Phil Bain, senior investment director at Rathbones Investment Management International, reflects on how changing demographics are impacting sectors
FROM pampered pets to longer lives, ageing societies are influencing everyday spending and healthcare demand.
Older populations are shifting spending towards areas such as pet care, premium products and consumer health, while reducing demand for early-life goods and impulse purchases.
At the same time, rising life expectancy – often without a matching increase in healthy years – is driving a surge in healthcare needs, particularly for chronic conditions.
These trends are supporting growth across pharmaceuticals, medical technology and healthcare services, with innovation and AI playing an increasing role in improving outcomes and efficiency.
Picture yourself enjoying a cup of your favourite tea after a light meal and reading this article as your faithful canine friend dozes by your feet. If you don’t have to imagine this – because it’s what you’re doing anyway – you may well be an older consumer, part of a bulging demographic that is highly interesting for the consumer staples sector.
Ageing populations, characterised by rising life expectancy and declining fertility rates, have profound implications, supporting demand for some products and services, but reducing it for others. Lower fertility reduces demand for infant formula and nappies, weakening long-term growth prospects for companies with heavy exposure to these “early-life categories”.
More broadly, food consumption falls with age. The average 70-year-old consumes around 20% fewer calories than the average 26-year-old. In ageing societies, this will limit total calorie growth, even if the population is growing.
Impulse-driven food products are also under increasing pressure. Sugary snacks are already hit by rising health awareness, regulatory scrutiny and GLP-1 weight-loss drugs.
On top of this, older people are less likely to eat these snacks, even if their spending remains resilient on premium and seasonal chocolate (much of the latter doubtless destined for their grandchildren).
Overall, alcohol consumption also faces demographic headwinds. But although older consumers drink less, they drink better quality. That’s good for sales of premium spirits and wine. Meanwhile, spending on most beauty products subsides markedly beyond 65. But hair colouring is a notable exception.
Some markets will benefit from ageing populations though. The consumer health market is likely to benefit from this trend which should in turn increase spending on over-the-counter (non-prescription) treatments for chronic symptoms and medical nutrition products that respond to particular health conditions. Older people also need more vitamins, minerals and supplements because of deterioration in their metabolism and ability to absorb nutrients.
Within food and beverages, rather than reaching for a quick sugary snack in a busy working day, older consumers are often more likely to reach for a coffee – and they have the time to make a cup of real coffee.
This will support the otherwise-mature coffee market.
Ageing low-fertility societies are lonelier societies. Pets increasingly meet the need for companionship, so older people are likelier to have them. This factor could drive growth in spending on pet food, and particularly at the premium end of the market, which older people often favour.
To conclude, demographic change is reshaping industries, creating both challenges and long-term investment opportunities.
