There’s no doubt about it: Millennials are a force to be reckoned with. This group now makes up the largest living generation — and they harness an annual spending power topping $200 billion. That’s a lot of people — and a lot of cash!
For the food industry, Millennials represent a challenge and an opportunity because they have different demands from generations before. In particular, they want premium food products with clean labels from companies that are transparent about where the food comes from. They’re also looking for healthy products, authentic brand experiences, and, of course, convenience.
Here are six examples of ways the food industry is changing to align with Millennial preferences.
Nixing low-fat for full-fat
Millennials want healthy, natural foods that taste good, and they’re willing to spend more for premium products. This trend is clearly illustrated in the comeback of full-fat dairy products.
Full-fat dairy has lost its stigma as being unhealthy. In fact, recent research supports the idea that it’s actually healthier than low-fat. Full-fat dairy is associated with a decreased risk of heart disease and diabetes, a healthier digestive tract, and easier weight loss, among other benefits.
One area where companies are capitalizing on this trend is yogurt. As U.S. sales of low-fat yogurt fall, premium yogurt is taking its place. An example of a brand offering a premium product is Noosa Yoghurt. The Colorado-based yogurt brand offers thick, Australian-style yogurt made with whole milk that results in a creamy and indulgent treat. Koel Thomae, Noosa’s co-founder, says Millennials are the driving market force and “most important to these shoppers are products that have a truly rich, delicious taste and that boast wholesome ingredients.”
Noosa’s flavors also meet Millennials’ demands for adventurous flavors that go beyond blueberry and honey: the company experiments with sweet and unusual flavor profiles like salted caramel and mango sweet chili.
Rebranding for “Instagrammable” appeal
Millennials want products made from quality ingredients — something Van Leeuwen Artisan Ice Cream prides themselves on. But making ice cream by hand with only a handful of ingredients is just part of what draws Millennials to the Brooklyn-based ice cream brand.
The other reason? Their pastel, spring-colored packaging that fills the users’ Instagram feeds from around the United States. And that’s not by mistake: Van Leeuwen recently rebranded with the specific purpose of making their pints “very Instagrammable” — a decision that has increased sales by 50%.
Selling grocery items online
Millennials have been called the “convenience generation.” That’s not meant to be negative — it merely conveys the fact that Millennials want to be able to use technology to get things done, quickly and efficiently, without too much fuss.
Grocery store lines don’t jibe with this convenience mentality, and, more and more, Millennials are looking to avoid the lines altogether. In fact, more than 40% of Millennials say they’d shop for food exclusively online if they could (compared to only 14% of consumers over 50), according to a Maru/Matchbox report.
Online retail giant Amazon is moving quickly to fill this growing need. The company launched AmazonFresh in September 2007, and while the initiative has faced challenges, it’s growing. Meanwhile, Amazon continues to experiment with new online grocery programs. There’s Prime Pantry for non-perishable food and other household goods and Prime Now for groceries, household items, and even restaurant deliveries. Just last month, Amazon opened AmazonFresh Pickup locations throughout Seattle — customers can order online and pick up items within as little as 15 minutes.
Amazon isn’t the only game in town — Kroger and Walmart also offer online grocery shopping. Over the next several years, there will likely be many more players as companies look to secure a share of the expected $100 billion market.
Making plant-based products
Plant-based products currently represent a $5 billion market. And that market is growing quickly. Last year, the growth in plant-based products was roughly double the growth of the food and beverage industry as a whole.
Millennials are a key driver of this trend. Not only are they more likely to embrace vegan and other alternative diets, but even those who don’t choose a completely plant-based diet often still regularly consume plant-based products.
Take, for example, plant-based “milks.” From now until 2020, U.S. dairy milk sales are expected to drop 11%, according to Mintel. As dairy milk sales drop, plant-based “milks” will fill the gap: MarketsandMarkets predicts that the dairy alternatives market will grow 13.2% in the same timeframe.
Riding on the plant-based “milk” train is Elmhurst Milked. Formerly Elmhurst Dairy, the company now sells a line of nut “milks” made from walnuts, cashews, almonds, and hazelnuts. Elmhurst Milked uses only whole, raw ingredients and vows to exclude guar gum, soy lecithin, and gellan gum — three types of thickeners and emulsifiers common in some plant-based “milks.” Their commitment to offering plant-based products without the fillers seems tailor-made for Millennials who want to know exactly what’s in their food.
Taking a stance on clean ingredients
If Chipotle was a person, it would be a Millennial. Opened in 1993, the fast-casual chain built their brand on clean, high-quality ingredients. Back in 2015, Chipotle committed to using only non-GMO ingredients in their food — something Millennials happily pay more for. As part of their Food With Integrity promise, the menu features only “vegetables grown in healthy soil” and pork from pigs that were able to “freely root and roam outdoors or in deeply bedded barns.”
Chipotle has certainly had a few hiccups, namely several high-profile E. coli outbreaks that some linked to where they source ingredients. But the data and the experts disagree, citing improper food safety practices instead. Despite the problems, Millennials keep coming back, which NPD Group’s restaurant industry analyst Bonnie Riggs attributes to “unabashed loyalty or lack of awareness” of the food safety issues.
Offering pre-made meal kits — online and off
Finally, Millennials are also behind the rapidly growing popularity of meal kits. According to Nielsen, one in four U.S. adults has purchased a meal kit and 70% keep buying them after the initial purchase. The generation gap is particularly striking among these consumers: Millennials and Gen Xers are 321% more likely to purchase meal kits than older generations.
Different types of companies are getting in on the meal kit action. Some, like Blue Apron (which recently filed for IPO) and Chef’d, deliver boxes directly to customers’ doors.
Grocery stores are also starting to offer meal kits. Take The Fresh Market, for example. The grocery chain has capitalized on the meal kit trend with Little Big Meal, a $20 kit that includes every ingredient for a fresh meal for up to four people. The Little Big Meal offerings change every week, giving consumers an opportunity to try a range of dishes.
The examples above are only a few ways food manufacturers can stay relevant with the growing Millennial generation. Learn more about how millennial preferences are transforming the food industry.