Millennial 'Buyer's Guide' (Part 3): Processed Exodus

A concerted move away from packaged, processed snacks and meals

Angel Abcede, Senior Editor/Tobacco, CSP

convenience store center of store

CHICAGO -- High-income consumers under the age of 35 may be avoiding the center of the store, cutting back on major processed-food categories, according to a recently released shopper insight study.

The RBC Capital Markets study, called Consumer Staples: Understanding the Millennial as They Enter Their Buying Years, documented the buying habits of people aged 18 to 35, using data from Nielsen, and focused on the higher-income demographic bracket because of its emerging and influential qualities.

“It is among these high-income millennials that the biggest buying-pattern changes have occurred,” wrote RBC analyst Nik Modi. “These consumers are highly influential and arguably the most attractive consumer base.”

Facing flagging household penetration and dollar spending since about 2009, convenient, branded, processed meal categories like soup, cereal and frozen entrees have experienced a steady decline, with the 18-to-34-year-old age group leading the reduction, according to RBC, Chicago.

Here are some results:

  • Frozen foods. From 2004 to 2009, sales for both young and old adults rose in terms of dollar spend by 20%. Since then, consumption among those 18 to 35 was down 19%, while the above-35 demographic demonstrated a mere 2% drop.
  • Snack cutback. High-income millennials cut back on their consumption of cookies, chocolate candy, salty snacks and crackers.
  • The one-to-one trade off from carbonated soft drinks (CSDs) to energy drinks, where the higher-income millennial dropped spending on CSDs per household by $13 after 2009, where energy drinks is $11 higher.

In terms of the snacks, Modi believes the move from the center aisles to the outer sides of the store means young consumers “are increasingly growing wary of certain ingredients and types of foods that they consume, particularly with respect to food manufactured by big brands.”

A significant decrease can be seen among households led by millennials, the report states. The decline of over 3 percentage points between 2009 and 2014 “marks one of the steepest … among all of the categories we looked at.”

Chocolate candy fared better, with softer declines than other categories. Among higher-income millennials, chocolate-candy penetration declined only slightly while for those above 35, it rose slightly.

Changes in Annual High-Income Household Spend Rates (2014 vs. 2009) By Age

Category Younger than 35 35+ Total
Ground coffee 73% 69% 72%
Nuts 24% 28% 29%
Snack bars 6% 26% 19%
Salty snacks 0% 12% 12%
Chocolate candy -1% 20% 19%
Cookies -7% 2% 3%
Cheese -7% 4% 2%
Crackers -7% -1% 0%
Sliced lunchmeat -9% 2% 1%
Dry dinners -9% -6% -6%
Refrigerated dough -11% -9% -8%
Fzn. vegetables -12% -2% -3%
Cereal -18% -13% -13%
Canned soup -22% -11% -11%
Juices & drinks -23% -14% -14%
Frozen entrées -24% -9% -9%

Source: Nielsen

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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