What will Millennials "Kill" Next?

What will Millennials “Kill” next?

            If you’re one of the 76+ million Millennials living in the U.S. no worries, we’re not suggesting you are to blame for current changes in the retail landscape.  Lately the Millennial cohort has been taking a lot of heat for driving changes in retail due to the size of their demographic as they currently outnumber “boomers”.  Believe it or not we’ll discuss how this affects the growth of wine sales in the U.S. via a circuitous route through seemingly unrelated territory.

            It’s been suggested that Millennials are killing the casual dining chains (Business Insider, 6/3/17) by Buffalo Wild Wings CEO Sally Smith who stated this demographic is more attracted to fast-casual and quick service restaurant options.  It’s not rocket science that the fast-casual segment has enjoyed rapid growth over the last two decades but even it is cooling off as Millennials also choose online ordering and delivery of groceries, home meal-kit services and have taken advantage of lower food costs and cook at home more often.  The only growth area for casual dining is home delivery which in turn lowers the check average with no opportunity to sell profit-driving alcoholic beverages.

            Millennials are also changing the consumption pattern of those “adult beverages” (see our July blog) not only are their choices changing so is their consumption rate which is less than previous generations (CNBC, 7/24/17).  Industry observers tell us that Millennials are also killing beer sales as Morgan Stanley reports beer sales dropped -0.9% year-to-year in the four weeks leading up to July 15^th.  What are they drinking, it turns out to be wine and spirits with wine leading by a small margin.  There’s another culprit in the downturn of mass-market domestic beer sales, weed (CNBC, 4/20/17).   

            As to the downturn in casual dining for which industry leaders would like to blame Millennials, we’re not so convinced.  While many of us hated our economics classes in college, let’s give them their due and “assume” the elements contributing to lagging casual dining sales.  Assume Millennials prefer to use online ordering, delivery, quick service and fast-casual restaurants – what’s the common theme?  Time.  We all have the same amount of time, so those bright Millennials are simply using any product, service or app that makes life more convenient which is the same reason their parents used the drive-through window!  Given other options, today’s young adults don’t see the value in sitting in a restaurant for food service.

            Addressing the changing patterns in wine sales there’s usually an explanation of cause and effect when a product or service no longer holds the consumers attention.  In the article cited above (CNBC, 7/24/17) an industry analyst observed in the decades of the 1980’s and 1990’s alcohol consumption fell 22 percent while marijuana use rose 18 percent.  It appears that wine and weed go together like love and marriage and beer is the “odd man out”.  This of course coincides with the rise of one demographic group and their preferences. 

We believe the take-away is for industry vendors and operators to remain vigilant to demographic change as each new cohort has driven change in the marketplace that answers their unique set of needs.  Either you’re leading the pack or playing “catch up” only you can make it happen.  For a more in-depth look or other industry insights we look forward to speaking with you at www.themenuspring.com.