Millennial Wave to Hit Imported Beer and Microbrews

I've never understood why more attention isn't paid to demographics! Thanks to the remarkable efforts of the Census Bureau, we KNOW what the population will look like in 5-, 10- and 15-years (which is, by the way, the reason there is little excuse for overcrowded schools).

Yesterday, I shared SeekingAlpha's conclusion that demographics trends may be unkind to Wal-Mart. Today, I am going to share SeekingAlpha's conclusions about the impact of these same shifts on beer. According to SeekingAlpha.com, Gen Y will " undoubtedly break the beer drinking records set by Boomers in the late 1970s and early 1980s." Here is an editted version of their analysis:

"As 78 million Baby Boomers started to exit the prime 21-34 beer drinking age bracket in the early 1980s, they were replaced by a much smaller potential-beer-drinker cohort, Generation X. This led to years of flat to declining volume in the beer industry. Now, as Generation X ages out of the prime beer drinking age, it is being replaced by the much larger Generation Y. This new generation of potential beer drinkers is currently mostly age 24 and under ... and it is the largest generation in U.S. history. In 2008 alone, more than 3.8 million members of Gen Y turned the legal drinking age of 21, 100,000 more than turned 21 in 2007. Their entrance into the prime beer drinking age bracket may already be making a difference. Industry data indicates that beer consumption has been on the increase since at least 2006."

Which types and brands of beer will benefit most from the shifts? According to their analysis, first and foremost it will be the big U.S. breweries (and their foreign owners), due to their sheer volume - 80% of sales. But the biggest gains will be seen by microbreweries, which are currently just 6% of sales, but already outpacing the rest of the industry. In 2007 the growth rate of microbreweries was estimated at 12 percent, (vs. 1.4 percent for the large domestic brands and imports). In 2008, microbreweries increased volume by another 5.8 percent, and increased sales more than 10 percent.

This analysis brought to mind an email I received from Marty Predd, a twenty-something Research Associate at Brand Amplitude who recently moved to Portland, OR from Indianapolis. He shared this a few months ago when we were working on a project for an imported beer client:

"As you may know, Portland is a mecca for craft beer...we have the most microbreweries of any city in the country, and I can think of about a dozen that are within walking distance of my loft. My girlfriend and I partake regularly and I'm sure we've become beer snobs to some degree. Bars we used to love in the Midwest seem less appealing now when we visit because of their limited selection of mostly huge national beers like Bud or Miller, or mega imported brands like Guinness, Smithwicks, Heineken, etc. With the exception of PBR, which has a nostalgic status in dive bars here, I can't think of the last time we enjoyed a mega beer brand that's not based here in Portland (i.e., Widmer)."

For data geeks like me who want to learn more, Ken Gronbach of SeekingAlpha has written a book,"The Age Curve: How to Profit from the Coming Demographic Storm". I've ordered my copy already.

Millennials Asked to Consider Marriage

In first century Rome, a lex julia de maritandis ordinibus aimed to addressed the low birthrate in the upper classes. The legislation set penalities for bachelors and childless couples, mainly limiting their right to inheritance under wills. After divorce or widowhood, women were expected to remarry within a fixed time. A father of one child was allowed to stand for public office one year earlier than the stipulated age. Siring children exempted a man from certain legal duties. Whether or not these measures were effective or not is unknown, but the combination of carrot and stick may have done the trick. The Roman empire didn't die out for lack of citizens, at least not for many centuries.

In an eerie, two-Millennia historical echo, USA Today reported yesterday that the U.S. Federal government is funding a 4-year, $5 million dollar, multi-media and social networking campaign aimed at encouraging marriage among Millennials. While this effort doesn't include penalties for remaining single, it does attempt to point out the benefits of marriage to a generation that lacks good marital role models and is delaying marriage.

"The average age at first marriage is now almost 26 for women and 28 for men. And a growing percentage of Americans aren't marrying at all. Provisional federal statistics released Tuesday report 7.1 marriages per 1,000 people in 2008, down from 10 per 1,000 in 1986...."We're not telling people 'Get married' but 'Don't underestimate the benefits of marriage,' " says Paul Amato, a Pennsylvania State University sociologist and adviser to the National Healthy Marriage Resource Center, which is spearheading the campaign. The resource center, a federally funded virtual clearinghouse, works under an agreement with the U.S. Department of Health and Human Services' Administration for Children and Families."

The drop in marriage rates may be a reflection of Millennial attitudes. Research by the youth research company, TRU, was commissioned prior to developing the campaign. They found just 22% of those 18-30 have a strong view of marriage. At the other end of the spectrum 14% express strong sentiments against it. Those in the middle have mostly a 'practical' view of marriage and plan to either wait a while or live with someone before committing.

The campaign will feature a web site (TwoOfUs.org) as well as ads on social networking sites Facebook and MySpace, videos on YouTube, spots on radio talk shows, ads in magazines and public transportation. The goal is to start a national conversation about marriage.

Will it work? Without the carrot and stick of the Roman ordinance, I am not so sure the independent minded-Millennials will listen or care. A quick look at the TwoOfUs.org web site didn't reveal anything you couldn't find about relationships that isn't easily available in any women's magazine. The tone is definitely not hip or cool, a serious handicap to starting a social media conversation. It also is strictly heterosexual, which may be a turnoff to many Millennials who take a broader view of 'marriage'.

However, the Federal effort may get an assist from the First Couple. Andrew Romano wrote a Valentine's Day cover article for Newsweek explaining that his Millennial friends think the Obama's are 'one of the swooniest couples around', akin to what the Twilight couple is to tweens. (Our Model Marriage The Obamas have the kind of relationship millennials aspire to.) According to Romano, Michelle and Barack are the dream couple to Millennials starved for appropriate marital role models.

"My hunch is that millennials are going gaga over Barack and Michelle because they want to be Barack and Michelle. It's not that other generations can't admire the Obamas' bond; their marriage -- a union of self-sufficient equals -- embodies the post-'60s ideal. But unlike their elders, most millennials have yet to experience marriage firsthand, and what they've experienced by proxy hasn't been particularly encouraging: a 50 percent divorce rate, a steep rise in single parenthood, a culture captivated by cheap celebrity hookups. Even America's most visible household hasn't offered much hope, veering from '50s-era subservience (the Reagans) to boomer dysfunction (the Clintons). But now the Obamas – two independent individuals who also appear to be (surprise!) in love – have filled the void. For young people who have rejected the tired "wife in the kitchen" template but resolved not to follow their parents to divorce court, it's a relief to see that the sort of marriage they hope to have – equal and devoted – can actually exist."

Millennials: The Education Divide

As a college professor, it's easy for me to forget that not all Millennials are college students or graduates. In December, I called attention to a recent Mintel Market Research report (Oct 2008) that notes college students are just 15% of the 71 million young adults 18-34 in the U.S. The report says 'Affluent Young Adults' make up another 19%. The remaining two thirds are what Mintel calls 'Minimalists' or 'Unpowered Young Adults'. These groups are quite different in their demographics, buying habits and general outlook on life. The large number of 'Minimalists', and their aggregate buying power, make them critically important for marketers to understand.

A new report from Tufts University ("Youth Demographics - Youth with No College Experience") provides an even more detailed picture of the education divide among Millennials. The report focuses on young adults 18-29 years old. Like Mintel, the report reminds us that non-college educated young adults represent a sizeable opportunity for marketers. The rate of college education among 18-29 year olds has increased steadily since the 1960's, yet today only 52% of all young adults have at least some post-high school education.

The Tufts report rebuts one of the the most widely shared views of this generation, it's civic-mindedness. According to the report, this trait is a function of education. Those who have no college experience are significantly less engaged on 10 different dimensions, from voting, to volunteering to membership in clubs or unions than their college educated counterparts.

In the Presidential primaries and caucuses, young people who had college experience were 18 percentage points more likely to vote than their counterparts with no college experience (25% and 7%, respectively). In the general election 70% of young people who voted had at least some college experience. Comparing non-college youth to full-time college students and people with bachelor’s degrees would produce substantially bigger gaps.

The education divide is apparent in other ways as well. Non-college young adults are more likely to be unemployed. Census data through March 2008 shows the unemployment rate for 18-29s with no college experience was 13.6%, while only 4.5% for those with some college. Interestingly, they are equally likely to be married.

What makes all this especially interesting is that another Tufts report (“Civic Engagement and the Changing Transition to Adulthood”) says it wasn't always this way. In fact, they believe that there is a generational shift that is increasing the divide between those with and without college educations. This report argues that "life has changed dramatically for people in their 20s. Marriage, childbearing, financial independence, and other aspects of the “transition to adulthood” have been transformed since the 1970s, and are now very different for people with and without college educations."

Most disturbingly, they conclude that young adults without college experience are permanently missing some aspects of civic engagement–such as group membership–that were common thirty years ago. While this has obvious implications for society and policy, it also is important context for marketers. We must keep in mind that there is great diversity among 71 million people, and generational shifts we see among the college educated, like civic-mindedness, may not hold for everyone.

Millennials: What's in a Name?

What defines a Millennial? A birthdate? A mindset? Whether you played Atari or Nintendo as a kid? How much your youth was shaped by the events of 9/11?

While there is no official definition, the birth rates suggest the line is somewhere around 1980-1982, roughly the high school graduating class of 2000 or later, hence the name "Millennial". Most marketers use the names 'Gen Y' and 'Millennial' interchangeably, but Millennial seems to be ascendant, perhaps because it is catchier, though undoubtedly harder to spell. According to the Washington Post in a July 6 article, "What Comes Next After Generation X"?, not all Millennials appreciate the label. Aside from the natural aversion to being labeled at all, they rightly point out that this generation is so varied that it is difficult to categorize the many 'niche' audiences that make it up. Some suggest that use of technology is a better way to define them than simply age:

"My sister is 32. We believe them to be generation X, but it's not that many years apart," said Giacomo Abrusci, 26, an American Chemical Society project coordinator. "But they managed to get through their education without technology.My sister thinks she's in gen X, but she's also super into Facebook and MySpace."

Ways to 'define' -- rather than label -- this generation include politics (liberal), social views (community oriented, tolerant), academic (lots of degrees) or lots of debt (to pay for the degrees). Ultimately, what will matter most to marketers is how the Millennials label themselves. Boomers considered themselves the 'Me Generation', a label Pepsi was able to leverage and exploit. Gen X'ers see themselves as entrepreneurial and independent, a self-image luxury marketers are doing their best to leverage.

Millennial Sex: There is a Difference!

Millennials, of course, are not all alike, and one of the main differences is sex. This isn't as blindingly obvious as you might think. Lifestyle and purchase behavior differences between Millennial men and Millennial women are so great, it almost makes sense to think of them as two different cohort groups. Of course, there are many ways that they are the same, but vive la difference when it comes to marketing. On the whole, Millennial men appear to be more like their teen counterparts, while Millennial women are more like, well, young adults. According to Mintel's 2008 report on 18-24 year males, here are a few of the gaps:

18-24 year old men are more likely than women to...

Live with a parent: M: 50% W: 33%

Watch more than 11 hours of TV per week: M: 48% W: 32%

Be saving money to buy a car: M: 36% W: 25%

Be saving money to buy a video game console: M: 22% W: 8%

Visit online chat rooms weekly: M: 42% W: 31%

Read weblogs or watch podcasts weekly: M: 32% W: 15%

Watch online video: M: 77% W: 59%

Agree I don't need a stereo if I have a computer: M: 36% W: 25%

Agree I don't need a DVR because I have a computer: M: 28% W: 10%

Watch TV broadcasts on a computer: M: 37% W: 20%

Record TV broadcastson a computer: M: 30% W: 13%

Have a $100+ monthly cell phone bill: 35% W: 23%

18-24 year old women are more likely than men to...

Think it's cool if a company uses a social network profile to promote its products: M: 64% W: 72%

Own a laptop: M: 48% W: 59%

Own a car stereo: M: 49% W: 64%

Purchased clothing online: M: 32% W: 48%

Live with a wife/husband: M: 4% W: 23%

In college: M: 33% W: 36%

Gender differences often yield productive marketing insights. For example, several years ago we explored purchases of flat screen televisions among young adults. To our surprise, young women thought of a flat screen purchase as a piece of art, something that would make a statement about them in their living room. Young men were focused on the viewing experience, expecially the sound and theatre-like picture.