HENRYs (High-Earning-Not-Rich-Yet) are the lucrative next generation of consumers being targeted by luxury alcohol brands in the US.
As the HENRY demographic matures, they may become the next generation of the ultra-luxury consumers; making the investment in gaining their loyalty early an opportunity that will appreciate over time.
The American middle class has lost some of its spending power, even with recent economic gains over the past several years. According to the Bureau of Labor Statistics 2017 Consumer Expenditure Survey, the average US household’s income before taxes is $73,573, down more than $2,237 from its high in 2006 of $75,810. Despite this, average annual expenditures per household has risen from $60,060 in 2017 vs. $57,311 in 2016, a 4.8 percent increase in spending.
The HENRYs are young, usually well-educated and highly paid (incomes range between $100,000 to $300,000+), but have not yet accumulated significant wealth. They are sandwiched between the ultra-affluent (annual incomes starting at about $400,000 and up to over $1.5 million) and the middle-income consumer segments.
The number of US households that are categorized as HENRYs number about 22.5 million, a considerably larger demographic than the roughly 2.5 million households in the ultra-affluent category, according to the Bureau of Labor Statistics Consumer Expenditure Survey.
All in all, their purchasing power is nothing to take lightly.
HENRYs account for 20% of Americans, but are responsible for 40% of US consumer spending according to Pam Danziger, consumer insights & marketing expert and President of Unity Marketing. So while HENRYs have a much lower spending capability per household, they make up for it in sheer volume with a market potential three to four times greater than that of the ultra-affluent.
The 3 Keys to Marketing to HENRYs
- Compelling Brand Story that Showcases High Craftsmanship
- They want to know what a brand stands for, its story, origins, why it exists and whether there is a pride of craftsmanship. These factors set your brand apart from mass-market offerings.
- They pride themselves on their intelligent buying choices and the research they put into their purchases.
- They want to be able to communicate what makes the brands they invest in worth the cost—the value proposition.
HENRYs don’t want a luxury product that solely serves as a status symbol; rather, they see the brands they choose as an extension of themselves and their savvy purchasing abilities.
- Provide a Luxury Value Proposition that Promises Luxury for Less
- HENRYs don’t leave their budget analysis and research abilities behind at the office. Before investing in a product, they tend to employ a rigorous evaluation process and rely heavily on the Internet to help determine the best products/brands with the highest value proposition.
- The “smart buy” and the reason behind it are what constitute bragging rights for this market, not an extravagant price tag. Practical, simple and minimalistic attract rather than the gaudy, showy or ostentatious.
- Mass vs. Class – Finding the Middle Ground
- They tend to be careful money managers who evaluate various purchasing options, often online, and then balance trade-offs with value to achieve the right return on investment.
- They want something in between the lower-tier options and the overinflated price tag of the ultra-luxury products. In other words, they are seeking a high value without the luxury price tag.
Luxury alcohol brands are well staged to take advantage of the high value or “smart buy” offering HENRYs seek. An engaging, well-crafted story and exceptional packaging are critical to supporting a luxury position at an affordable price.
Because HENRYs research products extensively online prior to making purchase decisions, a strong online brand presence can’t be overlooked. Be sure to pull your brand essence and storytelling, particularly details on craftsmanship, into your web presence. Keep in mind many consumers, including HENRYs, may actually discover you online first.
If companies can develop compelling stories and engaging package designs that support the quality of their products at an affordable price point, HENRYs will take notice, becoming a brand-loyal market segment for years to come.