London, Chicago: “I enjoy good coffee, I have a beard.”
Andrew Reeve rides a bicycle, works in London’s East End and enthuses about the taste of fresh versus six-month old beer.
“I’d describe myself as an undercover hipster — a hipster without the pretentiousness,” he says.
Now aged 27, Reeve set up HonestBrew four years ago to sell craft beer over the internet. Since launching, it has raised £650,000 (Dh3.46 million) from investors, and while it does not disclose its revenues, sales in December were 10 times higher than a year earlier.
Reeve stresses that his customer base is far broader than a single category but there is no doubting the economic force of hip consumers over at least the past five years, especially as they are prepared to pay more for higher quality.
“People are making a choice about how they spend their money. Are millennials spending more of their income on food compared to the previous generation? Anecdotal evidence suggests they are,” says Nick Fereday, a senior analyst at Rabobank.
Growing demand by younger consumers demonstrates their rejection of big commercial food and drinks companies.
Outside food and drink, men’s grooming products, including beard balm, are also riding high on the back of hipster demand. Sales of these products rose to $35.4 billion (Dh130 billion) in 2014, an 8 per cent increase over five years, according to Euromonitor. Shaving products grew at one-third of that rate.
Now hipster products are spreading beyond urban centres like Brooklyn, San Francisco and London’s Shoreditch, where they originated. Mainland China imports a lot of its hipster culture, often from South Korea, which has been enjoying a surge in micro-breweries as the country’s younger, affluent seek a change from the limited array of drinks enjoyed by their parents’ generation.
Such is their influence, they are also having a marked effect on neighbourhoods, says Byron Carlock, PwC’s real estate leader. “Quality of life drivers are really evident. It’s creating a totally different vibe for these neighbourhoods,” pointing to the alternative art scenes they create, foodie shops and the sprouting of small, one-of-a-kind stores.
That in turn, encourages employers to follow them. Douglas McWilliams, economist and founder of the London-based Centre for Economic and Business Research, attempted to put a value on the economic impact of hipsters and other millennials after discovering that more new businesses had been created within two years in a single London east end postcode — EC1V — than in the whole of Manchester and Newcastle.
In his book, ‘Flat White Economy’, named after the milky coffee favoured by “advanced techie geeks, marketing people to creative types”, he forecast that one-third of the UK’s economic output will depend on the digital industry by 2025.
“Hipsters don’t have many dependents. They’ve got identifiable spending patterns and homogenous tastes. But they don’t want others to copy them, so they keep up by changing their tastes, by moving on to the next things,” said McWilliams.
“You have to watch that if you are a consumer products company.”
Big food and drinks companies have been trying to get in on the act in two ways: making their own products more appealing to hipsters and millennials, and buying up brands these consumers like, even though this could be the touch of death for an acquired brand.
Kraft, Nestle, Hershey and General Mills have all made pledges on the removal of artificial colours and preservatives from some of their products. General Mills has introduced a gluten-free version of its Cheerios cereal.
Analysts warn, however, that being part of a multinational, however, inevitable reduces the hipster-cache.
“If a mainstream company is considering purchasing you, you’re probably big enough to be on the edge of the average hipster’s chopping block anyway,” says Tim Barrett, analyst at Euromonitor.
When two hipster coffee companies — Stumptown and Intelligentsia — were bought out by JAB, a large European holding company that is taking on Nestle in the coffee segment, the owners of both were quick to try and reassure their loyal customers that the new ownership would not alter the coffee or the brand.
Sales at Kashi, the US natural food business, increased strongly after it was bought by Kellogg in 2000 but then went into sharp decline, partly because of a backlash by Kashi fans against Kellogg’s stance on genetically modified foods.
Even McDonald’s has entered the market by trialling a new concept at a branch with a clinical modernist design and open kitchen in central Hong Kong.
Quinoa salad, single-origin coffee beans and customised burgers served on wooden chopping boards, are designed to tap into the MacBook Air-carrying, skinny-jeans wearing demographic.
For Jonathan Openshaw, editor at ‘The Future Laboratory’, a London-based consultancy, this signals that peak hipster has been well and truly reached. Today, there are virtually no big brands that have not hijacked hipster buzzwords to describe their products.
“When McDonald’s boasts about artisanal chicken, you know the message has gone awry,” says Openshaw. “The language built around hipsters — ‘authenticity’, ‘artisanal’, ‘heritage’, ‘bespoke’, ‘crafted’ — have become empty, hollowed-out words that consumers are blocking out. They are turned off by this narrative.”
For now, the hipster-inspired trend is likely to continue. The test, says Rabobank’s Fereday, could come in the next recession. “Will they still be prepared to pay more? Or will they return to traditional food?”
— Financial Times
