The industries that Millennials are destroying – including light beer
It’s a provocative thesis, but there’s a lot to be said for watching demographic shifts as businesses forge their long-term strategies. An article by MarketWatch.com on 23 June 2014 argued that younger Americans don’t like cars, cable TV, or soft drinks – which made Harry Schumacher, the editor of Beer Business Daily write on Twitter “Should we add light beer to this list?”
Although there is no agreement as to who the Millennials are, most researchers and commentators use birth years ranging from the early 1980s to the early 2000s. In the U.S. that’s about 80 million people. As the Baby Boomer population starts its inevitable decline, the power of this age group will grow substantially in the years ahead.
Some of that will be good, as the tech talents of younger Americans are put to work in the economy and as they grow into a powerful consumer class. But for some industries the rise of the Millennials is assuredly bad news.
According to MarketWatch there are five specific businesses that Millennials are shunning already, which could cause a lot of pain to their leading companies, if current trends continue.
One, Millennials are turning away from car ownership, to which all these car-sharing schemes testify. What is more, they don’t even care to drive. In support of this claim, MarketWatch cites statistics that in 2010 a mere 28 percent of 16-year-olds had driver’s licenses, compared with 44 percent in 1980.
Two, Millennials don’t want to live in suburbia, and either can’t or won’t take out a mortgage. This will be initially a problem for homebuilding companies but subsequently for the housing market recovery.
Three, they don’t like to go to shops to do their purchases. Instead they search for stuff on the web. That’s why MarketWatch believes that retailers are in big trouble. Broadly, online sales continue to outpace brick-and mortar results. There is no indication that this trend will reverse. “Brick-and-mortar retailers that can’t change with the times and evolve to a digital-sales platform are going to continue to feel the pain as more retail sales go online in the years to come”, says MarketWatch.
Four, they don’t watch TV like their parents do. For the first time ever, MarketWatch reminds us, the number of pay-TV lines in the U.S. fell last year, with a drop of about 250,000 subscriptions over the calendar year. That’s a big number, and one that seems to be growing at an alarming rate.
Five – and here things become more interesting to us – Millennials are spurning soft drinks, thanks to a focus on fighting childhood obesity and a rise of healthier alternatives. As a result, Millennials drink much less soda and that number is declining every year.
A report by Morgan Stanley report illustrates how the shift to energy drinks and sports drinks in the past decade is partially to blame. But while that’s good news for America’s health, it’s bad for companies like Coke and Pepsi. As says MarketWatch: “Perhaps companies like Coca-Cola and Pepsi can continue to diversify and evolve, both at home and abroad. But investors need to know what they are getting into with these consumer-staples companies that are increasingly less popular with younger Americans.”
Perhaps the Millennials may not quite succeed in killing the aforementioned industries, but their purchasing behaviour is already having an impact. Companies affected cannot say they have not been warned.
