According to a February report from McKinsey & Company, groceries are becoming a primary spending focus for younger generations.
The report, which surveyed over 4,000 individuals spanning baby boomers to Gen Z, asked about their spending intentions for the year. Millennials and Gen Zers ranked groceries as their top priority, surpassing categories such as restaurants, bars, travel, beauty and personal care, apparel, and fitness.
As millennials start families, they are spending more on themselves, their partners, and their children. This marks a significant change from 2018 when older generations like baby boomers and Gen Xers spent more on groceries than millennials.
Gen Z individuals indicated a preference for high-quality snacks and beverages, leading to higher grocery bills.
For example, a 23-year-old Gen Z respondent shared that they spend approximately $130 on groceries for a week and a half. The bulk of this expense goes towards "fancy sodas and drinks" and "random snacks at Trader Joe's," with an additional $35 allocated for protein bars.
The popularity of Liquid Death, a canned water brand, exemplifies young consumers' willingness to spend on unique food and beverage items. The brand's valuation soared to $1.4 billion following a recent funding round, as reported by Forbes. Investor Peter Pham credited the brand's success to its appeal to younger generations.
Pham explained, "The healthy food-and-beverage space has historically been a stale category filled with boring brands. This creates a lightning-in-a-bottle moment for disruptive brands who know how to tap into culture and talk to Gen Z and digital natives."
All generations are feeling the impact of inflation at grocery stores and across various goods and services. A report from Moody's revealed that the typical American household would need to spend an additional $445 per month to purchase the same goods and services as a year ago.
The Federal Reserve has not cut rates, and keeps is holding its benchmark lending rate steady at a range of 4.25% to 4.5%
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