VALS™ Lens Applying VALS™ to current events December 2014
In this issue:
In 2014: Affluent Holiday Spending
Ninety-seven percent of the wealthiest 10% of US households—households with a net worth of $800K or more—will spend an estimated average of $2623 on gifts this holiday: $31 billion in total. The average expenditure of these affluent households is about four times that of the general public, based on estimates from the National Retail Federation and similar research by PriceWaterhouseCoopers. Wealthy household's estimated holiday spending will remain the same in 2014 as it was in 2013, according to Ron Kurtz, founder of the American Affluence Research Center (AARC). The AARC has been tracking the Affluent since 2002. Almost two-thirds of high-net-worth households have Innovators or Thinkers heads (VALS™/GfK MRI Spring 2014). Innovators households typically have higher annual household incomes than Thinkers households do, but Thinkers households often have higher net worth because they are conservative spenders and dedicated savers and investors. Kurtz reports that the top two gifts that the Affluent want to receive has remained the same for several years: "gift cards or some form of currency and clothing" always top the list, plus "fine jewelry for women and sports equipment for men."
In Beverages: Coffee
Between 2008 and 2012, about 40% of Colombia's arabica coffee bean crop was infected by roya, a coffee-rust fungus. "Production plunged from a high of 12.6m 60kg bags a year in 2007 to just 7.7m bags in 2012," according to the Economist (26 July 2014). The fungus also affected coffee plants in other Central American countries, Mexico, Jamaica, and the Dominican Republic. A roya-resistant variety—Castillo, which the coffee federations' research lab developed after 13 years of crossbreeding—has mostly replaced plants on infected farms. The cost of arabica-bean coffee on grocers' shelves remains high in comparison with 2007 prices. The percent of US adults who have ground coffee in the past six months remains relatively unchanged between 2004 and 2012 (57% and 58%, respectively). Fall 2013 VALS™/GfK MRI reports that only 7% of US adults do not drink a cup of coffee in an average day; one-quarter drink only one or two cups. Fewer than 10% of adults are heavy coffee drinkers—who drink five cups or more in an average day. Makers are more likely than average to do so. Believers however, represent almost 20% of adults who drink more than five cups per day.
In the Economy: Millennials Predominate
Since the 1970s, Baby Boomers have driven the US economy; as of spring 2014, Boomers represent 31% of US adults; Millennials represent 35% of adults. As the largest generational cohort, Millennials are the future of the economy. Retailers, manufacturers, and service providers need to know them and know them well. Unlike Boomers, who gained maturity during economic growth and prosperity, Millennials experience economic volatility, political divisiveness, and terrorist threats. Many of today's young adults are delaying marriage and putting off having children and buying a home until "someday." In fact, 60% of Millennials are single, 31% live with a parent or relative, and 29% are not working. They live much of their life online; 86% have a smartphone, and 78% have visited Facebook in the past 30 days according to VALS™/GfK MRI (Fall 2013). Millennials are characteristically enthusiastic and optimistic, just as Baby Boomers were when they were young adults. Similarly, when young, both generations are entitled and selfish. VALS explains this general view of young consumers by noting that many members are Experiencers. For example, of Millennials, one-third are Experiencers, one-quarter are Strivers, and 15% are Achievers. Like Boomers, Millennials will eventually settle into adulthood. No one should expect they will do so in the same way that Boomers did.