The emergence of the millennial consumer is among today’s most important secular trends. Usually defined as the generation born from the early 1980s to late 1990s, millennials range in age from about 18 to 35, making them a key demographic whose tendencies have a growing influence on equity markets, particularly in the Consumer Discretionary sector. In some ways, millennial spending habits represent an enigma to investors seeking to capitalize on shifting consumer preferences. Finding opportunities among a generation that shuns homeownership yet embraces $15 açaà  bowls and $700 music festival tickets can be challenging, but we believe millennials are driving fundamental changes and unlocking promising investable themes in the Consumer Discretionary space.
The Experience Economy
With the emergence of the millennial demographic, material ownership has ceded the spotlight to a mentality that prioritizes experiences over possessions. Since 1987, the share of consumer spending on live experiences and events relative to total U.S. consumer spending has increased 70%. More than ever, people value creating memories via shareable experiences, sustaining the growth of an economy driven by their consumption.
Against the backdrop of the digital age, the secular shift away from materialism has facilitated the growth of an experience economy where interesting destinations and activities practically amount to social currency. Now that memories can be appreciated by friends, family, and followers across the interactive landscape of social media, the “cool factor” of unique personal experiences is amplified, a
dynamic we think will benefit companies catering to a market in search of shareable, Instagram-worthy moments.
One such company is Vail Resorts, Inc. (MTN, Financial), America’s largest ski resort operator. While weekend getaways to snow-covered mountains have long been popular, we believe skiing represents exactly the kind of activity that appeals to evolving consumer tastes. Vail’s resorts offer visitors the chance to experience some of the world’s best backcountry terrain, and the company has invested in technology that enables riders to track their performance on the slopes and share their experiences with friends. Moreover, Vail has demonstrated the ability to convert destination skiers into annual season pass holders via its Epic Pass, which offers unlimited access to 19 resorts in the U.S., Canada, and Australia. Pass sales are growing at around 10% per year, and we view recent acquisitions, as well as ski school, dining, and Vail’s newly introduced Military Epic Pass, as drivers of future growth.
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