What makes generations Y and Z tick, why do young consumers generally lack brand insight, and why do beverage manufacturers and retailers need to reposition themselves? Industry expert Dr Uwe Lebok, CEO of market research institute K&A BrandResearch AG, provides fascinating answers to these questions.
Generation Y, also known as millennials, are those born between the early 1980s to the mid-1990s. Generation Z are their successors. Mr Lebok, what are the values that distinguish these target groups from one another?
It’s not the case that generations Y and Z have completely different values from Gen X or baby boomers. Like the generations before them, they too want to enjoy life and have security and freedom. But the younger the consumers, the more concerned they are with pragmatic behaviour, situational attitudes and faster decision-making.
How does the beverage industry have to adapt to this to be able to continue to operate successfully?
Both age groups are much more flexible and have a lot more options. This means that they don’t automatically engage with a certain drink or a brand and then stick with it for ever. This is the crucial difference between them and the previous generation. In addition, these consumers read much less across the board, even in digital form, and so they have less knowledge of brands. The beverage industry has to respond to this. It has to think ahead, get under their skin and identify what it is that these young people want and expect in their everyday lives.
Generations Y and Z take their cues from social media, communicate through mobile devices and shop online. What does this mean for traditional retail structures?
The traditional retail segment is undergoing a brutal transformation. Previously, people always used to buy their drinks in crates and cases. But the generation that used to buy drinks by the case is dying out. This is very obvious if you look at Germany’s beverage supermarkets, which no longer attract lots of young people because they tend to prefer spontaneous purchases in smaller packs that they can easily carry by hand. And when they do occasionally buy a box, then it’s more likely to be a mixed case haphazardly put together as a “party box”. The specialist beverage trade also has to rethink, think outside the box and think differently, or it will be difficult for many operators in the future to reach the new generation of drinks consumers on the sales floor.
But what do online-savvy buyers look out for nowadays when choosing drinks, and how relevant are established brands in this context?
For Gen Z, brands are less and less “top-of-mind”. Brands mustn’t be boring and should clearly define why these drinks are the best choice in certain situations. An established brand that always just uses the image of a mountain lake on its billboards has milked the idea to death. For Generation YZ, advertising tends to have a negative aftertaste. The relevant core elements of a brand need to be expressed in a variety of formats, shared in meaningful ways and allow consumers to satisfy their conscience.
So how do drinks suppliers draw attention to themselves in future?
A brand needs to attract a certain amount of attention and has to constantly update itself. If there’s constantly something going on then you keep getting talked about as a manufacturer and have the opportunity to get your message out there via the drink brand. In our sharing culture, this is often easier for smaller vendors, because they have a local presence and know their environment really well. They are able to create customer intimacy and connect with their customers through events, for example. In this context, the trend towards regionality plays an important role. As a drinks manufacturer it’s important to be authentic and enable people to enjoy experiences with the brand.
Is this where craft brewers have an advantage?
Yes, because the product is put at the forefront. You can experience the beer, you get variety and are no longer restricted to a standard flavour. In terms of quality, the craft beer scene has achieved a lot. Craft brewers communicate their philosophy of craftsmanship and regionality in a credible way and the close connections between product, craft and manufacturers that are communicated in this way hit the spot with consumers.
Supposedly, Germany is ranked somewhere in the middle when it comes to internet use. How are other countries responding to this generational change?
Until now, Germany has had an enormous density of retail outlets. You just have to walk out of your door and you’ll have several shops to choose from. Here in Germany, going shopping is part of our standard routine, because we also enjoy it. This is why, for example, relatively few people shop for food online here, unlike in the UK or Scandinavia. But that is set to change here too in the next few years.
What is the importance of the target groups from Generation YZ for a trade fair like BrauBeviale? In an era of digital transformation, do traditional exhibition concepts even work anymore?
Yes, and why not? The young target groups want entertainment and experiences, and they want to engage with the issues that matter to them in a way that is close-up and personal. However, the experience factor has to be prioritised.
You have a slot in the Forum programme at the forthcoming BrauBeviale. What can visitors expect?
This year the focus will be on creating a beverage brand with the kind of wow factor that appeals to young Gen Z consumers. There will be contributions from speakers in the fields of consumer psychology and beverage marketing. In addition, there will be presentations from predominantly German entrepreneurs who will show how they managed to inspire Gen Z with their beverage brands: Jeff Maisel, owner of the successful Maisel brewery, Steven Brechelmacher from the pioneering organic brewery Neumarkter Lammsbräu, Robert Glaab from the innovative brewery Glaabsbräu, and (probably) a representative of SodaStream.