According to recent United Nations data, nearly two out of every three people worldwide fall into one of two demographic groups – millennials or Gen Z. This grouping represents one of the largest consumer bases ever to hit the baked goods industry, where mouths are already watering at the prospect of so many new buyers.
That’s a lot of consumers. But bakers and their supply chain partners need to keep one thing top of mind when thinking about millennials and Gen Z: these consumers have different expectations than the generations past.
Younger people want foods whose origin they know and approve of. Healthy is a plus, as is clean label.
Suppliers targeting these groups would be advised to have a stellar record when it comes to food waste and other sustainability bona fides.
Fortunately, said CJ McClellan, global marketing manager for bakery for Lenexa, Kansas-based Corbion, cookies, cakes, breads, etc. are not a tough sell for younger people.
“Both millennials and Gen Zers have a love for baked goods, and many purchase them on a weekly basis,” McClellan said. “And according to a study from the ABA (American Bakers Association), 75% of these younger consumers are not dissuaded from consuming baked goods because of concerns with consuming carbohydrates.”
In fact, both millennials and Gen Zers have a positive nutritional association with many types of baked goods. A recent study conducted by Generational Kinetics revealed that 78% of millennial and Gen Z consumers include carbohydrates in their regular diet, with 73% buying bread and 63% purchasing a sweet baked good in the previous week.
Challenges — and opportunities
Things may seem rosy for the baking industry right now, but that same study indicates there could be trouble coming. Fifty-three percent of Gen Zers and 48% of millennials buy or eat fewer baked goods than they did a year ago.
Millennials are seeking transparency and cleaner and simpler ingredient labels, and they want to support companies that reflect their own values. These causes include giving back to the environment and/or the communities and supporting an ethical supply chain, says Ashley Robertson, Corbion’s market manager for bread.
Younger consumers would also likely buy more baked goods if they could taste them first, and over half would buy more baked items if they came in smaller portions, including bread, Robertson added.
Also of huge importance for younger Americans is a focus on experience, personalization and customization. These generations are intrigued by products that tell a story and create an experience.
A great example of this is Kit Kat, which allows consumers to “create your own break” by customizing their Kit Kat just how they like it.
Nearly half of millennials and Gen Zers would also be convinced to try baked goods that have “responsibly-sourced” ingredients, according to the report.
Sustainability and quality
Perhaps the most important element of all to eco-conscious buyers is the problem of food waste.
“According to a report from the ABA, nearly three quarters of these younger consumers are bothered by wasting bread, and having to throw it away often deters them from future purchases,” Robertson said.
Smaller packages and bread that lasts longer without spoiling are among the solutions bakers are offering to meet the demand for lower food waste.
In addition to food waste, Gen Zers and millennials are also looking for baked goods that carry front-of-package claims such as whole grains, natural ingredients, and freshness.
These young consumers associate clean eating with an improved quality of life. If a product’s ingredients are sourced sustainably or locally, even better.
Millennials and Gen Zers are also more likely to buy items that use sustainable packaging and sport sustainable logos on them: things like “compostable” or “made from sustainably sourced paper.”
In a survey by The NPD Group, 55% of people aged 18-24 said they believe clean eating improves their overall quality of life.
Sixty-six percent of U.S. consumers say they expect companies to invest in sustainability efforts, while 80% say they’re more likely to buy from brands that are honest and transparent about how and where their products are produced.
Don’t forget the boomers
While clean label is front and center for many millennials and Gen Zers, Robertson says that older Americans are actually the main drivers behind this trend.
“Baby boomers are more likely to follow a restrictive dieting program,” she said. “Their interest in functional foods is followed by the belief that they will live longer, and they use their food to prevent or treat ailments.”
While older Americans don’t tend to follow the same restrictive dieting programs as younger generations, she added, they are definitely focusing more on healthier food options and cleaner eating.
“Baby boomers aren’t influenced by terms like gluten-free, vegan, or vegetarian, and less than half of them are called to action by phrases like locally sourced and low calories,” Robertson said. “Older adults are currently more concerned about sugar than other generations. They want to be able to eat something that has less sugar so they can enjoy more of it.”
Bakers and their suppliers can agree on one thing: there are endless opportunities to stand out on the shelves, and to give each generation a quality baked good that fulfills their needs.
“Taste and price will always be key factors consumers will look for, but the more companies can align with the preferences of each generation, the more successful they will be in the marketplace,” McClellan said. “That may mean creating baked goods with health benefits and simpler labels, delivering products with minimal impacts on the environment, or providing a baked good that’s convenient and easy to consume on the go.”
What do all these changes mean for the baking industry? Even in the face of changing generational buying habits, there is ample opportunity for companies to differentiate themselves amongst each of the major groups.