further by category, Millennials are in line with general trends in trading down most in fast-service restaurants, sugar/sweets, carbonated soft drinks, mobile phones, home cleaning products and fashion accessories. They're less likely to trade down in cosmetics, facial skin care products, fashion jewellery, fragrances and pet products.

When it comes to trading up, the picture shifts. Again, Millennials are broadly in line with general population trends: roughly 15% of the US population indicates trading up in 2015, but Millennials lead the pack at 18%, versus 17% for Generation X, 14% for Boomers, 10% for Silents and 13% for under-20s. Again, the category breakdown doesn't differ too much for Millennials as against the general population, but they over-index in terms of at-home food, cosmetics/healthcare products, mobile electronics and entertainment.

We discussed typical Millennial characteristics in part two of this briefing, but it's also worth noting the changes from the past two years. The generational traits and personalities that are unique to Millennials are 'very consistent' with the picture from 2013, the BCG report concludes.

However, there are some telling developments: 'success' and 'glamour' are viewed as more important now, as are 'education', 'hard work' and 'accomplishment'. Perhaps, most tellingly for spirits and beer companies, 'craftsmanship' is also an increasingly-important concept for Millennials.

Separating out the sexes, women gave more significance to 'personal accomplishment' and 'beauty' in 2015, but otherwise showed great consistency with the picture in 2013. For men, 'luxury', 'status', 'wealth', 'quality' and 'travel' all proved consistently important; but, while 'professional success' diminished in significance, 'isolation' and 'fitness' registered increases.

As noted earlier, there's an inherent paradox in Millennials' attitude about the future, which displays a strong degree of optimism, alongside high anxiety about financial matters. More than two out of three female Millennials are now anxious about the future.

In some areas, Millennial concerns are in line with the general population – worries about the next recession, for instance – but (again paradoxically) Millennials also report increased happiness, despite higher perceived levels of stress.

How - and by whom - are Millennials influenced? We'll consider this in more detail in part four, but the picture here is consistent with 2013: Millennials are more likely to be influenced by partners/spouses, friends and strangers, but are less likely to buy into 'expert' testimonials or traditional marketing messages. Influence from strangers increased somewhat, a reflection of the increasing interest in user reviews and social media conversations. But, Millennials remain greatly confident in their own status as influencers of trends and purchasers, simultaneously being open to peer pressure: up to 20% of younger consumers across the population would not buy a brand if their friends did not approve of it.

Crucially – and, again, showing consistency with 2013 – Millennials remain the most brand-sensitive of all the current generations, although the population in general is more aware than ever of issues related to corporate social responsibility and brand reputation.

We've seen earlier that Millennials (or at least those living in Millennial-headed households) have a 24% share of discretionary spending in the US. But, the categories in which they over-index remain consistent with the picture in 2013: most notably, alcoholic beverages (29% of spend), as well as eating out (27%) and apparel (24%).

But, things have changed in other categories: Millennials report increased spend on fresh fruit and and vegetables, for instance, and eating at home, as well as experiences/entertainment and education. The general picture is one of more positivity about the areas in which they're spending more.

The opposite is true when it comes to the categories in which Millennials are cutting back. While sugar/sweets, carbonated soft drinks and eating out all feature high on the lists of reduced spend, there's less appetite than there was two years ago to spend less on these discretionary categories.

That's the picture for 2015, but what about 2016? Here, we can look at anticipated Millennial spending on alcoholic drinks products in isolation – and the picture is rather mixed. For wine and beer, Millennials record an anticipated net spend of -4% (13% expect to increase spend, 17% to cut back), but that's broadly in line with the rest of the population (under-20s -1%; Generation X -3%; Boomers -5%; Silents -5%).

For spirits and other alcohol, the picture is more encouraging: Millennials register a net -3% in terms of anticipated spend (14% up, 17% down), but that compares to -6% for Generation X and Silents, and -8% for Boomers. Only the under-20s exhibit a more positive trend of +2%.

Importantly, this is a much improved picture when compared to 2013. Then, in the case of both wine/beer and spirits/other, anticipated spend by Millennials had a net figure of -14% – although even this was marginally more positive than the numbers recorded by Generation X, Boomers and Silents.

We've discussed the characteristics, predilections, influences and levels of optimism among Millennials in some detail now. But, what do they think of brands? How do they form these attitudes in the first place? And what can brands do to leverage their goodwill?

The final part of this management briefing can be found here.