Restaurant operators and adult beverage marketers alike are working hard to engage Millennials consumers, and with good reason. The generation born between 1977 and 1994 is the largest since the Baby Boomers, and nearly 90% are of now legal drinking age. They’re fans of adult beverage, and are driving many of the trends in spirits, wine and beer. They’re notable for their ethnic diversity, high level of educational attainment and comfort with technology.
They’re also notable for the fact that they were most affected by the recent recession: Millennials have the highest level of unemployment/underemployment and are the lowest-earning consumer group. Some of that is due to a portion of the demographic is still completing their educations, but economists indicate that this low income level sets the generation up to earn less over their lifetime than previous generations (on an adjusted basis). What’s more, the impact of the recession was not the same across the entire demographic, and Younger and Older Millennials behave somewhat differently.
Younger Millennials (age 21-27) faced difficulty finding jobs upon entering the workforce and were often among those first laid-off during downsizing. Older Millennials (age 28-35) also faced lay-offs, unemployment and underemployment. But since many of them are in the household formation stage, these events increased the pressures of meeting mortgage and other necessary expenditure payments, causing them to look carefully at discretionary spending.
What does this mean for their adult beverage purchases? Our recent study on Millennials revealed that more Younger Millennials (43%) than Older Millennials (37%) agree that price is more important than quality when purchasing beer, wine and cocktails on-premise. Older Millennials are more price-conscious when purchasing adult beverages for at-home consumption. This tells us that Younger Millennials tend to be price sensitive when on-premise, while older Millennials value quality and experience when purchasing beer, wine and cocktails in a bar or restaurant.
This difference in how they approach the bar may seem subtle, but it will likely color their respective spending habits for years to come. And given the size of the demographic, it’s important for restaurant and bar operators to tailor drink selection, pricing and promotion to tap into the sensitivities of the Millennial segments that matter most to their brand.