Reformulating for Generation Y

by Allison Sebolt
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"Generation Y," the 18-to-29 age group that comprises more than 40 million consumers in the United States, has billions of dollars in spending power, a factor of great importance to the food and beverage industry.

"They are the most diverse population America has ever had," said Kara Nielsen, "trendologist" with the Center for Culinary Development in San Francisco. "You are not dealing with the same mindset. They are people coming from really different points of view, different family backgrounds and different eating habits. They also have a different mindset of entitlement paired with high expectations for getting things they want. They are very focused on their individual desires and wants more so than other groups prior."

Within the 18-to-29 age group, the younger set maintains the majority, with 59% between the ages of 18 to 24 and 41% ages 25 to 29, according to market researcher Packaged Facts.

"There is an opportunity to provide food for them in a variety of channels," Ms. Nielsen said. "Since they don’t prepare a lot of their food themselves they buy a lot of their food, and they buy it wherever they are. They are very opportunistic, and they are open to finding food in all kinds of places. So the opportunities are to put food for them in all kinds of channels."

Authenticity is one of the more interesting defining characteristics of this group, Ms. Nielsen said.

"They really are attracted to authentic brands that have some kind of meaning and everything they do relates to that meaning," Ms. Nielsen said.

Mintel International, Chicago, said many consumers in this age group are cynical about corporate marketing and prefer to do business with companies run by young adults with an offering specifically for them.

Ms. Nielsen noted Whole Foods Market, Austin, Texas, and In-n-Out Burger, Irvine, Calif., as examples of retailers and restaurants appealing to Generation Y. She said the businesses don’t try to do more than what they are really good at, and everything they do is true to their message and true to the brand integrity.

"(Generation Y is) open to new things, but they are not very loyal," Ms. Nielsen said. "Because they are so open, they will just keep on going. If they don’t like your product, they will go find a new one. Even if they do like your product, they will still be looking for new. They are constantly trying to satisfy themselves, and they think there can be more satisfaction elsewhere. Manufacturers need to understand this group so they can meet their demands and understand how those demands are varied and will fluctuate."

Mintel said 18-to-24-year-olds are more likely than older adults to be impulsive shoppers, with 41% stating they have a tendency to buy things on the spur of the moment compared with 30% of all adults. In addition, 94% of those 18 to 34 do their food shopping at regular grocery stores, and 87% said they shop at mass discount stores. Forty-nine per cent said they shop at natural and organic food stores such as Whole Foods, and 44% shop at ethnic food markets.

The group also is interested in customization and being able to personalize items.

"They all think they are very special and unique and individual and their needs are really different from everybody else," Ms. Nielsen said. "They want to cater to those needs at all times."

Sustainability and being green is important to this group as well, and they are much more concerned about environmental issues than other age groups.

"They grew up in a time when being green was much more discussed, talked about in schools and practiced," Ms. Nielsen said. "They grew up recycling."

Ms. Nielsen said green packaging will continue to be important for this group and will become almost a given expectation. In the future, they will continue to demand more when it comes to environmental considerations. The group even will be attracted to retailers and food service operators with buildings using green designs, she said.

Ethnic foods and flavors are especially appealing to this younger consumer group as they are interested in different cultures and willing to try new things.

"They grew up in a multi-ethnic society, many of them are multi-ethnic by background," Ms. Nielsen said. "They have had the privilege of traveling extensively with their families and trying some foods out themselves, and they have also been raised with foods that have more flavors."

Because this generation spends more time at a computer and using technology, Ms. Nielsen recommended packaging and food formats that are easy to eat and snack on while surfing the Internet.

In terms of specific new product strategies, the C.C.D. recommended products helping give a boost in the morning and highly flavorful products for lunch and dinner. Overall, products should be shareable, portable, crowd-pleasing in taste, and offer a variety. Foods also should keep the hands clean for easy Internet surfing, have lots of flavor, be interactive, offer variety and be globally inspired. While this generation enjoys trying new things, they might be hesitant to try something too unfamiliar, so products should pair the unfamiliar with the familiar as a way of expanding tastes with something still recognizable.

This generation also enjoys taking their food to what Ms. Nielsen calls the "third space," or somewhere between the restaurant and home where they may lounge and hang out with friends. So being sharable, portable and customizable is important.

Using social media such as Facebook, Twitter and flickr may hold potential as vehicles to reach out, market to and communicate with consumers in this group. Mintel said Whole Foods uses Twitter to publicize promotional information, answer questions and engage in dialogue with consumers. Whole Foods also follows some Twitter members as this provides the retail chain with a way to study attitudes and lifestyles of customers in the context of a discussion.

"We think there is a huge opportunity in both C.P.G. and restaurants to come up with new snacks, big flavors, and exciting, cool packaging that is going to attract this group," Ms. Nielsen said.

This article can also be found in the digital edition of Food Business News, May 12, 2009, starting on Page 43. Click here to search that archive.

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