Progressive Grocer

MAR 2017

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"Chemical, artificial taste was a big negative with these consumers." —Monika Wingate, Digsite surveyed cited bottled water as their most recent bottled beverage experience. A majority of Millennial study respondents said that they chose water because it's a healthy option, and cited taste and concern about sugar as the No. 2 and No. 3 most common reasons they opted for water over other beverages. Digsite's research shows that while Millennials aren't totally opposed to sweetened beverages, they're con- scious of high levels of sugars in drinks and are careful about what they're choosing. "ey don't like artificial sweeteners," observes Monika Wingate, co-founder and CEO of Digsite. "ey will drink carbonated beverages, but they want them to be flavored with natural ingredi- ents so they don't feel so bad about it." Alternative waters, such as coconut water and watermelon water, offer a sweeter option without added refined sugars and should continue to see growth with this demographic. According to Wingate, Millennials are clear about what they don't want in their beverages. "Chemical, artificial taste was a big negative with these consumers," she asserts. "ey say artificial sweeteners can give them a headache, and they don't like the sugar crash they can get from an overly sugary beverage." Millennials are inherently wary, read labels and look for a short ingredient panel. "Consumers want five or six ingredients, and they are interested in the narrative behind a product," says Hartman's Bowden. "ey like to know where ingredients came from." Product narratives play to this audience. "Millennial consumers crave authenticity," affirms Wingate. "ey know they are being marketed to, but they like to know how something is made and where it is made. e story really resonates with them." Natural products are more important than organic, and simple, straightforward messaging connects with this generation. ey also react to unique packaging that sets a product apart from similar offerings on the market. Highly Functional Functional beverages are a critical beverage category for Millennials. Research from FONA International, based in Geneva, Ill., shows that Millennials are the consumer group with the highest consumption of functional bever- ages, with 57 percent of consumers age 25 to 34 demon- strating interest in these products. "Millennials are heav y users of functional bever- ages, but it's hard to pinpoint which beverage they consume most often, because throughout the course of a day, they consume multiple products," notes Pamela Oscarson, consumer insights manager at FONA In- ternational. "They use functional beverages to replace meals, energize and even just for refreshment. It is the convenience and no-brainer nutritional aspects that draw Millennials to these products." Digsite's survey shows that Millennials want bever- age experiences that make them "feel healthy," so it's no surprise that functional beverages are a big hit with these consumers. "Millennials want their beverages to do more for them," says Bowden. "ey want beverages to give them more energy for their busy, active lives, but those products have to align with their health-and-wellness goals." As early adopters, Millennials have been fueling sales of beverages that promote healthy digestion, and are enthusiastic consumers of drinking vinegars, artisanal tonics and kombucha. New products aimed at this consumer group include Fire Brew, an apple cider vinegar-based health tonic, and Wild Tonic Jun Kom- bucha, fermented with honey instead of the sugar used in traditional forms of the beverage. Energy Surge Natural energy boosters also rank high on Millennials' list of benefits. FONA research shows that 64 percent of Millennials consume energy drinks and half-drink energy shots. ese consumers say that they're drawn to energy-boosting options made with natural ingredients, so energy beverages with healthier profiles and that are infused with vitamins and supplements are winning this demographic. Wingate notes that consumers sur- veyed indicate that they're interested in immunity-boosting beverages. "Con- suming functional beverages aimed at immunity boosting wasn't a current behavior, but that was one benefit they rated highly and [that] seemed to gener- ate significant interest," she points out. Millennials also want their healthy beverages to be satiating. ey seek beverages that can fulfill a snack craving, such as options containing raw fruits and vegetables. Fresh-press juices and smoothies are significant categories for Millennial consumers, and they're willing to pay a premium for products they view as fresh and natural. Despite that, there's a limit to their spending. "Mil- lennials are generally cash-strapped, so there are times that they will pay a price premium for quality and uniqueness, but price will often trump a good narrative and social cause," cautions Bowden. For a generation that has grown up with Starbucks, coffee is also a significant category. According to Chicago-based researcher Datassential, people age 19 to 34 currently make up about 44 percent of the U.S. coffee demand. Chilled beverages, from frozen blended drinks to iced coffee, are highly popular gourmet products with this generation. Research from Chicago-based Mintel shows that more than half of Millennials drink cold lattes, and that this group drinks iced coffee almost twice as much as Gen Xers. Millennials are driving the growth of new segments, such as cold-brew coffee, which meet their expectations of premium ingredients and coffee-culture experiences. PG March 2017 | | 5

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