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Wealth Management: Investment Views – The Silver Economy: Silver age consumption

William Therlin, William Haggard and Amaya Gutiérrez, Wealth Management

“The Silver Economy targets the beneficiaries of the economic boom of the late 20th Century who are sitting on a great deal of capital.”

- Dominic Hollamby | Rothschild & Co's Global Advisory Head of Healthcare

Silver age consumption

The Silver Economy poses unprecedented economic opportunities and challenges for businesses given the rapid rise in consumer and public spending by and for the world's 60-plus age-group (Figure 2). Centred on the specific needs of senior citizens and their consumption of goods and services, the 60- plus segment is expected to represent nearly 60% of consumption growth in Europe and Asia from 2015 to 2030. In North America, where consumption is more evenly spread across age segments, the 60-plus are still expected to represent nearly 50% of total consumption.

Silver Economy NEW - Figure 2   

Source: McKinsey Global Institite Cityscope, 2016

Click the image to enlarge

Sectoral winners

With many active years ahead of them, $120bn per year is spent by baby boomers in (silver) tourism and leisure4. In the consumer discretionary sector, names such as L'Oréal and Unilever have introduced various product lines relevant to 'aging gracefully'.

4 World Travel Monitor

Meanwhile, Swiss food Group Nestlé has in several markets redesigned instant coffee jars and chocolate boxes by making them easier to hold and open, keeping products accessible to older age groups. 

Changing sectors, Toyota has aimed at capitalising on the Silver Economy in Japan - often used as the case study for the future of global demographics - by developing humanoid robots to carry out household duties. 

A discussion of sectoral winners from the Silver Economy would not be complete, however, without focusing on the healthcare sector and health-tech products, especially as healthcare spending is growing increasingly as a function of age (Figure 3 on the following page).

Click here to continue: Investment Views - The Silver Economy

 

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