After a decade or more of focusing largely on the needs, preferences, and behaviors of Millennials, the food industry is ready to focus its attention on Gen Z.
Gen Z, those consumers born on or after 1995, are still very young and haven’t yet been able to exercise their spending power. But, their preferences and needs, desires and demands, are of great interest to an industry still recovering from some of the changes brought about by the Millennials.
Remember Millennials were a strong reflection of the values of their parents, the Boomer generation. Boomers were the first to place environmental concerns at the forefront. That generation was the first to be broadly concerned with animal welfare, fair trade and worker pay, diversity and civil rights, and ethics in business. Millennials took those issues and focused them largely on the food industry, with food becoming a key element of the defining characteristics of Millennials.
By contrast, Gen Z is the product primarily of Gen X. Gen X, the generation that grew up with Wall Street, the Age of Excess, and rampant consumerism, did not focus much of their time, spending, or leisure activity on food. The question then becomes which generation—Gen X or Millennials—will have the greatest impact on Gen Z. The short answer is both, making this generation a product of somewhat contradictory behaviors that meld together into something new.
Some of what we know about Gen Z is very unique to this generation. It is, without question, the most diverse generation in the history of the U.S. and that will impact their perception of what is uniquely “American” from a food point of view. According to a study by Packaged Facts, Gen Z will have a combined spending power that exceeds $500 billion, which is greater than the GDP of several countries including Belgium, Sweden and Poland. That represents an incredible market for food to tap into. Finally, this generation was born into a tech-dominated world and have no memory of a time before the internet.
Of course, in some ways Gen Z will participate in and drive some changes brought by Millennials. According to a new report from The NPD Group, Gen Z will continue to place an emphasis on “real” unadulterated foods. Authenticity, freshness, and purity will play a significant role in their expectations for food products.
In important ways, however, Gen Z will be different from Millennials. Perhaps most significantly for retail food is that Gen Z will no longer shy away from major brands. While Millennials skewed toward niche or boutique brands in place of large, national brands, Gen Z is showing far less of a sensitivity to brand size. Rather, it appears they place a greater emphasis on the importance of brand values, ethics, and story, and how that fits with their own. Whether that brand is large or small seems to make little difference to this generation. Evidence suggests, however, that while they will not be anti-brand they are also brand agnostic with brand loyalty playing little role in their decision process.
Originally appeared in the November, 2018 issue of Prepared Foods as Understanding Gen Z.