Millennials already hold a strong influence in the food and beverage industry, as their passion for environmentally sustainable and healthier food options has led to more detailed product information and cleaner labels. But that is only the beginning. A high-stakes era of disruptive innovation will further reshape the industry, as recently published U.S. Food Market Outlook 2019 predicts. Having technology in place to support rapid new product introductions, agile responses to predictive data, and intimate knowledge of the customer, will become increasingly essential.
The last of the millennial generation is now graduating college and entering the job market. Therefore, millennials will become the new drivers of the economy—with more income to spend on food that meets their specific expectations. As this generation ages, though, demands will evolve, and the food and beverage industry will need to keep pace.
A Closer Look at the Influencers
Millennials, born in the early 1980s to about 1996, represent nearly one-quarter of the U.S. population. They are often called out for their eccentricities, strong dislikes, passionate social stands, and departure from traditions, like owning cars or investing in homes. While they have been blamed for killing a wide range of products, from bars of soap to paper napkins, we also can thank them for organic chicken risotto baby food and balsamic fig and mascarpone ice cream. Subscription-based meal kits, a proliferation of protein-rich snacks, and ready-to-eat meals from the grocery store are other byproducts of millennials’ demand for convenience—without sacrificing taste or healthy ingredients.
Millennials’ F&B Choices: By the Numbers
- 52 percent of organic consumers are millennials and they eat 52 percent more vegetables than their older counterparts
- About 40 percent of millennials embrace largely plant-based diets, even if they are not vegetarian or vegan
- For 40 percent of millennials, organic food choices are integral to their “green” lifestyle (compared to 28 percent of baby boomers)
Millennials cannot be fully understood by simply observing Traders Joe’s grocery store on a Saturday afternoon. There is more to them, and over-simplifying their motivations can backfire. For example, it was recently said that millennials are creating problems for the canned tuna business because they do not own can openers. Thousands of outraged young consumers insisted on setting the record straight though social media. They responded with waves of data about the carbon footprint of processing each can of tuna, the impact on the environment, and dangers of over-fishing the oceans. Then, they started on freshness. Millennials are activists at heart, armed with the intrinsic ability to mine the internet for case-proving data. In other words, do not jump to conclusions on why they make—or do not make—certain choices.
Furthermore, industries that ignore the generation’s preferences, interests, and causes do so at their peril. It is also suggested that the millennial obsession with food is related to intimacy and the innate, primal desire to connect with other people in this high tech, depersonalized world. Perhaps this is true. But, whether it is an emotional cry for connection or economically-driven power-play, food and beverage manufacturers need to pay attention.
How Can Technology Help?
Agility is more important than ever before. Manufacturers will need to modernize processes, from research and development (R&D) to supply chain management, to be more responsive to the fast-changing market trends. Technology will help companies step up to the challenges they experience with the following solutions:
- Cloud-based solutions offer fast deployment, making it easier to open new branches or divisions focusing on specialized product offerings, niche markets, or regional distribution.
- Product lifecycle management solutions will help companies race to market with new flavors, new product offerings, and new ways to package foods—whether destined for restaurants or grocery store shelves.
- Quality control will be crucial in maintaining freshness, taste consistency, and visual appeal. These are all important to pleasing a demanding demographic.
- Connected supply chain networks will help ensure timely delivery of ingredients and manage traceability.
Market Trends to Watch
These are the key disruption trends to watch for in 2019:
Localized Offerings. Millennials value locally produced foods, especially fresh packaged salads. Locally grown produce and packaged salads are fresher because they do not have to travel far to get into stores. To meet this demand, more regional greenhouses will be needed so foods can be grown across the country, year-round. Food grown indoors and in controlled environments is potentially safer from environmental pollutants or other contaminants. In addition, local produce is often farmed hydroponically, making it more sustainable.
For example, BrightFarms, a startup in this industry, grows salad greens in glass-roofed, 140,000 square-foot hydroponic greenhouse farms in Illinois, Virginia, Pennsylvania, Ohio, and Texas. This regional strategy reduces freight costs and ensures year-round supply with a longer shelf life.
Greater Authenticity. Today’s consumers want at-home food products that deliver restaurant quality meals. The proliferation of reality TV shows featuring chefs and cooking challenges have also generated the desire for "chef-inspired" meals. Millennials envision chefs cooking meals in a kitchen, rather than in a big industrial food processing plant, and they want to be able to do the same in their kitchens. This will lead to more meal kits and more ready-to-make entrees which blend the freshness of “from scratch” with the convenience of ready-to-eat packaged foods. For example, Grainful makes whole grain-based frozen entrees featuring whole oats, quinoa, sorghum, vegetables, proteins, and sauces. The packaging claims entrees are created “by a real chef in a real kitchen."
Additionally, Frozen Foodies is another company bringing restaurant style meals to the into the home by partnering with famous Chicago Chefs. The dishes are cooked in a central location, cryogenically frozen to preserve taste and texture, then sold and shipped directly to consumers.
New Players Challenging Traditions. Traditionally, major food players have driven the majority of the innovations in the industry, until recently. Now, new players are the ones causing disruption. Upstarts have especially been influential in energy bars, ice cream, probiotics, and foods and drinks laced with vitamins or enzymes. For instance, the better-for-you ice cream brand, Halo Top, launched in 2012 and exploded in popularity, showing that guilt-free indulgences are still popular. These are often small, regional brands. Large companies sometimes find that acquiring these start-ups is more economical and much faster than developing their own R&D around specialized product lines. Coca-Cola owns Honest Tea; Hormel owns Applegate Farms; and PepsiCo has worked with small farmers in Ethiopia.
Conscientious Consumers. While baby boomers read labels for information about calories and fat grams, millennials want to know where the food was grown, the carbon footprint, and if livestock were treated humanely. Sustainability is a top priority and millennials are well-informed on environmental issues and willing to support their ideals with their spending practices. Plastic containers, excessive packaging, and non-recyclables are big turn-offs.
Healthy food options are also a top priority—combined with exotic tastes. Unusual snack offerings are big hits, like chia seed pudding, roasted chickpeas and popped sorghum. Coolhaus, an ice cream maker, plans to target this market with a line of 13 vegan ice cream products made from peas, brown rice, and cocoa butter.
Winning Over Millennials
Food and beverage manufacturers have many technology tools they can use to help them understand and meet the expectations of millennials. This digitally adept generation is accustomed to instant satisfaction with the click of a mouse. Manufacturers can meet these consumers where they are most comfortable—on their phones. E-commerce, online portals, websites, surveys, newsletters, podcasts, and social media are tools manufacturers of all sizes can leverage.
Manufacturers will also become more regionally-focused. By leveraging locally grown produce with regional customer data, brands can create micro-assortments of product selections that will fit the exact needs of that culture and community. Machine learning and Artificial Intelligence (AI) make these regional assortments possible and have the power to further create selections down to the consumer level, offering consumers special offers from community grocery stores or restaurants.
This sort of special treatment is what millennials are already experiencing in digital services, like Netflix and Amazon. With this AI enabled decision-making, digital and physical retailers alike can take the work out of shopping and searching for the healthy, unique taste combinations consumers want.
Intimate customer engagement means actively listening to what customers want—and acting in a timely manner. Fortunately, millennials are very happy to tell you their wants. They are very vocal and clearly express expectations. But, are manufacturers ready to listen and act? Today’s choosy shoppers are a shrewd judge of products, value, and sustainability. Manufacturers need to stay modern, relevant, and focused on innovation and pleasing these young consumers who will continue to influence the food and beverage industry for decades to come.
Mike Edgett is Director of Industry and Solution Strategy at Infor.