The 'Must-Win' Generation

July 1, 2006
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The ‘Must-Win’ Generation

A youthful following is one of the most coveted assets for a brand, so it might not have occurred to most beverage companies to consider the recent changes to the Medicare system and how they might affect sales. But Information Resources Inc. thought to look at it and recently reported that Medicare Part D has resulted in an additional $36 billion in incremental spending power, or an extra $1,100 per person, for the 55-and-older crowd.
As far as beverages are concerned, that already has resulted in increased sales, including a 31 percent increase in “sports drinks” and an 11 percent increase in beer sales. That’s not to say there’s a new flood of seniors running marathons and downing Gatorade; IRI grouped nutritional beverages in the sports drink category for this study. But it does show that this group of consumers is seeking extra energy and nutrition in the form of beverages… and it’s apparently to help them party more. Beer, wine and spirits all are hot-sellers with this demographic.
The senior segment is technically broken out into “pre-seniors,” or those between 55 and 64, and “seniors,” who are older than 65. In many respects, these two groups have different buying behaviors. Beer and cocktail mix purchases, for example, index higher for pre-seniors than for the average American household. But as people age past 64, they buy fewer of these products and purchasing behavior drops below the national average. Spirits and wine sales, on the other hand, index significantly higher for pre-seniors than the average household, and they only buy more as they age. Wine sales index five points higher for seniors compared with pre-seniors, or 29 points higher than the average American household, and spirits 10 points higher for seniors vs. pre-seniors, or 36 points higher than the average household.
IRI argues that seniors are one of the most important, but one of the most ignored segments within the consumer packaged goods industry, and some have indicated that this attitude is changing very little, even as the huge baby boomer group enters this phase of life. Personal care company North Castle Partners recently published an interview with writer Ken Dychtwald, who said marketers have never truly understood the boomer market and understand it even less now that they are older.
“For the last 50 years, if you follow the marketing to this generation, it’s as though you’ve got a 76-million-pound elephant lumbering across the lifeline,” he said. “Every year it gets one year older. Yet for the past half century, the way that most marketers have pursued this elephant is to wait for it to pass and then try to shoot arrows at its butt.”
Getting out in front of these consumers may be one of the best things marketers can learn to do, according to these sources. Whether it’s through product differentiation or re-examining retail channel availability, older consumers — not the 18-to-34 demographic — are being called the new “must-win market.” BI
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