In 2005, a great business book called “Blue Ocean Strategy” challenged marketers to stop thinking incrementally and looking for ‘white spaces’ in which to compete. The book, now published in 41 languages urged mraketers to identify latent market needs. The authors maintained that too many marketers were playing a losing game by competing in crowded, fiercely competitive ‘red oceans’ when they should be looking for wide open blue waters.
Gen Y may present a remarkable blue ocean for many industries. Not only are they big, they purport to want something different and new. And many are literally begging marketers to ‘think differently’ about them.
Just today, Advertising Age carried an article by, Megan Meagher, a 25-year-old account planner at Taxi, New York titled “Millennials Are Evolving; Are You Keeping Up?” Megan doesn’t understand why marketers aren’t doing more to win over her age group, especially now when the recession has her retinking her spending priorities and brand preferences:
“I’m a changed person, thanks to this recession. I eat more meals at home and actually pay attention to the price of groceries. Living on my own for the first time, I find myself buying and using more household products, from dishwasher soap to stain remover. As a result, I’m newly receptive to advertising in those product categories. But what surprises me is how few marketers — outside of clothes, shoe, food-and-beverage and entertainment marketers — actually pursue my age group. I wonder why that is, when much of what I’ve learned about brand building in my work in strategic planning suggests that marketers that reach out to Gen Y may find that the payoff lasts decades.
In a few years my generation will be the moms and dads of the world, the major household buyers. Within the next decade, we’ll be generating $2.77 trillion dollars per year. It’s essential for brands to grab us now and reach out in ways we find meaningful. ”
The number of marketers with explicit Gen Y appeals is fairly modest, and most tend to be from entertainment, technology or traditional youth marketing categories. For marketers in food, wine, financial services, travel, appliances, household products and for retailers, this article and others like it should be a wake up call to start sailing in the blue ocean — before it turns red.
I’ve never understood why more attention isn’t paid to demographics! Thanks to the remarkable efforts of the Census Bureau, we KNOW what the population will look like in 5-, 10- and 15-years (which is, by the way, the reason there is little excuse for overcrowded schools).
Yesterday, I shared SeekingAlpha’s conclusion that demographics trends may be unkind to Wal-Mart. Today, I am going to share SeekingAlpha’s conclusions about the impact of these same shifts on beer. According to SeekingAlpha.com, Gen Y will “ undoubtedly break the beer drinking records set by Boomers in the late 1970s and early 1980s.” Here is an editted version of their analysis:
“As 78 million Baby Boomers started to exit the prime 21-34 beer drinking age bracket in the early 1980s, they were replaced by a much smaller potential-beer-drinker cohort, Generation X. This led to years of flat to declining volume in the beer industry. Now, as Generation X ages out of the prime beer drinking age, it is being replaced by the much larger Generation Y. This new generation of potential beer drinkers is currently mostly age 24 and under … and it is the largest generation in U.S. history. In 2008 alone, more than 3.8 million members of Gen Y turned the legal drinking age of 21, 100,000 more than turned 21 in 2007. Their entrance into the prime beer drinking age bracket may already be making a difference. Industry data indicates that beer consumption has been on the increase since at least 2006.”
Which types and brands of beer will benefit most from the shifts? According to their analysis, first and foremost it will be the big U.S. breweries (and their foreign owners), due to their sheer volume – 80% of sales. But the biggest gains will be seen by microbreweries, which are currently just 6% of sales, but already outpacing the rest of the industry. In 2007 the growth rate of microbreweries was estimated at 12 percent, (vs. 1.4 percent for the large domestic brands and imports). In 2008, microbreweries increased volume by another 5.8 percent, and increased sales more than 10 percent.
This analysis brought to mind an email I received from Marty Predd, a twenty-something Research Associate at Brand Amplitude who recently moved to Portland, OR from Indianapolis. He shared this a few months ago when we were working on a project for an imported beer client:
“As you may know, Portland is a mecca for craft beer…we have the most microbreweries of any city in the country, and I can think of about a dozen that are within walking distance of my loft. My girlfriend and I partake regularly and I’m sure we’ve become beer snobs to some degree. Bars we used to love in the Midwest seem less appealing now when we visit because of their limited selection of mostly huge national beers like Bud or Miller, or mega imported brands like Guinness, Smithwicks, Heineken, etc. With the exception of PBR, which has a nostalgic status in dive bars here, I can’t think of the last time we enjoyed a mega beer brand that’s not based here in Portland (i.e., Widmer).”
For data geeks like me who want to learn more, Ken Gronbach of SeekingAlpha has written a book,”The Age Curve: How to Profit from the Coming Demographic Storm“. I’ve ordered my copy already.
