How Millenials and Gen Z are Redefining Luxury: Budget Travel and Gourmet Lunchboxes

Amid persistently high inflation and a tendency for consumer sentiment to contract, it has become a hot topic that many Millennials and Gen Z (MZ generation) are still choosing to travel. These individuals are reducing their spending on dining out, cafes, and food delivery, instead investing in areas that hold personal significance, such as travel and concerts. This trend is referred to as ditto consumption.

Ditto consumption is a new term that refers to the trend of purchasing products recommended by specific individuals who align with their tastes or values. They follow their favorite influencers, read product reviews, and make purchases, thus reducing the time spent considering their purchases. This makes ditto consumption an optimal way of spending for them.

As influencers on social media platforms like TikTok and Instagram frequently post videos flaunting luxury items, extravagant travel destinations, and expensive homes, these displays have become a symbol of wealth for the younger generation.

The MZ generation is known for their adaptability to change, pursuit of novelty, and willingness to spend time and money on what they love. These characteristics are believed to be transforming their consumption patterns.

According to a recent survey by the asset management platform, Bank Salad, travel spending by people in their 20s and 30s surged by 47% in January-February of this year to $1.84 billion compared to the same period last year. In contrast, food expenditure by those in their 20s decreased by 21.8%, from $1.28 billion at the end of February last year to $1 billion at the end of this February. Similarly, food spending by those in their 30s dropped by 24.2%, from $1.12 billion to $849 million.

Despite the high prices, why is the MZ generation’s tendency to travel abroad increasing? They explained that they are saving on food expenses and investing in travel for the utility of life. Regardless of the economic situation, they prioritize areas where they derive the most satisfaction. This has resulted in a boon for the lunchbox industry.

Hansot, a leading player in the lunchbox industry, saw an 8% increase in sales in 2023 to $1.04 billion compared to 2022. Its operating profit for the same period was $109 million, up 12.4% from the previous year. Hansot also achieved its first-ever operating profit exceeding $73 million in 2022, and it continued to surpass this figure last year.

The demand for convenience store lunchboxes, known for their cost-effectiveness, has also increased. As lunchboxes become cheaper as their expiration date approaches, the MZ generation is known to strategically visit stores at closing time, a trend known as closing time run.

So, where are these MZ generation members, who are continuing this so-called frugal tech consumption, traveling to? Japan, benefiting from a favorable yen exchange rate, and cost-effective Southeast Asian destinations are the most popular. In particular, travel to Japan has shown a sharp increase, with a rise of approximately 6% compared to pre-COVID-19 levels.

Following the lunchbox industry, the domestic airline industry is also recording significant profits. Korean Air, a leading airline, saw its first-quarter sales this year rise by 20% year-over-year to $2.89 billion. Its operating profit increased by 5% to $330 million.

However, the repeated cycle of a depressed domestic economy due to the suppressed consumer sentiment of the MZ generation, who should be leading the consumer market, is a concern. The shrinking consumption patterns among young people, combined with a rising number of single-person households, declining birth rates, and population decrease, are posing challenges to the consumption index.