Six Disruptive Demographic Trends - Impact on Beverage Alcohol Market

Those of you who attended the NBWA 76^th Convention and Trade Show’s General Session, Monday September 30^th were treated to a fascinating, prescriptive and perhaps even disturbing speech by James H. Johnson Jr., Ph.D., a Professor of Entrepreneurship and Strategy at the University of North Carolina at Chapel Hill. His entertaining speech was derived from his 2011 publication: “Six Disruptive Demographic Trends: What Census 2010 Will Reveal”.

Like most subject matter experts, Johnson’s Demographic Trends were originally intended for the broadest possible audience, not a group of some 4,000 beer distributors, per se. However, Johnson clearly had taken some time and effort to relate the “Six Trends” to his NBWA audience. Even without drawing conclusions relevant to wholesale beer distributors, it would have taken little effort to see how the demographic trends Johnson discussed related to the beer and broader beverage alcohol marketplace.

Demographic Trends

According to Johnson, “As.  .  .data from the Census 2010 are released over the next several years . . . expect six disruptive trends of the first decade of the new millennium to be confirmed.”

In case you missed them, the six demographic trends Johnson identifies are:

• The South has risen — Again - Population growth, moving from “everywhere” — and moving to the South
• The 'Browning' of America - The rise of the Hispanic, Asian and other Non-whites
• Marrying Out is 'In' - Marriage across racial and ethnic lines is on a tear
• The Silver Tsunami is About to Hit - The graying (aging) of the native-born population
• The End of Men? - The end of male economic dominance
• Cooling Water from Grandma’s Well — and Grandpa’s Too! - The growth of grandparent-headed households raising grandchildren

Of course, during the presentation, Johnson would introduce one of the above six trends and discuss its impact on US consumer markets and workplaces as well the challenges posed for the US’s future competitiveness in a global marketplace. There are clear implications for beverage alcohol marketing and distribution for each of the six trends.

In the interest of moving our point along, I’ll not recap Dr. Johnson’s presentation in any further detail. However, if you would care to watch Johnson’s speech, I was able to find the almost identical speech here on the web: http://vimeo.com/70036067

Most Desirable Customers

While listening to Dr. Johnson’s NBWA discussion, I was reminded that in addition to the potential impact for NBWA members of these six disruptive trends, that there are still three groups of “most desirable” consumers, defined primarily by their birth years:

• 'Baby Boomers' — those consumers born between 1946 and 1964
• 'Generation X' — consumers born between 1965 and 1981
• 'Generation Y' (also known as Millennials) — consumers born between 1982 and 2000 — Also the most desirable of all because they represent nearly $200 billion in purchasing power

The Challenges for Beverage Alcohol Distributors

Hearing Dr. Johnson and knowing about the above three generational consumer groups it began to dawn on me just how daunting a task it is to market beverage alcohol to so many divergent groups. Traditional media (TV and print) may be consumed by most Baby Boomer’s and many Gen Xer’s, but the most prized consumer group these days are the Millennials, who are often “unreliable” users of traditional media, choosing other media forms and formats instead. Furthermore, Dr. Johnson’s disruptive trends do serve to point out how much traditional media is unable to connect with growing population segments who find much of traditional media irrelevant to their past and present experiences.

For example, studies have demonstrated that Millennials are often not only brand apathetic, they are often brand agnostic. Indeed many Millennials may actively seek out products with “names you’ve never heard of.” Traditional media marketing, even if seen, will be unlikely to have much, if any, persuasive message for Gen Y’s.

Today, consumers representing at least two different generations, gen X and especially gen Y, take their buying cues from two primary areas: Social media and point-of-sale (POS) materials. POS serves to introduce and explain the benefits of consumer products (including beer) and social media serves up “unbiased” reviews (known as user generated content or UGC) from trusted sources (Facebook posts, tweets, etc.) 

Did You Know? — Breweries Are Exploding

One more thing I learned thanks to the NBWA: There are currently about 1,000 new breweries, in various stages of completion, soon coming on-line. This means it is not unlikely that at least 3,000 new beers will be hitting the market sometime in the near future. Each one of these new craft beers will need distributor and marketing support. It is clear to me that as much we think we rely on POS today to educate and persuade shoppers to try a certain beer brand or product, we haven’t seen anything yet.

Clearly it will only become more and more important that we track, measure and manage POS, the most important marketing tool we have in our tool kits.

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