From the December 1996 issue of Entrepreneur

Got a clue? We do, and we're willing to share. Culled from hours of research, observation and talks with experts in a variety of industries, the following pages contain our picks for the 14 hottest trends for 1997 and beyond-not to mention dozens of products, styles and services we predict will spark sizzling sales.

What trends look particularly hot? Perhaps the biggest force shaping the future is the approaching millennium. Giving rise to a whole raft of businesses related to personal growth and New Age thinking, the millennium is so important, we've devoted an entire article to the topic (see "2001: A Business Odyssey").

And while it doesn't take a genius to peg technology as a hot trend, our look at virtual corporations and home tech will help you pinpoint where the greatest opportunities lie in this fast-changing field.

As for the rest of the trends we've selected-well, if our picks are any indication, Americans seem to be going to extremes. On the one hand, they're rocketing down mountains or up skateboard ramps as participants in "extreme" sports; eagerly pursuing the latest fitness regimes, vitamins and herbal supplements in an endless quest for eternal youth; or stuffing themselves with gourmet food and designer water. On the other hand, Americans are also seeking to streamline their lives and are turning inward to spiritual pursuits. (Is it any wonder we named "confusion" as one of the hot attitudes for '97?)

Figuring out these seemingly contradictory states of mind-and how your business can best benefit from them-takes a bit of effort on your part. That effort will, however, be amply rewarded. So without further ado, start reading . . . and get a clue.

Spirituality

What profits it a man to gain the whole world but lose his own soul? For many who lived through the anything-goes '60s and '70s, greed-driven '80s and bare-bones early '90s, this question begs a long-overdue answer. Spirituality is experiencing a revival and proving for many infinitely more fascinating, and necessary, than anything of a physical, emotional or social nature.

In a recent poll by Utne Reader magazine, "moral and spiritual decay" ranked as the biggest issue facing the nation-ahead of the environment, racial tension, crime, corporate downsizing and the budget deficit. "Society is reaching the end of its emotional resources," says George Gallup, executive director of the Princeton Religion Research Center. "When that happens, people turn to God. The crisis deepens the search."

It also deepens the chasm separating the levels of spirituality. On the one hand, you have Spirituality Lite-witness references to God in popular music, movies like "The Preacher's Wife," and TV shows like "Touched by an Angel." According to the Princeton Religion Research Center, some 96 percent of U.S. adults say they believe in God or a universal spirit. But vague hunches rather than divine inspiration seem to guide many of these believers. "If you ask about a personal God who judges and answers prayers," Gallup says, "the figure [drops] closer to eight in 10."

However, more seekers are starting to jump the fence and travel a more committed path to enlightenment. Even secular players are seeing the light-much of the Christian music industry is owned by Fortune 500 companies such as EMI Records. Truth Clothing, a sportswear company making waves in the $3 billion Christian-oriented retail industry, relies on quality to appeal to the secular as well as the spiritual market. Owners Eric Hannah and Scott Brinson have seen crossover success not only in their marketing but also in their message.

"In the '80s, there was more hiding of one's beliefs," says Hannah. "Today, we don't have to apologize for taking a stand."

"Spirituality is much more mainstream," agrees Brinson. "People are seeing a need for a spiritual life." That includes the next generation. With only 7 percent of kids aged 3 to 17 saying they don't believe in God, what will happen as spirituality continues to sweep the nation? God only knows.

Virtual Corporations

Business as usual is anything but with the advent of virtual corporations. A company more in concept than in reality, the virtual organization might be considered the ultimate in 1990s downsizing-an entity minus the employees, minus the corporate bureaucracy, minus the physical trappings of a "real" company.

"I have almost no meetings-I do everything over the phone," boasts Steve Kendall, owner of St. Louis-based virtual company SMK Marketing. "Occasionally, I meet with people, but my philosophy is the less meetings we have, the more work we get done."

And Kendall gets his work done, no question. The inventor of a device that opens the cellophane wrappings of compact discs (as well as audiotapes and videotapes), the 45-year-old entrepreneur began selling his product in the Wal-Mart discount chain last summer. For fiscal 1996, Kendall projects sales of $3.5 million.

How does it work? SMK has no employees. "Everything I need, from the start of production to the point when it's shipped out the door to Wal-Mart, is done through outsourcing," explains Kendall.

"I think [the trend of virtual corporations] is going to continue," says Sharon Marsh Roberts of the Independent Computer Consultants Association. "The fact that [entrepreneurs] want to respond to a client's needs before some larger organization gets its bid in is certainly part of the restructuring of American business."

The upshot? Doing business as usual in the leaner, meaner global economy of the 1990s necessitates new thinking and new corporate organizations. Of this, we feel safe in saying, you may be virtually certain.

Entertaining At Home

It used to be that people who were all dressed up with nowhere to go were considered losers. Today, they're lauded as the coolest of the cool. Entertaining at home is the natural progression of the cocooning trend of the '90s. With Americans unwilling to venture out into the cold, cruel world, bringing entertainment home was the next logical step.

"In the '80s, people were spending money on unique clothing, unique restaurants or unique travel," says Paul Fihn, president of the Raintree Collection, a home and decorative accessories importer. "Now they're spending it to create a sense of uniqueness in the home. They want to replicate as entertaining an environment at home as they experienced when they went out." By decorating with the intention to create warmth, romance or adventure, people "don't have to leave their homes to transport themselves to another place," Fihn says.

For many, entertainment means retreating from a hectic lifestyle and getting together with friends. They share in the cooking, and even play cooking games like Stir Crazy, a board game that involves actually preparing a meal. Even children are getting in on the trend: Graduating from the ever-popular Playskool minikitchens and plastic food, kids are enrolling in cooking classes at schools, hotels and restaurants. They can peruse the 51 cookbooks aimed at children and teens published last year; surf The Kids Cooking Club, a Web site that provides monthly family cooking projects; check out the culinary classes for anyone aged 10 and older at the Disney Institute at Walt Disney World; and join the Cooking Together Foundation, formed to support cooking workshops and events for children.

Meanwhile, twentysomethings, renowned for putting their own spin on trends, are singlehandedly bringing back the cocktail party. In fact, they've created a subculture known as the New Cocktail Nation and spurred a music craze called "ultralounge" music-a hodgepodge of old recordings and new beatnik sounds. These kids can be seen wearing vintage clothes, eating vegetarian appetizers off mismatched retro dishes, and drinking nonalcoholic cocktails. Equal parts '50s-style cheese and '90s-style hip, the next generation of home entertainers is nothing if not inspired. Could a Twister revival be far behind?

Water

People everywhere can be overheard discussing their preference for domestic or imported, contemplating the etiquette of when and when not to partake, and judging others by the size of their bottles (big bottles make a bold statement; gallon sizes, however, indicate a certain lack of class). Yes, water mania has flooded our gyms, our offices, our shopping centers, our social events, even our elementary schools: In Irvine, California, one elementary school has requested that first-graders (gulp) bring their own bottled water to school to cut down on trips to the drinking fountain.

Sales in the bottled water market grew 8.1 percent last year to $3.4 billion, while bottled water consumption rose 7 percent, to almost 3 billion gallons, according to research firm Beverage Marketing Corp. In restaurants, bottled water is soaking up double-digit increases; Beverage Marketing reports it outpacing the popularity of most soft drinks, beers and liquors.

And California, land of the trend-obsessed, accounts for nearly 30 percent of all purified water purchases in the nation and has seen increased sales of the latest must-have accessory: water bottle holsters.

While no one questions the liquid assets of brands like Evian and Arrowhead, some of the other 900-plus bottled water companies have decided to explore uncharted waters. Water Concepts LLC in South Barrington, Illinois, is one such company: Its Water Joe offers caffeinated water supplying a jolt equivalent to a cup of coffee. Targeted at 18- to 35-year-olds, Water Joe is "the coffee and cola alternative," says inventor David Marcheschi. "It's water with a kick."

"Water is the premier alternative beverage," says Tom Pirko, managing director of Bevmark LLC, a New York City-based beverage management consulting firm. Water . . . alternative? Perhaps it's a rebellion against rebellion, a longing for a life stripped of the extras. Or perhaps it's just for the health of it. Whatever the motivation, the irony is clear: Bombarded with every type of in-your-face beverage imaginable, more and more people are asking businesses, "Got water?"

And those who drink of these waters shall thirst again. Says Pirko, "Water consumption is projected to grow significantly throughout the decade."

Home Tech

For sale: 4 BR, 2 BA, 4 PCs with 3-D graphics, ISDN, CEBus products, 31-inch TV with fully loaded 120 Mhz Pentium PC. No, it's not some Jetsonian flashback or yet another peek at the millennium-we're talking Chino Hills, California, 1997. The CyberHome, a brainstorm of Computer Life magazine made reality by West Venture Homes, showcases the latest in home automation, featuring more than 50 gadgets that do everything from run 3-D video games to control your lights automatically.

While some scoff that the average home buyer isn't keen on high technology and that high-tech companies haven't yet mastered a way to meet the demands of entertainment-seeking residents, it's clear the twain shall soon meet.

"[Computer] systems are making more and more sense for home users," says Michael Penwarden, executive editor of Computer Life. "There's a lot of interest in home computers, for everything from online banking to home automation and entertainment-the list of ways computers can be used in the home is pretty long. And as computers become easier to configure and more powerful for the price, they become even more compelling."

Indeed, a survey by the Consumer Electronics Manufacturers Association found personal computers are migrating from the home office to other areas of the home-40 percent of the respondents had a computer in an office or den, 36 percent had computers in bedrooms, 29 percent had computers in family rooms, and 11 percent had computers in their living rooms. Eighty-eight percent of teenagers surveyed said they would rather have a computer than a video game system.

The smart house has arguably piqued the most mainstream interest. CEBus, a home automation system that may be introduced as early as next year, allows you to "call from your office and have your house cool, the oven on, and your hot tub hot when you come home from work," Penwarden says.

Research organization The Battelle Memorial Institute predicts that within 10 years, home techies will have even more to feast on, including a digital, high-definition TV set that will hang on the wall like a large painting and serve as a computer monitor, videoconferencing device and entertainment medium all in one. Meanwhile, aging baby boomers will seek home devices that can monitor total health and recommend
exercise programs, meals and lifestyle changes as easily as we weigh ourselves today.

Says Stephen Millett, manager of The Battelle Technology Intelligence Program, "Much of the technology we've been talking about for years is practically ready today."

Cigars

Clearly, there are more important things in life than tracking down a Cuban cigar. You just wouldn't know it by the way some people are carrying on.

A phenomenon if ever there was one, cigars are, in the immortal words of Jim Carrey, smokin'. According to the Cigar Association of America, sales in the premium cigar industry have risen dramatically-about 31 percent in 1995 and 51 percent in just the first half of 1996. "Even those in the industry never saw the boom coming," says Norman Sharp, the association's president.

Consolidated Cigar Holdings Inc., the nation's largest cigar manufacturer, has a backlog of about 28 million cigars. "We expected the market would slow down and that we would, with our increased production, catch up on back orders," says Richard L. DiMeola, Consolidated's executive vice president and COO. "We were wrong. The market did not slow down; in fact, this year, it's expanded even faster."

Prior to the 1962 Cuban embargo, the premium cigar market averaged 185 million cigars per year; by the mid-1970s, that number had dropped to 50 million. This year, for the first time, the market is expected to surpass 200 million cigars. "I've never seen a surge like this," says DiMeola.

Despite this recent surge, the trend started at least a decade ago, with the spawning of the cigar dinner. Then young celebrities and models started sporting stogies. But the crescendo came in 1992, with the advent of Cigar Aficionado magazine, which "repositioned cigars as a fashionable product," says Marvin R. Shanken (above), the magazine's publisher and editor and, by most accounts, the trend's founding father. Since the magazine's advent, Shanken says there's been "an explosion in the population of cigar smokers, which has doubled or tripled in the last four years. I'm not sure any other industry has experienced [growth] like this, with the possible exception of the computer industry in Silicon Valley."

"Nobody anticipated the kind of growth that's happened," says Mark Thomas, a veteran retailer who recently opened Blue Havana, a cigar shop in Chicago. "We expected [the store] to do well, because we knew the category was on fire. But in 21 years in retailing, I've never seen sales in a store ramp up like these. It usually takes two to three years to see the kind of sales we've seen in 14 weeks."

The difference, apparently, comes down to a shift in demographics. While cigar smokers used to be stereotyped as what Thomas calls "the old, stinky cigar market," today's cigar smokers are clearly young, clearly rich and clearly elitist. The average Cigar Aficionado reader has a household income of $148,000, with an average net worth of $1.1 million; 79 percent are college graduates and 65 percent are professional or managerial. Thomas identifies the 20- to 35-year-old male as the new smoker "who has set the cigar world on fire," inspiring thousands of cigar events per year nationwide, from $25 afternoon barbecues to $1,000-a-plate charity dinners.

While the cigar shortage brought on by the industry explosion poses immediate difficulties, opportunities to cater to the cigar smoker appear to be endless.

Humidors, books, upscale ashtrays, journals, even golf tees to hold your cigar on the links are being snatched up. And, as industry insiders hope for some slowing down to healthier growth levels, they're already gearing up for the next windfall. "If and when the Cuban embargo is lifted," says DiMeola, "it'll send this market into the stratosphere."

Internet Marketing

Over the past year, we've seen consumers as well as marketers getting more comfortable with the Internet. More than 20,600 stories about the Internet, the World Wide Web, online services and CD-ROMs were published by the media last year. Yet since the creation of the Internet, the technology's potential has always been more exciting than the reality. According to Forrester Research Inc., online shopping is expected to reach $6.6 billion in 2000-a substantially higher figure than the $518 million spent in 1996. More than 65 percent of people who purchased products or services through new media planned to shop through the Internet or other new media again within the next 12 months, a survey conducted in 1995 by consulting firm A.T. Kearney concluded. Does this mean the potential of Internet marketing will finally intersect with the expectations within the next few years?

Marketers are betting on it. Hundreds of big-name companies have set up Web sites, and a report by Forrester shows that even companies without household names have become huge presences on the Internet.

"People marketing on the Internet are getting more savvy about collecting information," says Joe Hair, director of the Institute for Entrepreneurial Education and Family Business Studies at Louisiana State University (LSU) in Baton Rouge. "We are rapidly developing software that will give us more information on the value of a hit [a visit to a site] so you can judge who's coming [to the site], how long they stay, and whether they ultimately purchase." To business owners of the future, marketing on the Internet will be second nature, thanks to programs such as one being tested by LSU, in conjunction with publishing conglomerate International
Thompson, in which students learn Internet marketing, complete with the e-mail addresses of marketing scholars worldwide.

Clearly, those still put off by Internet marketing may find their businesses suffering as a result. Entrepreneurs "have to get on the Net and experiment with it," says Harris Gordon, a vice president at A.T. Kearney, "because the model of marketing itself is going to start changing."

That change will be instigated not by any one company, no matter how big or small, but by consumers. "Instead of sitting by passively, consumers are going to make their needs known in the marketplace and expect marketers to respond to them," says Gordon. "Or they'll [peruse] a large spectrum of products or services, select five or six, then ask for more information or for a bid. Though this is the business-to-business model for marketing today, exactly the same thing is going to happen with consumers in the future."

Gordon predicts that by the early 2000s, 20 percent to 25 percent of direct marketing revenues will result from the Internet and other communications devices. "The question is not whether [this trend] will grow," he says. "The question is how fast."

STILL HOT

Candles

The candle craze is burning at both ends, as consumers clamor for everything from minuscule votives to substantial pillars, from floating rose candles to wild abstract designs. Annual retail sales of decorative candles are pushing past the $1 billion mark, while those wafting aromas you detect are probably scented candles, which continue to be industry growth leaders.

Converts can't help but wax poetic about the true benefit of candles. "People are seeking tranquility," says J.C. Edmond of the National Candle Association. "Candles provide that."

Home Improvement

Apparently, homeowners still aren't satisfied in their quest to build the perfect dream house: According to the American Express Retail Index, a whopping 40 percent of U.S. consumers made home improvements this year.

The kitchen-home of professional steel stoves and other sophisticated appliances-is where many of the improvements are happening, says John Quaregna of the National Association of the Remodeling Industry. The bathroom is another hot spot: Stressed-out consumers are seeking refuge in luxurious amenities such as Jacuzzis and more.

Turtles

Cautiously, the turtle is peeking out of its shell and into the spotlight. Games, puzzles and books are crawling with the creatures, who are creeping into household decorations, too.

"The preoccupation with turtles has a lot to do with a growing interest in nature," says Carrie Chesloff of Gift and Stationery Business magazine.

But while the animals have a reputation for dawdling, sales of turtle-related products are anything but sleepy. With consumers readily shelling out the green, the turtle trend appears to be moving swimmingly.

Tiki

Have the tiki torches been passed to a new generation? As unlikely as it sounds, tiki merchandise seems to be riding a wave of popularity. Carved tiki gods, bamboo and rattan furniture, shell lamps, drinking glasses adorned with hula girls . . . it's enough to trigger "Hawaii Five-O" flashbacks.

"It blows my mind how popular it is," says Brian Varela, co-owner of Space Invaders, a Long Beach, California, vintage store. "If we [stock] tiki clothing, tiki pictures-all that stuff goes."

As for whether Middle America will embrace the tiki trend-well, that remains to be seen. Suffice it to say that if they do, we're going to need more than a few mai tais to get us over the shock.

Scary Toys And Books

If you thought the horror was over, think again. Led by the Goosebumps book series, ghosts, monsters and other things that go bump in the night are attracting kids and sales.

The latest trend in terror: scary products that also make kids laugh. Book series Deadtime Stories (Troll Communications) and SpineTinglers (Avon Books) and TV programs "Bone Chillers" (a live-action show for teens) as well as "Secrets of the Cryptkeeper's Haunted House" are all getting in on the action.

Meanwhile, older programs, including Nickelodeon's "Are You Afraid of the Dark?" and "AAAHH!!! Real Monsters," continue to scare up healthy audiences among boys and ghouls-er, girls. And with many of the books and shows accompanied by lines of CD-ROM games, audiobooks, toys, apparel, videos, party goods and more, the profit potential is enough to make you scream.

Ballroom Dancing

Rumba, anyone? If you predicted the ballroom blitz brought on by 1994's hit movie "Strictly Ballroom" would fade faster than a pair of aching feet in high-heeled pumps, you were way off the mark. Indeed, the U.S. Amateur Ballroom Dancers Association more than doubled its membership during the past four years and expects to reach 50,000 members by the year 2000. That figure might even be exceeded if Hollywood waltzes ahead with plans for other big-screen turns in ballroom dancing.

Inline Skating

Inline skating is still on a roll. Thanks in part to the formation of inline skating leagues, the fastest-growing sport in the country over the past six years is more popular now than when it exploded onto the fitness scene in the '80s. In 1994, there were 18.8 million inline skaters in the United States; one year later, there were 22.5 million enthusiasts, an increase of 20 percent. "[Inline skating] isn't just for recreational skaters anymore," says Maureen O'Neill at Minnetonka, Minnesota-based Rollerblade Inc. "And it caters to children, men and women equally. It's a sport for everybody."

Gardening

We're not promising you a rose garden-just a $22.2 billion industry comprised of 72 million households. Gardening, you see, is no longer a passive pastime; it's a competitive sport. "People take great pleasure in having the first ripe tomato on the block," says Bruce Butterfield, research director of the National Gardening Association.

Why the obsession? It's no secret. "Whether for aesthetic reasons, or to grow fresh vegetables and herbs, or to have a backyard oasis," says Butterfield, "a garden is a retreat from a crazy world."