Millennials: a challenge for FMCG brands

Millennials, who now represent 26% of the population, are forcing brands to reinvent themselves. The term Millennials refers to those born between 1980 and 2000, that is both generation Y and the younger generation Z. These generations are digital native and mobile plays an important role in their life.

In a Financial Times feature on How Millennials’ taste for ‘authenticity’ is disrupting powerful food brands, Mark Schneider, Chief Executive of Nestlé, is quoted for sharing with investors: “They’re important because this is a group that’s fast approaching their peak earning years. And youth rarely goes out of fashion. So whatever the Millennials do, you can count on their preferences getting picked up by other generations and getting emulated. Catering to their needs is very important for any fast-moving consumer goods company.”

Paul Polman, Chief Executive of Unilever even told the FT: “My biggest fear for this company, of which I have very few, is that we lose the connection with Millennials. Very selfishly, because then obviously we don’t have future consumers any more.”

Consumers with a different set of values

Millennials bring a different set of values to their grocery shopping than older generations. Emmanuel Faber, Chief Executive of Danone, shared at the 2018 CAGNY industry conference: “Consumers are looking to ‘pierce the corporate veil’ in our industry and to look at what’s behind the brand. The guys responsible for this are the Millennials. Millennials have a completely new set of values. They want committed brands with authentic products. Natural, simpler, more local and if possible small, as small as you can.”

For Millennials, brands should be a purposeful force for good in the world and stand up for what they believe in. Tom Ollerton, Marketing and Innovation Director at creative agency We Are Social, told The Telegraph that Millennials are interested in social change, not just products: “They want to be part of a higher purpose. A good example of this is the Dove Real Beauty campaign. It was very powerful with Millennials because it stood for something more [female empowerment, rather] than just shampoo and moisturizer” he said.

According to the Millennials study from the marketing agency inkling, 70% of Millennials consider a brand’s ethics and values when making purchases.

A mobile-first generation

Millennials are mobile-first and in many cases mobile-only. The vast majority of Millennials communicate digitally more than they communicate in person. According to research commissioned by LivePerson, 74% of Millennials say they interact with each other digitally more than they do in the real world.

Rurik Bradbury, Global Head of Communications and Research at LivePerson told The Independent: “What we see in the research data is the phone truly becoming an extension of the self, and the platforms and apps within it — digital life — occupying more than their offline interactions.” Ofcom Digital Day estimates that Millennials spend 24 hours a week on their mobile, more than twice the amount of time spent by those aged 35 -54.

Millennials tend to rely on their mobile significantly for shopping and finance related activities.

The Millennial mindset

In a global study on The Millennial Mindset, Nielsen defines Millennials as the “We, More and Now Generation”, with eight shared characteristics:

• They aspire to a healthy lifestyle and better products
• They want control and personalisation
• They are multi-taskers, engaging in multiple activities at a time, often involving mobile
• They value authenticity and want to see the real story behind the scenes
• They are on-the-go and connected everywhere at all times
• They are vocal and social sharing their experiences online
• They are looking for added benefits and perks
• They like convenience and ease-of-use

How Millennials shop

According to research from Nielsen BrandBank and Deloitte:

• 84% of millennials claim to use their phones for shopping assistance while in a store
• 74% of Millennials go online to buy their grocery or health & beauty items, or to research these products before making a purchase in store
• 36% of Millennials use an app all/some of the time to grocery shop
• 1 in 5 Millennials use others’ opinions when choosing a product

Millennials are attracted to products that are:

• Local: Provenance matters for Millennials. According to research by Haygarth, 40% say that local produce or ingredients are important to them. As such, greengrocers are increasingly popular with this generation. This trend is also driven by the backlash against plastic, as pointed out by The Telegraph. Online grocer Farmdrop, which sources fresh food in minimal packaging from local farmers, has experienced a 10% month-on-month revenue growth since 2016.

Olly Abotorabi, Senior Regional Insights Manager at IRI, says: “Consumers are increasingly aware of the fact that food grown closer to home means fewer carbon emissions, will be fresher and supports the local economy, and as a result we’re seeing local and national brands starting to win consumers’ hearts and minds. We have a vibrant and innovative ‘local scene’ where challenger brands are emerging as winners, driven by huge amounts of creativity and a desire for authenticity and provenance.”

• Vegan: Vegan products are extremely popular with Millennials. According to research by Oatly, the top five items in their shopping basket are falafel, avocado, kale, vegan milk and hummus. It is estimated that a third of vegan consumers are Millennials. Marketing Week says it is the “the country’s fastest growing culinary trend of 2018 with a market worth of £310m.” 

Vanessa Henry, Shopper Insight Manager at IGD explains: “We are seeing an increasing number of people adopting a more flexible approach to their diets, whether it’s just for one meal or one day a week, shoppers are increasingly choosing a vegan, vegetarian, or flexitarian diet. This is for a variety of reasons; the aspiration to be healthier, to adopt more ethical credentials and also to limit the impact on the environment.” 

• Organic and natural: According to research commissioned by the Organic Trade Board (OTB), 78% of Millennials say that organic is important, compared to 49% of their parents. The Soil Association Organic Market 2019 report points out that the market for certified organic and natural beauty is at an all-time high. The organisation predicts that this is set to continue as more Millennials and Generation Z come into the market, more retailers stock certified brands and sustainable beauty becomes increasingly relevant.

Engaging with Millennials

To appeal to Millennials, authenticity is key. According to the Millennials study from inkling, Millennials consider that what makes a brand authentic is:

• Standing for high quality (for 55%)
• Talking like a real person (for 44%)
• Providing enjoyable and relatable advertising and content (for 35%)
• Involving them in creating products and asking for feedback (for 34%)
• Its heritage and history (for 29%)

The brand activities that are the most important when it comes to increasing their loyalty are:

• Customer service and support (for 26%)
• Price promotions (for 21%)
• Free giveaways (for 12%)
• Social and environmental responsibility (for 9%)
• Recommendations (for 8%)
• Helps me achieve my goals (for 7%)
• Helps me to make my daily life easier – apps & tips (for 6%)

As a conclusion, Millennial shoppers have different expectations. They favour brands that are committed to having a positive social and environmental impact. They are attracted by products that are local, vegan and/or organic. Highly connected, they use their mobile to search for information and share their experiences. In order to appeal to Millennials and generate sales, consumer brands must offer products aligned with their values and engage in authentic and transparent communications.