Seltzer, houseplants, skincare — These 12 industries are reinventing themselves to win over millennials
Millennials may be at the center of paying their way through the student debt crisis, but over the next few decades this generation will be entering its prime spending years — with an inheritance totaling $30 trillion from baby boomers and Generation X on the way.
After analyzing trends across multiple industries, looking at case studies, sales fads and other factors, CB Insights nailed down 12 industries that anticipate the biggest influx from millennials' new spending power. These are industries that are restructuring to focus on Generation Y, finding ways to be more sustainable, affordable, flexible and tech-savvy.
Though CB Insights tells CNBC Make It that this list isn't all-encompassing — there are certainly more industries benefiting from millennials — these are the 12 they expect to have a millennial spending boom:
In 2018, millennials made up 56% of all new campers, an increase from 51% in 2017, CB Insights found, based on data from Kampgrounds of America.
Part of the reason is that camping is a budget-friendly family adventure, especially if you have kids. The rise of online booking platforms like Airbnb, Hipcamp and Campsy have made it easy for users to book unique experiences in yurts and treehouses, rather than having to pitch a tent. The rise of "glamping" has also given the industry a boost: Almost 60% of the 1.4 million households who first camped in 2018 preferred cabins, recreational vehicles and "glamping" to tents, CB Insights says.
Millennials care about their exercise. The generation spends nearly $7 billion annually on gym memberships — double the amount Gen Xers and boomers spend — and 76% report exercising at least once a week, compared to 70% of Gen Xers and 64% of baby boomers, according to the report.
The biggest gainers from this health trend are on different ends of the spectrum: budget gyms and boutique studios. Budget gyms, such as Planet Fitness, provide a wide range of amenities at a much lower cost than traditional gym memberships, while pricier boutique studios like SoulCycle offer community-driven classes that millennials view as social activities.
Affordable travel and bespoke experiences are sending millennials to see the world. A 2016 survey by the Financial Times found that millennials prioritize short-term spending over long-term spending, going on holiday rather than saving their money because they "feel financially doomed."
This year, millennials are prioritizing their wanderlust more than previous generations, placing a big emphasis on accommodations that are authentic and local to the destinations they visit, checking into Airbnb and VRBO rather than hotels. And instead of seeing the standard tourist attractions, millennials would rather pay for something experiential, such as music festivals and culinary events.
For the budget conscious, price-comparison apps like Hopper and HotelTonight have made it easier for millennial travelers to spot a good deal — CB Insights found that 85% of millennial travelers check multiple sites before making a commitment — and thanks to social media, there are endless customer recommendations to help consumers plan.
Fast casual dining
Fast casual dining restaurants like Chipotle, Shake Shack and Blaze Pizza are satisfying millennials' appetites and catering to their busy lives with mobile ordering and in-store pickup. A Technomic research study cited by CB Insights found that almost 40% of millennials eat meals on the go.
According to CB Insights, millennials today make up 44% of the demand for coffee in the U.S. But it isn't just your old cup of Joe they crave — canned cold brew, nitrogen-infused beverages and fair-trade brands are garnering a lot of attention from those who prefer the convenience, the different flavors and the sustainability newer brands provide.
The frozen food aisle is being revitalized by freshly-prepared meals, like Frozen Foodies' cryogenically frozen meals prepared by professional chefs and Buttermilk's reheatable pre-made Indian meals. As gourmet frozen foods offer healthier options and better quality than frozen foods once did, they are attracting younger consumers.
"In 2018, the total volume of frozen foods sold in the U.S. increased for the first time in five years, driven largely by millennials and consumers with children," reports CB Insights.
Frozen plant-based brands like Gardein and Daiya are helping to feed the 52% of millennials who prefer organic food and the 40% on a plant-based diet.
Low-calorie carbonated beverages, such as seltzers and flavored sparkling waters, are so popular among millennials' that Coca-Cola and PepsiCo have introduced seltzer products of their own.
According to CB Insights, "Venture capitalists invested more than $152 million in seltzer and sparkling water companies in 2018 alone — more than the sum invested in 2016 and 2017 combined." Newer brands like Recess, a CBD-infused seltzer, and White Claw, flavored alcoholic seltzers with only 100 calories, are reinventing the soda industry for the younger generation's taste buds.
Citing data from from the National Gardening Association, CB Insights reports that annually, "The average household spend on indoor plants has increased, growing from about $30 in 2016 to nearly $50 in 2018."
Additionally, plant sales represent a $1.7 billion market. Millennials in urban areas have jumped on the holistic wellness trend that plants promote, by using houseplants to spruce up their small-scale apartments. Direct-to-consumer plant brands, as well as low-cost subscription services, make it easier to purchase plants online, and social media offers plant decor inspiration — the greenery in millennials' apartments offering the perfect Instagram prop or backdrop.
As people become more conscious of the ingredients in their products, niche cosmetic brands are popping up to inform a curious audience. Between 2010 and 2015, smaller brands grew their market share by 5%, while the 10 major cosmetics brands lost 6% market share, according to a Deloitte study referenced by CB Insights.
Natural skincare brands are paving their way, too. "Launches of vegan beauty products increased by 175% between 2013 and 2018," according to Mintel's global new products database.
"Millennials are [three times] more likely than previous generations to research new brands and products using social media, and 37% more likely to trust a brand after coming across a sponsored post about it," says CB Insights.
It's said that millennials are killing the car industry, but in reality, they are helping it stay in drive. According to CB Insights, in the first quarter of 2018, "Millennials were responsible for all new-vehicle sales growth in the U.S." They prefer smaller, more efficient and more affordable sedans than older generations who like luxury cars, like high-end sedans and SUVs.
CB Insights references a 2019 survey that found that 86% of younger millennials and Gen Z said that when they buy a car, they would consider a sedan. According to the report, millennials prefer foreign-made, mid-range cars with Japanese automakers Honda, Nissan and Toyota making up the top three car brands millennials buy.
Millennials prefer city living and are "21% more likely to buy their homes near city centers than Gen Xers," says a Journal of Regional Science study, mentioned by CB Insights. Affordable, efficient and eco-friendly transit is an important factor for urban millennials, who use Uber and Lyft ride-hailing services, use bicycle-share programs, and travel via Bird and Lime electric scooters. CB Insights notes that the entire micromobility industry is predicted to be worth up to $300 billion by 2030.
Millennials hold the most student loan debt of any generation, and this cash-strapped cohort is taking interest in understanding their finances, and turning to the web and personal finance apps to help them.
Financial technology companies are creating easy-to-use apps to help this younger generation learn to budget, save, invest and spend their money. Mobile banking and personal budgeting apps, such as Revolut and Qapital are most popular with millennials, with personal budgeting apps having a user base that's 70% millennials, reports CB Insights.
Apps also save millennials from having to visit a physical bank. According to business management consultant CG42's 2018 retail banking study cited by CB Insights, over the next year alone, the 10 largest banks are predicted to lose more than $340 billion in deposits to digital-first competitors.
Like this story? Subscribe to CNBC Make It on YouTube!
Don't miss: Charmin's new 'Forever Roll' is a massive roll of toilet paper targeted at millennial customers