Millennials are projected to soon emerge as the most important demographic in consumer spend. They are changing the face of the global food & drink industry, with executives saying the pace of change is unprecedented and the companies that come out on top will be those that are the most agile.

The first generation of digital natives have different preferences and purchase habits. This generation is at the forefront of the drive for convenient, healthy, authentic (artisanal/locally originated), natural products that are sourced and produced ethically.

These changes will shape the consumer landscape for years to come, but create significant risks for the laggards, which will be bypassed by entrepreneurial startups able to latch on to the latest trends and give millennials what they want, when they want it, and in the channels they shop.

Brand, channel and consumer fragmentation have been themes for some time, but they are now accelerating and no staples company is immune. In food, big brands are losing to small brands, as there is a millennial backlash against processed food. In HPC, fragmentation is more visible in upscale personal care (ie colour cosmetics) than in household care. In beverages, the explosion in craft beer might be peaking but we think craft white spirits still have a long way to go.

Numerous companies have reacted by setting up independent venture capital arms such as Unilever’s Foundry to seek out the next trends. Others have tried to renovate their portfolios, while some have splurged on acquisitions - for example beer giant ABI has been hoovering up millennial-friendly craft brewers (most recently Wicked Weed, its 10th US craft acquisition). Diageo is doing both: it launched Distil Ventures as its VC arm and just spent an estimated c18x sales on Casamigos - a tequila brand founded by George Clooney.

In food, the desire for lower calorie, clean label and protein has driven innovation. As big food companies rush to adapt, ingredient companies such as Kerry are well positioned. Millennials matter, and companies now know it. The question is who can best adapt, cut through the clutter and capture their attention and imagination.

Warren Ackerman is head, global staples research, at Société Générale