Investing in the coffee generation

Merryn Somerset Webb / 23 February 2016

The young may struggle to buy a home, but they are savvy consumers. Investors should wake up and smell the coffee.



Whenever you hear financial professionals discussing demographics, you will generally find that they are focusing on the best way to make money out of an ageing population. 

There’ll be barely a mention of the young – the young, after all, don’t have the money, so what’s the point in investing in the companies that cater to them? 

That’s a mistake. The Millennial generation (born between 1980 and 2000) is a case in point: this lot now accounts for nearly 25% of the European and US population (more than the baby-boomers in the US). They are also just entering their prime earning and spending years – and they aren’t far from their inheriting years. That makes how they live and shop pretty important to long-term investors.

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Buying habits

According to a report from advisory stockbrokers Killik & Co, they have entirely different ‘priorities and preferences’ from the generation that preceded them. They are ‘digital natives’, their buying habits have been formed by economic disruption. So they are price-conscious, Amazon- using online shoppers (57% use smartphones for price comparisons) but also service orientated: they expect a social media response if they challenge a brand.

Finally, the cost of housing seems to be making them do everything later than the generation above them: they study for longer, live at home for longer, flat-share more and get married later (in 30 years the average has moved from 24 to 30). That means they need more social activity outside the home – and for longer.

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Coffee shop boom could benefit investors

You can see this in the coffee-shop boom. For the older generation, going out for coffee is a social treat. For the young, it’s about finding an alternative living room – somewhere to go to get away from flatmates, parents and shared kitchens. 

So Killik recommends buying shares in Starbucks. You might think that there are more than enough branches. Killik reckons you are wrong: Starbucks plans to open 2,500 stores in China (which also has a growing older population and a cramped younger population) over the next few years. 

It also plans to capture the few members of the global population who insist on making coffee at home: by selling more and more ‘packaged coffee products’.

Seven signs that you need to get on top of your finances.

Social media and online shopping could be good bets

Then there is Facebook. I use it mostly to try to figure out what gifts my godchildren might like. But the Millennials use it all the time: 22% of all the time spent on the internet is spent on Facebook.

Thirtysomethings I know use it actively four or five times a day; that makes the site a leading platform for advertisers who want to reach said thirtysomethings. Killik has them both as buys. 

One fund to look at, which is invested in this kind of theme, is investment trust Scottish Mortgage – Facebook and Amazon are both in its top ten holdings. Pick up the stocks or the fund now – post the stock-market correction – and perhaps you’ll make enough to help your own Millennials with a house deposit. 

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Saga Share Direct, provided by Equiniti Financial Services Limited, is a low cost share dealing service with no annual account management fees and flexible trading options. Aged 50 or over and would like more information? Click here or call 0800 092 9845. Lines open 8am to 6pm weekdays (excluding Bank Holidays).  

Shares are high-risk investments. Share prices and the income from them can fall as well as rise and you may not get back the full amount invested. Past performance should not be taken as indication of future returns. This service is not suitable for everyone. If you have any doubt whether it is suitable for you, you should obtain advice from a financial adviser. Saga Share Direct is an execution-only service, which means we do not offer advice.

Read Merryn's column every month in Saga Magazine. Click here to subscribe.

Saga Share Direct, provided by Equiniti Financial Services Limited, is a low cost share dealing service with no annual account management fees and flexible trading options. Aged 50 or over and would like more information? Click here or call 0800 092 9845. Lines open 8am to 6pm weekdays (excluding Bank Holidays).  


Shares are high-risk investments. Share prices and the income from them can fall as well as rise and you may not get back the full amount invested. Past performance should not be taken as indication of future returns. This service is not suitable for everyone. If you have any doubt whether it is suitable for you, you should obtain advice from a financial adviser. Saga Share Direct is an execution-only service, which means we do not offer advice.

- See more at: http://www.saga.co.uk/magazine/money/savings/investing/merryn-somerset-webb-invest-in-gold#sthash.gqT0F8z8.dpuf

Read Merryn's column every month in Saga Magazine. Click here to subscribe.

Saga Share Direct, provided by Equiniti Financial Services Limited, is a low cost share dealing service with no annual account management fees and flexible trading options. Aged 50 or over and would like more information? Click here or call 0800 092 9845. Lines open 8am to 6pm weekdays (excluding Bank Holidays).  


Shares are high-risk investments. Share prices and the income from them can fall as well as rise and you may not get back the full amount invested. Past performance should not be taken as indication of future returns. This service is not suitable for everyone. If you have any doubt whether it is suitable for you, you should obtain advice from a financial adviser. Saga Share Direct is an execution-only service, which means we do not offer advice.

- See more at: http://www.saga.co.uk/magazine/money/savings/investing/merryn-somerset-webb-invest-in-gold#sthash.gqT0F8z8.dpufA year of carnage. A year in which a great boom turned into a great bust. That’s how anyone involved in the mining or energy business will remember 2015. 

It all started back in the early years of this century. Then the demand from China’s extraordinary decade of growth was really beginning to kick in. The prices of everything from oil and iron ore to copper and gold were starting to soar in price after a nasty 20-year bear market. 

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Supply out-stripped demand

Mining companies made serious money – and in a bid to make even more they raised stunning amounts of capital and used it to get as many new mines into production as possible. It was an incredibly exciting time for the industry – and for those investing in it.  

But somewhere along the way the resource companies forgot about the basic economic truths of supply and demand. When there is too much of the latter and not enough of the former, prices rise. When they are in equilibrium, prices are stable. When there is more of the former than the latter, they fall. You’ll know where we are in that equation today.

Chinese demand has slowed just as the producers have all their shiny new holes in the ground good to go. The result? Price collapses all round, followed by defaults, drastic restructuring and dividend cuts across the sector. Whoops! The good news, of course, is that the story doesn’t end there.

The next part of the capital cycle entails the firms involved cutting back on production and slashing capital expenditure. In time this will push supply back down and herald a return to the happy days of rising prices. 

Sadly this doesn’t happen instantaneously: the CEOs of big mining companies tend to bravado and it takes time to cut big projects anyway. However, looking at the market today there is one part of it I rather like – gold mining.

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The resurgence of gold

The gold price saw its biggest falls long before the carnage hit the rest of the market. That means big mining companies have already started to pull themselves together. 

They have written down (and off) the projects they should never have started in the first place; they have shut down unprofitable mines; and they have worked to cut the cost of production in the rest. They have also revamped their management teams with a view to making money out of digging gold rather than just digging gold. 

The next swing in the capital cycle (where supply is constricted just as it was back in 2000) may soon be upon them.

Experts in the area say investors should focus their buying on the big, low-cost producers such as GoldcorpRandgold and Newcrest

I’m rather too lazy to invest in individual gold shares, so I would look at the big gold funds instead – think BlackRock Gold & General (which I hold already) and theTocqueville Gold Fund. Both have performed abysmally since the gold price started falling back in 2011. But given how much progress gold-mining companies seem to have made in fixing their businesses, that might be a trend that is about to turn.

Read Merryn's column every month in Saga Magazine. Click here to subscribe.

Saga Share Direct, provided by Equiniti Financial Services Limited, is a low cost share dealing service with no annual account management fees and flexible trading options. Aged 50 or over and would like more information? Click here or call 0800 092 9845. Lines open 8am to 6pm weekdays (excluding Bank Holidays).  

Shares are high-risk investments. Share prices and the income from them can fall as well as rise and you may not get back the full amount invested. Past performance should not be taken as indication of future returns. This service is not suitable for everyone. If you have any doubt whether it is suitable for you, you should obtain advice from a financial adviser. Saga Share Direct is an execution-only service, which means we do not offer advice.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.