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12 Industries That Will Thrive Thanks To Millennials CONT (PART 2.)

7. Seltzer

DITCHING SODA, MILLENNIALS SEEK A HEALTHIER FIZZ IN THEIR DRINKS

While many millennials have little appetite for sugary sodas, that doesn’t mean they aren’t looking for other convenient carbonated beverage options — and they’re finding them in seltzers and flavored sparkling waters.

Sales of sugary carbonated drinks have fallen steadily for several years, and although sales rebounded for some brands in 2018, many of the largest soda manufacturers have gone back to the drawing board as consumers turn toward healthier alternatives.

The beverage industry has been quick to respond to these trends. In recent years, the dramatic increase in seltzer’s popularity has sparked an arms race among major beverage manufacturers as they seek to shore up their losses on soda with sales of low-calorie carbonated drinks.

Several major drink manufacturers have diversified their product offerings to include flavored seltzers. Coca-Cola acquired Mexican seltzer brand Topo Chico, which has long been popular across the American Southwest, for $220M in 2017. Coca-Cola also offers sparkling-water beverages through its Dasani and Smartwater brands. PepsiCo owns Izze, a range of juice-seltzer blends, as well as Bubly and SodaStream.

In addition to major brands, dozens of smaller independent beverage companies have emerged to quench millennials’ thirst for flavored seltzers. Spindrift, which claims to be the first sparkling water in the US to be flavored exclusively using real fruit juice, has grown rapidly since its founding in 2010. The company achieved revenue growth of more than 1,000% over a 36-month period from 2016 to 2018.

Venture capitalists invested more than $152M in seltzer and sparkling water companies in 2018 alone — more than the sum invested in 2016 and 2017 combined.

New upstarts are taking advantage of this momentum, looking to capture the attention of millennials by adding new ingredients into the mix — most notably CBD (which was declared federally legal this year) and alcohol.

Recess, a CBD-infused seltzer brand, opened an online store to sell its hemp-infused CBD seltzer in early 2019. The product is marketed as a wellness aid, and also contains supplements like L-theanine, an amino acid found in tea leaves.

White Claw Hard Seltzer, meanwhile, produces a range of flavored 100-calorie alcoholic seltzers. During summer 2019, White Claw sales surpassed that of any craft beer except for Blue Moon. A Nielsen survey showed hard seltzer’s sales growth at 193% over 2018. Of all hard seltzers, White Claw represented more than half of total sales.

In light of falling revenues and the soda industry’s ongoing image crisis, big soda companies have had little choice but to respond to the rise of seltzer by diversifying their product range to include healthier options that align with younger consumers’ tastes. Many leading beverage companies, including Coca-Cola and PepsiCo, have adopted an acquisitive approach to product diversification with mostly positive results.

With its sparkling water business up 19% in 2018 alone, Coca-Cola is in an enviable position to leverage changing tastes in the beverage market — but even Coke cannot take its historical dominance for granted.

For established brands, the biggest challenge may not be catering to changing tastes, but reinventing themselves to capitalize on their strong brand recognition while moving away from product lines that have traditionally been perceived as unhealthy, including their core soda beverages.


8. Houseplants

WELLNESS-FOCUSED URBAN MILLENNIALS BRIGHTEN THEIR SURROUNDINGS WITH PLANTS

In 2019, Bloomberg declared that plants had become the new children for Generation Y. The Washington Post went further still, saying that millennials were filling their homes — as well as the “void in their hearts” left by not having children or pets — with houseplants.

There are a couple of problems with this narrative. For one thing, millennial women accounted for 82% of all births in the United States in 2016. Meanwhile, 35% of all pet owners in the country are millennials, making them the largest pet-owning generation — so many millennials do have children, pets, or both. Moreover, there’s not much evidence that people see houseplants as substitutes for children or pets.

That said, plant sales are on the rise, increasing in the US by nearly 50% in the past 3 years to reach $1.7B, according to the National Gardening Association. The average household spend on indoor plants has also increased, growing from about $30 in 2016 to nearly $50 in 2018.

Forces behind this demand may include millennials’ interest in holistic wellness and proclivity for urban living, where the temporary nature of rentals often doesn’t allow more permanent changes to one’s housing. On the supply side, a range of new digitally native D2C plant brands have sprung up to offer an easier and more accessible houseplant buying experience.

Houseplants have become an integral part of many Gen Yer’s wellness and self-care routines. On social media, terms like “jungalow” — a portmanteau of “jungle” and “bungalow” — and “urban wilding” have become incredibly popular hashtags for stressed-out millennials hoping to create urban oases in their apartments.

D2C plant brand The Sill’s tagline, “Plants Make People Happy,” directly contextualizes houseplants as a form of self-care and wellness.

“They call us Generation Stress for a reason. We position plants and our brand as the break in all this. It’s the antidote to this unfortunate thing that our entire generation suffers from: anxiety. And plants really can be part of the cure.” — Eliza Blank, The Sill

Advocates regularly cite scientific studies showing houseplants can increase productivity, reduce stress, boost physical health, and improve air quality. While recent research shows that houseplants have a generally negligible effect on indoor air quality, the mood-changing effects of surrounding yourself with plants are real and clear.

Also important in the resurgent growth of the houseplant industry is the “youthification” of America’s urban areas. Millennials today have a preference for city living that eclipses that of baby boomers and Generation X at the same age, and tend to rent more than other generations: 74% of millennials live in rental properties, compared to 61% of early boomers in 1981 and 62% of Gen Xers in 2000.

While renting is more affordable, and makes city living more possible, it also makes it harder to personalize and customize a living space. Plants offer a low-cost, low-impact way to do this.

And as millennials seek out greenery to enhance their living spaces, retailers aren’t waiting passively for customers to come to them; instead, they’re adapting their offerings to reflect changing shopping habits among millennial consumers.

Direct-to-consumer houseplant companies like The Sill, Greenery NYC, and Bloomscape offer highly cultivated aesthetics designed to be found and shown off on social media. They also offer meticulous plant care instructions and prioritize online sales.

Several houseplant subscription services have emerged in recent years, including Click and Grow, Horti, and The Sill’s Plant Parent Club. Larger e-commerce platforms like Amazon and Etsy have also launched specialized marketplaces for houseplants. These services not only make cultivating and caring for houseplants easier for busy urban consumers, but also strongly align with broader e-commerce trends that are popular with millennials.

While these trends may threaten traditional garden retailers, some independent nurseries have adapted and found success with millennial shoppers. California’s Folia Collective, Sanso, and Peacock & Co. have attracted millennial shoppers by embracing the clean, angular aesthetics of companies like The Sill and focusing their sales on houseplants — appropriate for a generation that’s more likely to have space for indoor than outdoor plants.

By offering easily available, aesthetically clean, and lower-cost houseplants, plant retailers of all stripes can better appeal to wellness-minded and urban-dwelling millennials.


9. Skincare

DRIVEN BY CONSCIOUS CONSUMERISM AND ONLINE-FIRST STRATEGIES, SMALLER COMPANIES GAIN GROUND ON LEGACY COMPETITION

Over the last several years, the cosmetics industry has seen strong growth, driven largely by millennial’s new discovery and purchasing behaviors and the rise of niche new brands catering to their preferences.

As of 2017, millennial shoppers were buying 25% more cosmetics than 2 years prior, and significantly more than baby boomers, with self-described “makeup enthusiasts” using 6 or more products each day, according to NPD.

The global cosmetics market was worth about $530B in 2017 and is expected to surpass $800B as soon as 2023. However, between 2010 and 2015, the 10 biggest cosmetics brands in the market lost 6% market share, according to a Deloitte study, while smaller brands grew their share by 5%.

At the root of this shift is the millennial generation’s changing preferences around how they find and choose skincare brands.

Millennials are 3x more likely than previous generations to research new brands and products using social media, and 37% more likely to trust a brand after coming across a sponsored post about it. Beauty videos in particular are on the rise: global views of beauty videos on YouTube increased by 60% to a total of 219B between 2016 and 2017.

This tendency to use social media to find products has spurred the growth of new online-first and D2C beauty brands like Glossier, which used Instagram as its primary marketing channel to surpass $100M in sales in 2018.

Meanwhile, brick-and-mortar companies like Ulta Beauty are embracing niche merchandising as a strategy to lure consumers. Ulta has worked with the Kardashians, became the exclusive retail partner of popular skincare brand Peach & Lily in early 2019, and recently announced that 1,200 Ulta Beauty stores will carry D2C company Madison Reed’s products. Ulta saw an average of 20% revenue growth each quarter for the last 3 years.

While millennials are generally price conscientious, 73% are willing to pay more for products that are sustainable (compared to 66% of average consumers), with a lack of testing on animals as their highest priority.

They also want to buy natural, high-quality products. Roughly half of millennials reported purchasing skincare products free from synthetic chemicals during the past year, while launches of vegan beauty products increased by 175% between 2013 and 2018, according to Mintel’s Global New Products Database (GNPD).

As the skincare market becomes more crowded than ever, it’s important for brands to build strong connections with their customers. Glossier, for example, is working on its own “social commerce” project designed to connect customers with the company and with each other. Building its own platform could help insure Glossier against the possibility of Instagram’s influence turning against it, while giving the brand a more direct relationship with customers.

Ultimately, while millennials are more conscientious consumers of skincare products than generations before them, that hasn’t slowed down their spending. Armed with the ability to easily research new skincare companies, and faced with a wider range of niche brands than ever, millennials are buying far more skincare products than any other generation.

It’s up to the skincare brands to now capture that attention, deliver products that match millennials’ preferences (such as sustainable practices and natural ingredients), and nurture that connection over the long term.


Transportation

10. Automotive

MILLENNIALS STILL WANT TO DRIVE — THEY JUST WANT CHEAPER, MORE EFFICIENT VEHICLES

Despite their concern for the environment and reputation as bicycle riders and public transportation commuters, a large portion of Generation Y is just as keen to get behind the wheel as their parents were. In terms of vehicle-miles traveled, millennials actually drive more (controlling for factors like marriage and urban living).

In Q1’18, millennials were responsible for all new-vehicle sales growth in the US — quite an accomplishment for what many in the industry described as the automotive sector’s “lost generation.”

“Millennials had all but been written off as a serious customer group in the auto industry. But data tells a much different story. The demographic is maturing and is now poised to be a driving force in automotive marketing.” — Marty Miller, Experian Automotive

However, millennials do differ in their preferences. While older cohorts may favor luxury vehicles, such as high-end sedans and SUVs, most millennial motorists prefer smaller, more efficient, and more affordable sedans. In a 2019 survey, 86% of younger millennials and Gen Z members said they would consider buying a sedan themselves when they buy a car.

Millennials also have a demonstrated preference for foreign-made vehicles. Of the 10 most popular vehicle brands among millennial consumers, only 3 are American. Japanese automakers Honda, Nissan, and Toyota — the 3 top-selling vehicle brands among millennial consumers — are routinely rated as among the most reliable vehicle brands in the world. In addition, their popularity as midrange brands means comparatively lower prices for newer vehicles.

Despite millennials’ auto preferences, many automakers are eliminating sedans from their lineup: Ford recently announced that it would discontinue 100% of the sedans in its lineup by the year 2020. General Motors and Fiat Chrysler are following suit.

To retain their competitiveness in the domestic market, American automakers will likely need to reverse the ongoing elimination of sedans from their lineups. While overall data shows that consumers are buying more trucks and crossover SUVs than sedans, that data doesn’t account for generations. While sales of compact SUVs and larger cars are up among Generation X and baby boomers, only 2 non-sedan cars were among the 10 most popular vehicles driven by millennials in 2018.

Volkswagen, Hyundai, Subaru, and Toyota are a few of the international car brands that released new sedans in 2019, catering largely to millennials looking for smaller, and in many cases, first vehicles.

Experts and analysts expect that sedans will continue to make up as much as 30% of the domestic vehicle market in years to come. So far, it appears that it’s primarily foreign automakers who are intent on capitalizing on this trend — and on the larger trend of millennials getting behind the wheel in larger numbers.


11. Micromobility

FOR URBAN MILLENNIALS, MICROMOBILITY WILL BE THE KEY TRANSIT CHOICE OF THE FUTURE

Gen Y has been pivotal in the trend of resurgence in America’s urban areas. Not only do they have a significant preference for city living, they are also 21% more likely to buy their homes near city centers than Gen Xers. For the cohorts aged 25-34 and 35-44, the critical factor in that decision is access to transit, according to a Journal of Regional Science study.

Given that millennials make up America’s largest-ever generation, that is positive news for the sector of the transportation industry most primed to capture the future urban market: micromobility.

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Micromobility services — including ride-hailing platforms like Uber and Lyft, bike-share programs like New York City’s Citi Bike, and electric-scooter rental services like Bird and Lime — have grown rapidly in recent years. Today, there are more than 85,000 e-scooters available for rent in 100 cities across the US, with more than 38.5M trips made in 2018 alone. As a whole, the micromobility sector is expected to be worth up to $300B by 2030.

American cities in particular are ideal environments for micromobility startups. Roughly 60% of all trips made in the US are 5 miles or less, and e-scooters and e-bikes are much more efficient than driving for such short distances.

Uber has already noticed its shared e-bike platform Jump cannibalizing its ride-share business during peak hours:

Top users of services like Jump and Uber are also significantly less likely than other respondents to buy a new car, according to the Shared-Use Mobility Center:

Top automakers in America and around the world have begun working on their own micromobility projects to capture the demand for a more affordable, efficient form of transport, especially inside America’s urban cores.

GM has unveiled its own e-bike project, ARĪVwhich is launching first in Germany, the Netherlands, and Belgium before shipping to customers in the United States.

In late 2018, Ford bought e-scooter company Spin for a reported $100M, and the company has been operating a docked bike-share program in San Francisco and the Bay Area since 2013.

Other legacy transportation companies trying to adapt to a micromobile world include BMW, which is building its own line of electric bikes and motorcycles; Harley-Davidson, which is building an electric motorbike; and Audi, which is building electric mountain bikes.

One of the keys to success with micromobility will be the ability to work with municipalities to bring scooters and bikes to the road in a sustainable manner. Although some municipalities have welcomed micromobility startups with open arms, some have been resistant to allowing them to operate within city limits.

The city of Santa Monica, California filed a criminal complaint against Bird after the company deployed its fleet of e-scooters in 2017, and city attorneys in San Francisco issued cease-and-desist letters to Bird and Lime in 2018, claiming the scooters were a public nuisance.

Several other cities across the US, including Nashville, San Antonio, and Seattle, have introduced legislation in recent years either restricting or outright banning micromobility startups from operating in those cities following complaints, accidents, and fatalities.

For micromobility companies looking to capitalize on millennial consumers, a key challenge will simply be figuring out how to operate in the urban geographic locations that the generation prefers.


Finance

12. Personal Finance

MILLENNIALS ARE INCREASINGLY TAKING CONTROL OF THEIR MONEY WITH APPS, NOT BANKS

Despite being saddled with the highest student loan debt of any generation and the fastest-rising cost of living in a decade, millennials are often characterized as being inept when it comes to their finances.

The reality, however, is that nearly half of millennial Americans are actively saving for emergencies, retirement, and even future homes. Despite lower earnings than Gen Xers or baby boomers had at their age, millennials are more likely to have savings goals, manage their debt better, and do a better job of sticking to their budgets.

Generation Y’s secret weapon when it comes to navigating budgeting, saving, investing and spending — even with depressed wages and a less-than-desirable job market — is technology.

Millennials are the vast majority of users of web and mobile personal finance apps, which are year by year becoming increasingly popular tools to help millennials better understand, organize, and improve their finances.

With more than half of American smartphone users using at least one full-service banking app and almost one-fifth using a standalone budgeting app, consumers across demographics are embracing fintech products — but Gen Y users rely on mobile banking and standalone budgeting apps more than their older counterparts. Personal budgeting apps are especially popular with millennials, with approximately 70% of the user base of these apps belonging to the millennial cohort.

One of the most popular verticals for personal finance tech is banking. In one survey, 71% of millennials said that they would rather go to the dentist than listen to what a bank has to tell them — a sentiment driven largely by poor customer service and poor technological integration.

That distaste has created a huge opportunity for digital-first challenger banks, 7 of which have already surpassed 1M accounts: Revolut, Chime, Nubank, Qapital, Monzo, N26 and Uala. CG42’s 2018 retail banking study predicted that the 10 largest banks would lose more than $340B in deposits to this upstart brand of competition over the next year alone.

Millennial adoption has also fueled the growth of robo-investment advisors like Betterment ($16.4B in assets under management), Wealthfront ($11B AUM), and Personal Capital ($8.5B AUM). Robinhood, a trading platform, was valued at $7B as of 2019. In 2015, it revealed that it had a user base of 80% millennials, with an average age of 26.

As the rapidly rising cost of living continues to squeeze already struggling millennials, it’s inevitable that demand for personal finance apps to help cash-strapped consumers make informed decisions will remain high.

To stay relevant, legacy financial institutions will need to offer mobile apps that are both technologically sophisticated and simple to use. These apps may utilize technologies like Face ID for quick login, offer integrations with the other financial products like Robinhood that millennials are using, and be built as consumer products first — not portals into a web interface from the 1990s.

Original source here

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