Tapping in: the consumer generation study
With untapped spending power, brands are now looking to target the Senior market with relevant products. Sonia Sharma spoke to Tetra Pak to learn more about their findings from the consumer generation study.
When thinking about targeting consumer groups, demographic cohorts such as 'Generation X' and 'Millennials' often come to mind. However, the senior market does not receive as much attention. Those aged 60 and above do not tend to be the focus of major retailers and brands, opting instead to target the younger consumers.
Nevertheless, the senior market is now coming to the forefront as a key consumer group. Multinational food packaging and processing company Tetra Pak recently released a consumer study that highlighted the spending power of seniors and identified them as an influential cohort. GlobalData spoke to Tetra Park to find out more about the senior demographic and how manufacturers can tap into this market.
A loyal customer
The senior market is becoming a growing percentage of the worldwide population, but this generation is generally an ignored demographic. Based on insights from 27 countries across developed and developing markets including Japan, the US, and Brazil, a new consumer generation study from Tetra Pak highlights the opportunities in the food and beverage market for seniors. It investigates consumer trends in food, packaging, and shopping experience, identifying product opportunities for producers.
Seniors control a large proportion of wealth and they are likely to be responsible for purchasing basic household staples regularly. Seniors are also a loyal customer base for brands, as many are more likely to stick to brands they trust. Research from Mintel found that more than half of older US seniors will only shop at their favourite stores because they know what service to expect.
Vice-president of global marketing at Tetra Pak Libby Costin said: “Seniors spend 20% of their income on food and beverages. They have more disposable income than previous generations and are poised to become one of the most important consumer groups over the next decade, with a total spending power of $10 trillion by 2020. This creates a huge opportunity for manufacturers to respond to their needs.”
According to the United Nations, by 2050 more than 22% of the world’s population will be aged 60 and above, compared with just 8% today. This makes seniors the fastest growing consumer age group in the world. Therefore, this demographic is a key target for global food and beverage manufacturers.
However, advertisers appear to be giving less attention than may be warranted to the seniors, as they are more focused on products that are aimed at younger generations. This is in spite of a recent Euromonitor survey indicating that the disposable income of those aged 55-64 in the US is twice that of the under 25s. In addition, only 1% of global innovation is currently directly targeted at seniors.
Seniors’ habits are different from other generations, so manufacturers need to tailor their product offerings to meet these various needs. For example, seniors shop more often and buy different product categories, as well as shopping closer to home and in smaller stores. Seniors also have a higher spending on food and beverages compared to the rest of the adult population, spending 20% of their income on food and beverages, while the average for those under 60 is 18%. This is partly due to the group putting a greater emphasis on excellence, with a total of 88% equating value with high quality. A total of 41% of those aged 65 and above are concerned about E-numbers on products, according to Datamonitor.
When thinking about consumption choices, 59% say the most important factor is how a product’s quality compares to other brands. Seniors look for products and ways of shopping that are more focused on their particular needs, with 54% of those aged 65 and above using food and drink to improve their health. Just under a third of seniors also claim they actively look for products and services that help them live a healthy lifestyle, such as foods with a focus on vitamins, dietary supplements, and functional food.
The senior generation tend to avoid fast food and they are heavy consumers of vitamins and foods that are fortified with additional minerals promoting stronger bones, better digestion, and cardiovascular health. There is a particular opportunity for foods and products that meet these needs in developed markets, where there are higher incomes and a greater awareness of health issues.
Growing older also means that we become more susceptible to varying health ailments, such as weaker bones and muscles. Half of those aged 65 and above report difficulty opening products, so packages need to be lightweight and easy-to-use to overcome any issues of reduced wrist strength. The packaging material should also be firm so it is easier to grip and prevents spillage. In addition, a longer shelf life needs to be preserved so that fewer shopping trips are required and nutritional information needs to be easy to read.
Meeting the requirements of the seniors has already become a top priority for some countries. In April 2012, Japan’s largest supermarket group Aeon opened its Chiba mall just outside of Tokyo, which is specially designed to address the shopping needs of seniors. Japan has one of the world’s highest life expectancy rates, standing at 80 years old for males and 87 years for females, in comparison to 77 for males and 82 for females in the US, according to the World Health Organization. The store’s brand portfolio has been tailored to meet the needs of a more mature customer, with features such as slower escalator speeds, leisure activities, and discounts on pension day. In Japan, concentrated vegetable juice has also been developed as a product targeted at seniors that meets the requirements of a healthy and enjoyable diet.
This increasingly influential consumer group has led to the emergence of significant opportunities for producers. It is now up to the industry to respond to the habits of the fastest growing consumer age group around the world.