The Shifting Landscape of How Americans Live Play

The Shifting Landscape of How Americans Live, Play and Buy. Prepared for the Cross Country Ski Areas Association Whistler, British Columbia April 16, 2009

Introduction Macro shifts that have nothing to do with XC skiing. . . …and everything to do with XC skiing Demographics Generational shifts Lifestyle trends

Demographics.

The Age Wave Progresses Boomers

The Changing Face of America. 1900 s - 1970 s 10 -13% minority 25 years ago 20% minority Now 34% minority 25 years ahead 46% minority Source: US Census Bureau historical data and projections, Reach Advisors analysis

The Hispanic Market

Demographic Challenges Audience most familiar with X-C skiing is aging Smaller number of families with children at home America’s population growing… …but not among X-C skier population Actually shrinking

Demographic Opportunities Larger, more active aging population? Larger youth population emerging?

Generational Trends.

Generational Impact Formative Experiences Values Life Stage Economic Environment Needs Aspirations/C onstraints Consumer Behavior

Four Generations in Today’s Marketplace Mature/Silent Generation Baby Boom Generation X Generation Y

Mature/Silent Generation Born: 1927 -1945 Age: 64 -82 Source: US Census Bureau

Baby Boom Generation Born: 1946 -1964 Age: 45 -63 Annual birthrate up 30% The breakthrough market for many brands and activities Source: US Census Bureau, Center for Disease Control, Reach Advisors analysis

Baby Boom Generation Led the boom in outdoor recreation and fitness in the 70 s/80 s Healthier, more active than prior generations at this age Not aging out of outdoor fitness as much as prior generations did Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Generation X Born: 1965 -1979 Age: 30 -44 Annual birth rate down 15% Shrinking market flattened the growth rates of a lot of marketers Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Generation X The ‘latchkey’ kids grown up Less income/wealth growth than prior generation Male wages have dropped Fewer have jobs with pensions Most entered housing market after the unprecedented run-up in prices started in 1996 Dramatic increase in college educational attainment of women Less likely to live where they grew up Greater longing for community than any other generation Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Generation X Dramatic shift from ‘country club sports’ of past… …into outdoor recreation Post-Title IX era Emergence of women as peers in outdoor sports Greater engagement of their children in outdoor recreation than seen in past Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Generation Y Born: 1980 -1990 s Age: 20 s, teens, tweens (TBD) Birthrates up 10% + big immigration bump Many marketers salivating for repeat of boom of the Baby Boom Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Generation Y: Reverse Gender Gap Wage/gender gap: 80% of men’s income The new gender gap: Earning 100%-120% in cities with knowledge-driven employment base Source: US Census Bureau, Reach Advisors analysis

Generation Y: Reverse Gender Gap The real gender gap: 59% BAs/advanced degrees The growing gender gap: 1. 5 X BAs/advanced degrees Since outdoor sports participation correlates with educational attainment… …the future will be more feminine Source: US Department of Education

Generation Y Incredibly technological adept generation… …reshaping the world More ‘front range’ than ‘back country’ Fewer engaging in outdoor recreation Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Participation in Outdoor Sports Data indicates that participation appears to be growing But 100% of the growth is from Baby Boomers staying engaged at a higher rate than prior generations did Masking a major issue of declining participation Source: US Census Bureau, Center for Disease Control , Reach Advisors analysis

Participation in Outdoor Sports (by age category) 12 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 Total US (000 s) 1989 20. 9% 19. 8% 16. 4% 11. 2% 9. 7% 13. 9% 222, 551 1992 20. 5% 18. 6% 17. 5% 12. 0% 9. 2% 14. 1% 229, 906 1995 20. 2% 17. 7% 17. 9% 12. 8% 9. 0% 8. 0% 235, 460 1998 20. 0% 16. 0% 18. 3% 14. 2% 9. 3% 7. 6% 242, 884 2001 20. 3% 14. 8% 17. 8% 15. 4% 9. 8% 7. 2% 251, 239 2004 20. 7% 14. 3% 16. 7% 15. 9% 11. 0% 7. 1% 258, 533 2007 20. 4% 14. 0% 15. 7% 16. 3% 12. 1% 7. 2% 265, 381 Trend Flat Dropping Growing Stable Growing Source: Reach Advisors analysis of NSGA Outdoor Participation Historical Data

Generational Challenges Baby Boom Generation has already walked away from the sport. . . will they return as they age? Generation X Generation that’s embraced the outdoors…but why not X-C skiing? Generation Y Generation that hasn’t embraced the outdoors like prior ones…can that change?

Generational Opportunities Baby Boom Shift towards Total Wellness…more to come Generation X All the underlying dynamics are in alignment…more to come Generation Y It’s the women…more to come

Lifestyle Trends.

Resetting of Financial Expectations The jump-ball economy Example: Alpine resort spending shifts Destination resorts tanked. . . most off 10%30% from last year • Worst for the luxury resorts Many of the more aggressive day areas had record years

Total Wellness.

Consumer Health Trends 1950 s: The Breakthrough Years 1960 s: Pharmaceutical Freedom 1970 s: Era of Self-Improvement 1980 s: Group Self-Improvement Meets Managed Care 1990 s: Era of Health Activism 2000 s: Consumer-Driven Demand

Era of Total Wellness 2010 s

Era of Total Wellness Why?

Boomers are Aging Boomers

But are the Champions of Anti-Aging 75% say they are keeping an active lifestyle to stay healthy 74% say they won’t describe themselves as old when they reach 70 40% say they are healthier than they were in their 20 s Sources: National Council on Aging, Kelton Research

Information = Empowerment

Information = Empowerment Greater access to information § 85% of Internet users have searched for information on health topics § 68% go online before consulting their doctor Greater control over health delivery § DTC testing for a host of health conditions § Retail healthcare Greater confidence in ability to make healthcare decisions § Half of consumers give their own opinion equal weight as their doctor’s Sources: Pew Internet & Am Life Project, Yankelovich Monitor 2007, Reach Advisors Analysis

Health Consumption = Integrated Approach 38% of US population using complementary and alternative approaches for health needs 51% of those who engage in some sort of physical activity (vs. 24% of others) Tend to be better educated / have higher incomes than rest of population Yoga as example of integrated approach: Apx. 14 million Americans say that a doctor or therapist recommended yoga In 2008, 49% of yoga participants reported that they started practicing to improve health… …in 2003, only 6% reported that Sources: Canaccord Adams, NIH, Yoga Journal

Segmentation for Total Wellness High Proactively healthy behaviors Low High Low Medically driven behaviors

What Does All This Mean? Overall, fundamental trends in X-C demographics and outdoor sports participation rather negative… …but other key trends clearly moving in the direction of X-C skiing The bottom line? It’s time to go after the niches and retool how X-C skiing perceived in America

Questions? James Chung 518. 439. 6942 james@reachadvisors. com