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Insight of the Day: Gen Z driving specialty coffee growth: Coffee conference

Findings:

  1. Generational Trends:

    • Gen Z is driving growth in specialty coffee, preferring out-of-home consumption as part of social occasions.

    • Older cohorts, Gen X and Millennials, dominate conventional coffee consumption, with over 60% drinking coffee before lunch.

  2. Cultural and Demographic Influences:

    • Coffee consumption is influenced by cultural heritage, with 33% of daily coffee drinkers identifying as people of color. These groups are more likely to begin drinking coffee before age 13.

  3. Changing Consumer Behavior:

    • Pandemic-related shifts saw historic highs in home coffee consumption. However, as people socialize and return to workplaces, out-of-home coffee consumption is steadily rising.

  4. Emerging Coffee Preferences:

    • Cold coffee is five times more popular among Gen Z than Boomers.

    • Innovative products like beanless coffee (made from upcycled plant materials) are gaining interest as sustainable alternatives.

  5. Economic Trends:

    • Rising food costs are creating two distinct consumer segments: affluent shoppers and frugal consumers seeking value and sales.

  6. Innovation in Coffee:

    • New products include Keurig’s plastic-free pods and Atomo Coffee’s beanless coffee, which uses components from crops like date seeds and strawberry fibers.

Key Takeaway:

Gen Z’s preference for specialty and cold coffee, coupled with cultural and generational shifts, is transforming the coffee industry, driving innovation and out-of-home consumption.

Trend:

  • Consumer Trend: Rise in specialty coffee consumption driven by Gen Z.

  • Consumer Sub-Trend: Preference for cold coffee and social coffee experiences.

  • Big Social Trend: Demand for sustainable and innovative coffee solutions.

Consumer Motivation:

  1. Social Connection: Coffee is increasingly seen as part of social occasions for younger consumers.

  2. Convenience: Out-of-home coffee meets the demand for quick, enjoyable experiences.

  3. Sustainability: Interest in eco-friendly innovations like beanless coffee aligns with ethical consumerism.

What is Driving the Trend:

  1. Cultural Diversity: Culinary traditions influence coffee preferences, especially among younger, diverse populations.

  2. Generational Preferences: Younger generations value innovative, cold, and functional coffee products.

  3. Economic Conditions: Rising costs push consumers to seek affordable yet quality coffee experiences.

Who Are the People in the Article:

  • Consumers: Gen Z, Millennials, Gen X, Boomers, and culturally diverse coffee drinkers.

  • Industry Leaders: Keurig Dr Pepper, Atomo Coffee, Starbucks, and other innovators.

  • Experts: Data analysts and industry professionals presenting at the Coffee Association of Canada (CAC) conference.

Description of Consumers and Products:

  • Age: Predominantly younger consumers (Gen Z and Millennials).

  • Products: Specialty coffee, cold brews, beanless coffee, and innovative brewing solutions.

Conclusions:

  • Younger generations, particularly Gen Z, are reshaping the coffee industry with their focus on specialty drinks, social consumption, and innovation.

  • Cultural influences and sustainability concerns are further driving diversification in coffee products.

Implications:

  1. For Brands:

    • Develop specialty coffee options targeting younger demographics, especially cold brews.

    • Embrace sustainability through eco-friendly products and production processes.

  2. For Society:

    • Highlights the role of cultural diversity in shaping consumer habits.

    • Encourages innovation in sustainable coffee production.

  3. For Consumers:

    • Expands access to diverse and innovative coffee options, catering to evolving tastes and preferences.

  4. For the Future:

    • The coffee industry will continue to innovate, focusing on sustainability and catering to the social, cultural, and functional demands of younger consumers.

Learnings for Companies to Use in 2025:

  • Invest in sustainable, innovative products like beanless coffee or plastic-free pods.

  • Develop marketing strategies that emphasize social and cultural aspects of coffee consumption.

  • Target Gen Z and Millennials with cold coffee and specialty drink offerings.

Strategy Recommendations for 2025:

  1. Focus on Specialty and Cold Coffee:

    • Expand product lines with cold brews and socially engaging beverages.

  2. Emphasize Sustainability:

    • Highlight eco-friendly practices and introduce innovative, sustainable products.

  3. Cater to Cultural Diversity:

    • Create products that reflect diverse culinary traditions and preferences.

  4. Drive Social Engagement:

    • Position coffee as a lifestyle product through branding that aligns with social experiences.

Final Sentence (Key Concept):

"Gen Z is transforming the coffee landscape by driving demand for specialty drinks, sustainability, and social experiences, challenging the industry to innovate and diversify."

What Coffee Brands Should Do in 2025 and How:

  • Innovate for Younger Consumers: Create specialty and cold coffee options tailored to Gen Z’s preferences.

  • Highlight Sustainability: Invest in eco-friendly solutions like beanless coffee and recyclable pods.

  • Promote Social Connection: Develop campaigns that position coffee as central to socializing and community-building.

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