Millennials: the Generation of Choice

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Millennials: the Generation of Choice

By Angela Hanson, Convenience Store News - 06/07/2016

Despite the efforts that retailers, suppliers and marketers are putting into understanding millennials, they can be a hard demographic to pin down. Of course, an entire generation will encompass a wide variety of tastes and preferences. And this is especially true of millennials who, in comparison to their elders, value choice, customization and the opportunity to experiment.

Alcoholic beverages, in particular, is a category where there’s a lot of conversation happening around millennials — consumers born between 1977 and 1995. Every supplier is trying to attract more millennial dollars, and millennials in turn are proving to be “far more promiscuous” in their consumption of alcoholic beverages, brand choice and choice of beverage type than previous generations, according to Eric Shepard, vice president and executive editor of Beer Marketer’s Insights.

“Everything had been going on fairly smoothly before this generation,” Shepard told Convenience Store News. “I’m not sure why, but [millennials] have a much broader portfolio of beverages and brands than previous generations. That creates very interesting challenges.”

Rather than selecting one drink as their beer or malt beverage of preference, millennials are exploring their options, making suppliers work harder to catch their attention.

“There’s a huge choice of beverages that is much broader than previous generations had. Whether you’re on-premise or off-premise, there’s just a lot more choice out there and they’re exploiting that choice,” Shepard said, noting this applies to beyond alcoholic beverages.

FLAVOR FANS

Breweries are responding to the call for choice by developing new flavor innovations that let adventurous beer drinkers expand their palates.

The proportion of new flavored beer product launches grew from 15 percent of total U.S. beer launches in 2010 to 27 percent of total U.S. beer launches in 2015; a staggering 80-percent increase over the five-year period, according to Mintel’s Global New Products Database.

The increased interest in flavor extends to hard cider, which saw volume sales grow fivefold during the same period. This growth was most strongly driven by millennial dollars.

“Mintel research reveals an explosion of innovation in the flavored beer category,” said Beth Bloom, food and drink analyst for the research firm. “The fact that well over half of all U.S. alcohol drinkers say they are interested in flavored beer highlights a significant opportunity to boost participation in the beer category.”

Craft beer is also on the rise as the segment continues to see substantial growth despite accounting for a relatively small portion of market share. And it’s not just the flavor of beers in this segment that is attracting millennial drinkers; it’s the marketing, too.

“I think millennials respond to different types of messages than brewers, distillers and vintners were used to using in the past. [Millennials] talk about experiential and authenticity, and all the buzz words,” Shepard said. “Producers have had to change the message and the way they reach out.”

The key challenge for convenience store operators as craft beer keeps growing is a practical one: very few c-stores have the room to add numerous craft brands without cutting into what they already stock. As a result of this tricky balancing act, craft in the convenience channel is significantly under-shared compared to the grocery channel. It’s also difficult to know how many millennials will walk away and not choose the next-best option if their preferred craft beer is unavailable.

“It’s hard to put numbers to that because the mass global brands are still mass global brands. Millennials are drinking them, too,” Shepard said. “But if you’re looking for something more local, you’re more likely to go with a craft type of beverage.”

Further proving the power of craft beer, larger breweries are thinking small by acquiring craft breweries and incorporating them into their portfolios. Anheuser-Busch in particular has aggressively expanded its presence in the craft beer segment. Its most recent acquisition came in April when it announced the purchase of Devils Backbone Brewing Co. of Virginia. This marks the eighth craft brewery the beer giant has acquired.

PACKAGING & POURING

In addition to flavor options, another way c-store operators can cater to promiscuos millennial drinkers is to offer packaging options. This can mean selling single cans in addition to six-packs and cases.

While the growth of singles as part of c-stores’ beer business may not be a strictly millennial-driven change, younger consumers are a prime example of busy, on-the-go customers who are likely to make a single impulse purchase.

Growler programs are another option for c-stores that want to promote themselves as a destination for higher-quality beer, such as Georgia-based Parker’s Convenience Stores, which began piloting a growler program in 2012. However, while growler programs can serve as a point of differentiation, they do bring extra challenges in terms of space and staffing.

In the end, while millennials hold a variety of sometimes conflicting opinions, just avoiding the one-size-fits-all approach will serve c-stores well in attracting this demographic.

“Anything that expands choice will help c-stores,” Shepard concluded.