HOW MILLENNIALS BECAME THE WORLD’S MOST POWERFUL CONSUMERS
When Scott Norton and Mark Ramadan were undergraduates at Brown University in Rhode Island a decade ago, they were horrified not by the 2008 financial crisis but by Heinz tomato ketchup. The bright red sauce was so common in shops and kitchens around the world that it seemed it would be there forever. “At the center of supermarkets were all these classic American brands that hadn’t evolved in 70 years,” recalls Mr. Norton.
As they talked to their student friends, they realized that none of them wanted bland, mass market products shipped from factories by huge corporations. So they started to mix their own organic ketchup in an off-campus apartment. On graduation, they founded a company and, having no origin story with resonance, invented a joke one. They named it after a mythical Victorian called Sir Kensington, a monocled adventurer who had “advised the British East India company in the acquisition of spices.”
The pair are now 31, at the heart of a millennial generation that has come of age, transforming business not only in the US but around the world. In April, their company was acquired by Unilever, the British-Dutch group that had fended off a takeover by Kraft Heinz. Their ketchup, once a student jape, has just gone on shelves in Walmart and Target. “Sir Kensington’s is the playbook for reaching millennials,” says Richard Hartell, president of strategy and transformation at Publicis Media.
MILLENNIALS ARE ‘CORE’ BUSINESS
This is the millennial moment, long expected and feared by companies that built their brands for baby boomers. They are aging and their offspring, once called the “echo boom,” are no longer teenagers, or even students. Pew Research Center, the US research group, defines millennials as the 73 million Americans aged between 22 and 37, who will next year overtake boomers in number. “We don’t think of them as special or different anymore. They are the core of our business,” says Alan Jope, president of beauty and personal care at Unilever.
The coming of age of the world’s 2 billion millennials is not only a generational shift: it is one of ethnicity and nationality. Forty three percent of US millennials are non-white, and millennials in Asia vastly outnumber those in Europe and the US. Despite China’s former onechild policy, it has 400 million millennials, more than five times the US figure ( and more than the entire US population) while Morgan Stanley estimates that India’s 410 million millennials will spend $330 billion annually by 2020.
Millennials have reached what the bank calls “the most important age range for economic activity,” when households are formed, babies are born and money is spent not just on going out but on settling down. Simon Isaacs, cofounder of Fatherly, an information and e-commerce site for millennial parents, cites family camping as one of its most popular topics. “That does extremely well for us. They like to buy cool family tents and share videos of their trips.”
This reflects the depth to which technology is integrated into millennials’ lives and habits. The oldest were teenagers at the time of the Netscape initial public offering in 1995, as the internet became a mass medium, and the youngest were 11 when the Apple iPhone was launched in 2007. They are used not only to communicating online but buying most things there: $25 billion was spent on Alibaba’s Singles Day online shopping festival in China on Nov. 11.
Big companies have scrambled to adjust to millennial tastes. “Local, original, and what they can feel and trust are all good. Maybe there is a bit of a reaction to globalization,” says Laurent Freixe, who heads Nestlé’s US and Americas business, “Organic, natural, and non- GMO are crystallizing in the US very fast.” Nestlé last year bought the Blue Bottle chain of coffee shops and in May signed a $7.1-billion licensing deal with Starbucks to refresh its Nescafé and Nespresso brands.
But it is placing immense strain on institutions that once thrived on mass marketing of products through television advertising. Growth has slowed and investors are unhappy. “They are only about global brands, one size fits all. That was great in the ’80s and ’ 90s but the world has changed. Millennials want these little brands, local brands,” Nelson Peltz, the 75-year- old activist investor, said last year as he attacked Procter & Gamble.
Some are being outflanked by young rivals with roots in Internet and mobile. Google and Facebook have shaken marketing groups such as Publicis and WPP, and the streaming service Netflix last month overtook Walt Disney as the world’s most valuable entertainment company. Often, revenues are simply nibbled away by upstarts: Boston Consulting Group estimates that between 2011 and 2016, large US consumer groups lost $22 billion in sales to smaller brands.