Feeling the pinch, groceries become a ‘splurge’ for millennials and Gen Z

Younger generations are spending more on groceries than before.

Splurging once meant spending money on buzzy restaurants, expensive vacations, and designer clothing. These days, what’s considered splurge-worthy falls into a more humble category.

Groceries are shaping up to be a top spending priority for younger generations, according to a report from McKinsey & Company.

The firm asked over 4,000 people, from baby boomers to Gen Zers, about the categories they intend to splurge on this year. Groceries ranked highest for millennials and Gen Zers, outpacing restaurants, bars, travel, beauty and personal care, apparel, and fitness.

Millennials are also becoming parents, which means they spend more on themselves, their partners, and their children. It’s a notable shift from 2018 when older generations like baby boomers and Gen Xers still spent more on groceries than millennials.

Gen Z, meanwhile, said they often choose high-quality snacks and beverages, which makes for expensive grocery bills.

One 23-year-old Gen Zer told B-17 by text that he spends about $130 on groceries for a week and a half. “Fancy sodas and drinks” and “random snacks at Trader Joe’s” account for the bulk of the bill. He also said he spends about $35 on protein bars.

The success of the canned water brand Liquid Death is an example of young people’s willingness to spend on flashy food and beverages. The brand shot up to a valuation of $1.4 billion thanks to a recent round of funding, Forbes reported. Peter Pham, an investor in Liquid Death, previously told B-17 that part of the brand’s success comes from its appeal to younger generations.

“The healthy food-and-beverage space has historically been a stale category filled with boring brands,” Pham told B-17. “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 pinch of inflation at grocery stores and for goods and services in general. The typical American household would need to spend $445 more a month to purchase the same goods and services as a year ago, a report from Moody’s found.