Be Ready for Gen Z

Brands and CPGs reinventing themselves and their packaging isn't just window dressing. It's essential to stay relevant to Gen Z, with it's unique set of behaviors and wants.

Matt Reynolds1

I’ve frequently opined on what I think is an admirable brand owner and CPG trend toward diversity, equity, and inclusion. As such things relate to packaging, they’re realized either via a physical change in packaging structure that makes the product more accessible to some group, or by a change in graphics and text on the packages themselves that promote a brand’s internal diversity and inclusion policies.

While I consider this trend a good thing overall, we should probably remind ourselves that it isn’t driven by altruism alone. If these changes weren’t profitable, they likely would not get done at all. Consider cases of structural changes to packaging, like P&G’s etched Herbal Essences bottles for people with vision impairment (pwgo.to/7310) or Unilever and Degree’s accessible deodorant for people with limb disabilities (pwgo.to/7239). Those projects get the greenlight, at least partially, thanks to an underlying brand owner realization and financial calculation that significant portions of the global market are underserved, and their dollars are being left on the table.

But what about when it’s just new graphics and not a functionally new package structure that attempts to achieve diversity goals? (Think Land o’ Lakes eliminating the Native American woman or Mrs. Butterworth’s sidelining the matronly Black grandmother figure.) These adjustments in graphics don’t directly open a new and unserved market the way the above-mentioned structural changes do, which is why they often made me think they were more window dressing than anything else.

That way of thinking underwent a big change at the Craft Brew Conference in Denver, Sept. 9-12. There it became clear to me that brands are championing inclusiveness and celebrating diversity as a matter of future survival, and the financial underpinnings of this trend are in society’s changing demographics.

According to Bart Watson, Chief Economist with the Brewers Association, the whole brewing industry is going through a big transition based on demographic and generational changes. Craft brew is a microcosm of what all the big brands are going through, and through that lens, the other big-brand attitude shifts toward inclusiveness become more understandable.  

Watson’s annual State of the Industry included some fascinating macroeconomic trends. He described a landscape where the average craft brew drinker is growing older, and fewer new alcohol drinkers are replacing them. That’s because Generation Z isn’t gravitating to the category like their Gen X and Millennial predecessors. Why? Partly because Gen Z is much more culturally diverse, with more diverse tastes that range outside of the traditional IPA, lager, and stout categories that dominate craft brew. Women, who have traditionally been targeted more by wine, and more recently by RTD spirits and seltzers, are drinkers, and traditional craft brew may be missing out.

“To call out one stat in particular, 21- to 25-year-old women now drink at a slightly higher rate than 21- to 25-year-old men,” Watson said at the conference. “Though young men likely consume more volume of alcohol overall, young women are more likely to be drinkers in the first place than are young men.”

Watson also cited an interesting report from Rabobank looking at spending shifts in the beverage alcohol industry. “If I were to summarize it in a couple of lines, spending on alcohol today is increasingly female and increasingly BIPOC (Black, Indigenous, People of Color),” he said. “And this goes above and beyond the overall demographic shifts. We are becoming a higher percentage minority country in general. But those percentages and those indexes were increasing even faster than the overall demographic trend.”

Meanwhile, craft brewery ownership is 93% white and 76% male. No wonder the Brewers’ Association was so noticeably pro-active in reaching out to new communities and demographics. Check out the Brewer’s Association website for information on their Thrive program designed to “build safe, inclusive, and equitable cultures” in craft breweries, or the #NotMe application and platform designed to make it easier to report unwelcome sexual advances in brewery business settings.

This is a microcosm of the demographic calculation that bigger brands and CPGs have also made—diversity, equity, and inclusiveness are good business, not just feel-good taglines. Far from engaging in mere window dressing when they show Aunt Jemima the door, big brands and CPGs have made a calculation on what the future will look like, and how to stay relevant. That comes through in the packaging.

Hockey great Wayne Gretzky is famously credited for saying he skated not to where the puck was, but where the puck was going to be. In this analogy, where’s the puck going to be? Sounds like it’ll be with an increasingly diverse and inclusive Generation Z

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