Concentration in the US manufacturing sector, overall, has been increasing over the past two decades. That’s with the exception of consumer packed goods (CPG). While historically, concentration of CPG categories has been dominated by large, national brands, rapid growth in smaller brands marks a recent structural break. The prevailing theory has been that millennial consumers prefer smaller, more authentic seeming brands. Yet, the question remains: Are millennials tastes really that different from previous generations?

…we find that heterogeneous consumption capital accounts for 85% of the generational share gap between Millennials and Baby Boomers, with the remainder explained by intrinsic generational differences in preferences. — Bronnenberg, Dubé, & Joonhwi (March, 2021).

In this study, Bart J. Bronnenberg, Jean-Pierre Dubé and Joonhwi Joo offer another explanation. Generational differences in behavior reflect heterogeneity in the accumulation of “consumption capital.” This originates from their experience purchasing and consuming mainly established, national brands, prior to new craft and artisanal CPG products coming to market. Millennials in contrast, have typically had access to established, national brands and craft and artisanal brands, starting from when they began forming shopping habits. Researchers used a novel database and tracked the geographic differences in diffusion of craft breweries across the US, in order to test their hypothesis.

They found that Millennials buy more craft beer than earlier generations. They then tested two competing mechanisms: (i) persistent generational differences in tastes and (ii) differences in past experiences or consumption capital. The researchers found that heterogeneous consumption capital accounts for 85% of the generational share gap between Millennials and Baby Boomers, with the remainder, explained by intrinsic generational differences in preferences. In short, generational differences in craft beer demand are mostly an artifact of generational differences in the historic availability of brands during early adulthood.

Read the working paper here.