Coffee giant Nescafe targets Gen Z as consumption habits shift

Interestingly, Shifting consumption habits among young coffee drinkers has Nescafe targeting new duct lines

Market analysis shows Nestle-owned brand sees cold coffee as a way of opening up new consumers and consumption opportunities

Nestle has lagged major rivals over recent years, as it built its portfolio out across broad category ranges

Olga Rolenko | Moment | Getty ImagesORBE, Switzerland — For almost a century, a nondescript factory in an unsuspecting town beneath the Swiss mountains has played host to some of the most widely consumed coffee trends brewed up by caffeine giant Nescafe

Nevertheless, From the 1938 launch of its flagship soluble powdered coffee to freeze-dried granules and later coffee capsules, the Nestle-owned household brand is now targeting its iteration for the next generation of coffee drinkers. "We have to develop solutions specifically to bring young people into the Nescafe brand," Don Howat, global category lead for Nescafe at Nestle, told CNBC, in today's financial world

For Nescafe, that means targeting the ballooning cold coffee market, considering recent developments

However, Today, one-third (32%) of coffee consumed out-of- is iced, according to company compiled estimates

For many younger consumers, namely Gen Z, it's often their first introduction to the ubiquitous drink

However, "Nescafe's heartland is really in the morning, drunk hot," Howat continued, considering recent developments

On the other hand, At the same time, "We're trying to move into a space which is throughout the day — more in the afternoon, consumed cold, retargeting that younger generation. ""That vides a super exciting growth opportunity for Nescafe

Nevertheless, "Targeting Gen-ZCoffee is a big bet for Nestle, with Nescafe and sister brand Nespresso accounting for two of the company's six key priorities for 2025

It represents a return to the core for the world's largest food and beverage company, whose main lines include coffee, pet care and food under brands such as Nespresso, Purina and KitKat

Nestle's stock has lagged major rivals such as Unilever and Danone over recent years amid weaker sales growth and revised guidance, even as the sector at large has come under pressure from higher commodity prices and increased private label competition

CEO Laurent Freixe, who took the helm in September, has vowed to refocus the, saying a slew of acquisitions under his predecessor had "weakened the fabric" of the company

Nevertheless, "We want fewer, bigger, better innovations

We want breakthrough and impact," Freixe told a media event earlier this month, citing coffee as one of the with the highest rate of "-cut" wins, in light of current trends

Stock Chart IconStock chart iconNestle, Unilever and Danone

The firm's gambit, Nescafe Espresso Concentrate, nevertheless marks a new apach to duct development — one it plans to extend to other, considering recent developments

Market analysis shows cold liquid concentrate, which can be used as a base for chilled caffeine drinks, was developed in a re and development (R&D) accelerator and trialed in U

Kroger stores before its ultimate sign off

This demonstrates that is one in a of cold coffee ducts to flood the market lately, however the majority have been in the pre-mixed, ready to drink (RTD) space

Furthermore, Nestle says its goal is customization, with the concentrate designed to let consumers "hack" their coffee at according to their preferences, for instance by adding milk, water, lemonade or other beverages (quite telling). "Most young people have grown up with coffee cold … their expectation is for cold coffee, lots of flavors, textures, additions," Howat said, in today's market environment

Meanwhile a collaboration with influencer Zach King is seen marketing the duct at social media users (an important development)

Furthermore, Meanwhile, "It's achieving what we set out to achieve," Howat said. "It just takes the brand into a different space (remarkable data), amid market uncertainty. "An alcohol alternativeThe coffee giant is now hoping that by targeting new consumers and consumption habits, it could pave the way for further expansion into adjacent

That includes penetrating traditional tea India, China and Japan, building out customization and premiumization, and targeting new consumption occasions. "What's interesting younger consumers is they're drinking a lot less alcohol," Howat said

Successive studies have pointed to lower alcohol consumption habits among Gen Z compared to previous generations, sparking a surge in non-alcoholic and health and wellness-oriented alternatives

July re from an ISWR survey sought to debunk that narrative, however, citing the cost-of-living crisis as a source of the perceived abstinence trend

Nescafe nevertheless said it sees new scope to position coffee as an all-day duct and sophisticated alcohol alternative. "When they socialize in the evening with their friends, they'd to drink something which is adult but perhaps doesn't have alcohol," he continued (this bears monitoring)

On the other hand, "That vides an opportunity for Nescafe to get into that space, perhaps with decaffeinated ducts, with cold ducts, indulgent ducts," he said.