Millennials hate change and they love change. That's right, they hate change in that they would gladly swipe a credit card for something that's $4.31 because they do not want 69 cents jangling around in their pockets or pocketbook. They have such an aversion to it that if you have a loyalty card like Panera (PNRA) or Starbucks (SBUX) has, it's a natural draw.
At the same time, they love change, in that they love to find something that works for them, that doesn't pollute, keeps a small footprint, allows them to express themselves and can fall within their meager budgets.
I have spent a huge amount of time trying to figure out the millennials because they hold the key to growth. You can't have a consumer business without thinking of them and what they want, and I tire of those who find them unfathomable. In fact, they are anything but.
As I have explained, first you have to figure out what they will pay up for. Here's what we know: There are three premium goods they must have. First is Uber, perhaps because they can't afford cars or don't think they are necessary. Second is the iPhone, and that's pretty simple, because it's their lifeline for everything from games to texting to calendars to Facetiming and even Netflix (NFLX) and ESPN. They are willing to pay the equivalent of a latte a day, Apple (AAPL) CEO Tim Cook's clever calculation for the cost of an iPhone X when sold by a cellphone company, to get that lifeline. And they need not just any makeup, but premium makeup, hence why Estee Lauder's (EL) stock is worth a heck of a lot more than that of E.L.F. Beauty (ELF) . (Starbucks and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
But how about when they are done with those purchases? We know from Home Depot (HD) CFO Carol Tome that this cohort is just now beginning to move out of their parents' homes. We know they are stretched to the limit by student debt and rents and healthcare.
And we know they are fanatical about the Earth and not despoiling it. If you can address those concerns, recognize that they have changed to embrace these desires, you can begin to have growth, like the 61% total shareholder return that ConAgra's (CAG) given you if you include the spinoff of Lamb Weston (LW) . What's ConAgra done? It has fundamentally revitalized and reinvented the company, taking tired old brands like Healthy Choice and reinventing them in a way that has definite appeal to millennials.
I mention them and Tyson Foods (TSN) , which bought Hillshire Brands, which used to be run by ConAgra CEO Sean Connolly, because both companies have been trying to navigate not the headwinds of millennials but the dynamic, the changes millennials are bringing to the supermarket. I am not going to steal -- "dynamic" is Connolly's word from a recent Morgan Stanley presentation, as his company is changing its whole product line to satisfy this cash-strapped but more rich group. What's his best move? I think it's replacing plastic with biodegradable compost paper because millennials can't stand packaging -- something that Procter & Gamble (PG) with its horrendous Gillette packaging still hasn't learned. Second-best move? Adopting the clean label strategy that International Flavors & Fragrances (IFF) CEO Andreas Fibig talked about the other night on Mad Money.
Third best? Here's a lucky one -- being in the frozen-food aisle. Millennials crave convenience, price and staying at home. If you can cut out the preservatives, which can happen if you flash-freeze, and keep the costs down, the freezer aisle works well. It's made a real comeback as we learned when we talked to Tyson CEO Tom Hayes a few weeks back.
ConAgra's not going to master everything. It's not experiential like Royal Caribbean (RCL) , Carnival (CCL) and Norwegian Cruise Lines (NCLH) are. It doesn't make you want to reinvent yourself with fabulous backdrops -- the cruise industry's secret weapon -- in order to capitalize on Instagram. And as much as I like Angie's Boomchickapop, it can't uproot the fabulous Frito-Lay franchise.
But one thing's for certain, it recognizes and embraces the change that millennials are demanding. That's how you stay fresh. That's how you win, because my cohort? We think we are important, but what you buy when you leave your parents' homes isn't what they buy. We are happy with antibiotics in our chicken and plastic at our table or sinks. They aren't. That's why we've become irrelevant, vestiges of a branded past. Knowing what millennials desire is rapidly becoming one of the keys to a successful portfolio. Embrace it or else.