Over the course of the next 10 years, “millennial” consumers (those currently aged 21-34) will make up 40 percent of American 21 and older. So how does this demographic approach their alcohol beverage purchases? Nielsen analyzed millennial consumer attitudes and preferences to understand the generation’s significant impact on the beverage alcohol industry.

Millennials are redefining the beverage alcohol landscape and will continue to do so in the years ahead. Without a doubt, millennials are a large and influential generation and alcohol beverage companies need to know their taste and buying preferences in order to take advantage of the trends that can greatly impact business.

Highlights of our findings:

• Compared to the general population, millennials are more likely to trade back up to more expensive alcohol beverage brands as the economy improves.
• Millennial consumers are more likely to equate product cost with quality.
• Millennials are more likely to explore new and different alcohol beverage products and will be even more likely to buy a locally-made or produced product knowing it may help the local economy.
• An added boost for marketers employing social or traditional media to influence behavior, millennials are slightly more likely to plan their purchases versus purchase on impulse in today’s down economy.
• Millennials’ tendency to experiment and try new things will keep them versatile, skipping between a variety of alcoholic beverages. While the majority of millennials still prefer beer, they purchase relatively more wine and spirits than older generations did at a comparable age. Nielsen’s research shows that as consumers age, their lifestyle transitions typically result in a relative shift from beer to wine and spirits. Given that current millennial preferences between beer, wine and spirits diverge from prior generations, future consumption preferences also become less predictable.
• By 2036, the majority of consumers age 21 and over will be multicultural. Hispanics, in particular, are swelling the ranks of these newer legal drinking age consumers and their tastes are influenced both by cultural factors, such as their degree of acculturation, as well as attitudes that include a willingness to try new things and openness to be influenced by other consumers’ suggestions.

Understanding how Millennials’ product preferences may change as they age, while at the same time recognizing the alcohol beverage buying habits of younger, ethnic consumers will be essential for alcohol beverage companies to future-proof their portfolios. Leveraging social media will be a critical marketing strategy for alcohol beverage companies to communicate with Millennial consumers and make their brands relevant with this generation.

About Nielsen’s Millennial Study
Nielsen’s analysis is based on a combination of qualitative and quantitative research examining dynamics such as consumer attitudes, behavior, lifestyle, media and retail preferences to gain insight into today’s alcohol beverage consumer. The research, conducted in Q2 2010, includes online survey responses from 7,500 millennial generation consumers of legal drinking age (21 – 34), geographically and demographically representative of the total U.S. population.

“It was resoundingly clear from the presentations that we have a new consumer on our hands, one that has emerged from the financial crisis with what could be a permanent shift in their values, spending habits and lifestyle choices and affecting the way they consumer and purchase alcohol.  They are more frugal and demanding value.  Investing in new product development should be an essential part of any suppliers’ strategy in counteracting consumers’ heavy reliance on price discounts as a key purchase driver,” said Michael Walton, Executive Director, Nielsen Liquor Group in the Pacific.

Nielsen’s regional experts also provided a snapshot of trends in their respective markets.  The four key topics that were common across regions were:

• Low carb and low sugar: new products and brand extensions in this category are performing relatively well.
• Marketing to the over 50s demographic: This group makes up between 40-50 percent of alcohol consumers in the UK, US, Australia and New Zealand, yet are often overlooked when it comes to marketing in favor of a millennial focus.
• Online consumers: New ways and approaches to marketing to the technologically savvy consumer.
• New product development: A critical pathway to improve returns and drive real category growth.

Gavin Humphreys noted that just 57 percent of British beer drinkers popped over to the pub in 2009, compared to 70.5 percent in 1998.  In fact, the off-trade sector looks set to overtake share of beer consumption over the next two years.  While beer remains the favorite, wine is rapidly gaining share, driven by its link with in-home entertaining and also the availability of cheaper South African, Italian and Chilean varietals.

In the U.S., Danny Brager noted that more than 50 percent of Americans choose to entertain and eat at home more often.  Consumers are often trading down in an effort to find the best value, favoring domestic offerings and sticking with brands they know and trust.

Paul Kirby said that almost half of Australian drinkers claimed to be going out less often compared to last year, but are actually trading up when they do go out, sparking growth in premium and super premium alcohol segments (imported beer, international wine and bottled wine priced over $20).  Almost half of all packaged liquor was sold on promotion and 77 percent of alcohol consumers selecting their choice of outlet because it offered great promotions.

Just to the southeast, 60 percent of New Zealanders claimed to be going out less often compared to last year, according to David Hanson.  Annual sales for the off-premise market grew by 10 percent in value terms and 7 percent in volume.  More than three-quarters (77%) of all beer sales were sold on promotion.

With a growth rate of 32 percent in the last 13 weeks of 2008, premium wine casks outpaced all other wine categories, and there remains room for significant growth going forward.

On a full year basis, premium wine casks grew 31 percent, compared to 4.4 growth for table wine, the dominant wine sector. Total table wine sales for the year were $9.6 billion, while premium wine cask sales racked up $110 million.

Among the factors leading to this explosive growth is the value offered by premium wine casks: one cask holds the equivalent of four bottles, and on an equivalized basis, are approximately 40 percent less expensive than the average table wine.

“In today’s economy, consumers are seeking value with necessarily compromising quality, and this has contributed to premium wine cask success,” said Danny Brager, vice president, Beverage Alcohol at Nielsen.

Read the full press release here.

A troubled economy doesn’t necessarily mean declining wine sales, Danny Brager, vice president, beverage alcohol, Nielsen, writes in a recent Progressive Grocer column. 

Brager cites Nielsen research showing that, while almost 50% of consumers have reduced their overall spending, wine sales remain healthy.

Growth of premium wines has declined slightly, but the category remains strong overall — perhaps because consumers tend to view wine as an affordable luxury, Brager notes. 

If the current trend continues, he concludes, wine may emerge as a ”recession-resistant” category.