Future Shift

Five years into the new millennium, California will still be the most populous state, with at least 34.4 million people--one in 10 Americans--residing there. That's a 5.9 percent increase from the Census Bureau's 1999 projections. Despite its mass, however, even the Golden State will see significant changes in the makeup of its consumers.

Post-millennial consumers in California will be older and more diverse than their 20th century forebears, according to Stephen Levy, director of the Center for Continuing Study of the California Economy, a private economic research organization in Palo Alto. Of the two main themes, diversity is the dominant one. "Between now and 2005," says Levy, "California will become a minority-majority state." That means the residents of European ancestry who currently make up 51.8 percent of the state's population will be outnumbered by a combination of Latino, Asian American and, to a lesser extent, African American consumers, he says.

"Almost all the population growth in California is going to be Latino and Asian," says Levy. All told, he estimates there will be 12 million Latinos and 5 million Asian Americans in California by 2005.

Although diversity is a theme that will be prevalent throughout the United States, when it comes to age, California bucks the trend. Because the bulk of its growth will be generated by natural increase--an excess of births over deaths--as opposed to immigration, California won't get old as fast as the rest of the nation. Californians' average age by 2005 will be in the low- to mid-30s, two or three years younger than the national average, says Levy.

Even sizable demographic changes may not add up to a huge difference for entrepreneurs, however. One reason is that small companies tend to be niche players, affected only by the trends that directly impact their specialty markets.

David Morgan, president of Foghorn Press, a publisher of outdoor-recreation guides in Santa Rosa, isn't planning to alter his business practices to appeal to burgeoning ethnic consumers--as long as his core market of middle-class outdoor enthusiasts avoids radical change. For Morgan, continued growth in the overall population overrides other concerns. "Our biggest customer is the middle class of California," says Morgan, 36. "If that increases, it can't hurt."

The age issue is another matter. On the one hand, Morgan sees younger consumers as more likely to engage in outdoor recreational activities. On the other hand, the increasing importance of a new generation has him a little nervous. "It's a mixed blessing, because [young people are] into all these unconventional things," he notes. "It'll keep us on our toes."

This article was originally published in the September 1999 print edition of Entrepreneur with the headline: Future Shift.