IRI Consumer Connect Survey Finds Younger Millennials Outspending Older Cohorts on Food and Beverage Purchases

Edibles’ Inflation Softened in Q1 2019; Interest in Sustainable and
Plant-Based Products Continues to Grow

CHICAGO–(BUSINESS WIRE)–Consumer confidence has been up and down in 2019. Despite a strong start
to the year, confidence dimmed at the end of Q1 2019. It is currently
surging again due to a strong labor market, but trade issues could
easily cloud this outlook. This mixed bag is impacting consumer spending
on food and beverages, according to the latest IRI Consumer Connect™
survey findings released today. Food inflation softened in Q1 2019 to
1.7% compared to 2.2% in 2018, but not everyone is freely opening their
wallets. Younger millennials (born 1990+) are outspending older
generations in food dollars, while older cohorts are more likely to be
using a number of money-saving tactics to keep food bills manageable. To
get a closer look at the most recent food and beverage trends for the
beginning of the year, IRI also released “Early
View 2019.”

“Younger millennials have been lulled by the historically low
unemployment rates, which is boosting their overall confidence and
loosening their wallets,” said Joan Driggs, vice president of Content
and Thought Leadership for IRI. “At the other end of the spectrum, many
baby boomers, retirees and seniors are concerned about their retirement
savings due the volatile stock market this year and are watching their
expenses more carefully. In recent years, millennials have been less
optimistic than older consumers and were spending less. We are now
seeing a role reversal that is impacting spending on edibles across the
board.”

Food and beverage trends

Edible sales increased in January 2019; however, the growth was slower
than the industry average and cooled off in February and March. The West
(4.1%) and Plains (3%) regions led the way in edible growth, and the
Northeast (1.4%) and South Central (1.2%) had the slowest growth for the
13 weeks ending March 25, 2018.

Storewide department sales trends are rather mixed. Beverage and liquor
were top-performing departments in Q1, while the general food and
refrigerated departments, which experienced 3.7% and 3.2% growth in
January, declined by 1.5% and 1.1%, respectively, in March 2019.

Produce and meat posted declines in pounds, placing downward pressure on
the whole sector in Q1, while the bakery department posted strong dollar
growth driven by price. Perimeter pound growth has slowed compared to a
year ago across most sectors, including deli cheese, deli meat, deli
prepared, bakery, meat, produce and seafood.

Generational spending and saving habits

Younger millennial spending on food and beverages is clearly outpacing
older baby boomers and retirees, who struggled in Q1. In fact, younger
millennials’ edible dollar sales grew by 21.5% for March compared to a
year ago. And edible dollars sales for retirees and senior is down by
3.8% for March compared to a year ago.

Older generations are feeling a bit pinched and are embracing a wide
variety of money-saving tactics (younger millennials, older millennials,
Gen X, younger boomers, older boomers, retirees and seniors):

  • Buy private label: 74%, 88%, 87%, 83%, 79%, 77%
  • Try new, lower-priced brands: 70%, 80%, 79%, 73%, 69%
  • Visit multiple retailers: 60%, 61%, 57%, 54%, 48%
  • Download coupons from retailer/manufacturer website: 46%, 62%,
    60%, 56%, 48%, 39%

In addition, these older cohorts are more likely to buy food and
beverage brands other than their preferred brand because they are on
sale and buy brands because they have a coupon. However, retirees and
seniors won’t scrimp on certain items, with 44% regularly purchasing
premium quality food and beverage products compared to 38% of younger
millennials.

Emerging trends in sustainable and plant-based products

With nearly six in 10 consumers interested in eating less meat, and
nearly eight in 10 millennials eating meat alternatives, it is no secret
that plant-based eating is gaining momentum.

However, consumers also are looking to the power of plants for products
that do more — for their bodies, their families, the environment and the
world. The rate of consumer acceptance of plant-centric products across
the store is increasing rapidly, going from just a handful of categories
in 2014 to more than 90 categories, totaling more than $13 billion in
cumulative sales in 2018. Products such as dish care, facial care and
cosmetics are well on the path toward reaching peak household
penetration in addition to more obvious products, such as pet food, meat
alternatives and cheese.

The need for cleaner and healthier products goes beyond plant-based
products, with 78% of consumers saying sustainable sourcing of
ingredients is an important product attribute. Research conducted by IRI
and NYU’s Stern Center for Sustainable Business found that sustainably
marketed products delivered 50.1% of market growth from 2013 to 2018
while representing 16.6% of the CPG market in dollar sales in 2018.
Across all categories, sustainably marketed products delivered $113.9
billion in sales in 2018, 29% growth compared to 2013, and are
expected to grow to $140.5 billion by 2023.

“The latest generational spending habits combined with increased
interest in plant-based and sustainable products, opens up an
array of new opportunities for CPG marketers,” added Driggs. “To be
successful marketers must consider the importance of social media
reviews, create fresh, relatable content and be authentic when targeting
younger consumers. This doesn’t mean marketers should lose sight of
older consumers, who still have the greatest purchasing power, but
marketers must be very savvy and develop personalized, targeted
marketing campaigns that appeal to the various generations of shoppers.”

About the IRI Consumer Connect Survey

IRI provides new survey results at the end of each calendar quarter
covering shoppers’ behaviors and attitudes as they directly relate to
their strategies for learning about, purchasing and utilizing CPG and
health care products, as well as information regarding perceptions of
economic conditions and their ability to provide for their families. For
more information about customizing the research for a particular
category or industry, please contact IRIMarketing@IRIworldwide.com.

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