The Rise of ‘Anytime’ Coffee: How Nescafe is Betting on Cold Brew, Gen Z, and an Alcohol-Free Future
One-third of coffee consumed outside the home is now iced. That single statistic encapsulates a seismic shift in the $465.8 billion global coffee market. For Nescafe, a brand synonymous with instant coffee for over 80 years, adapting to this “anytime” coffee culture isn’t just about survival – it’s about unlocking a new era of growth, particularly with a generation that often views coffee as a cold, customizable, and increasingly sophisticated beverage.
The Cold Brew Revolution & Gen Z’s Palate
Nescafe’s latest move, the Espresso Concentrate, is a clear signal. It’s not about competing in the crowded ready-to-drink (RTD) market; it’s about empowering consumers to “hack” their coffee, tailoring it to their exact preferences. This resonates deeply with Gen Z, a demographic that grew up with customization as the norm. They expect cold coffee, diverse flavors, and the ability to personalize their experience – a far cry from the traditional morning cup of hot coffee that defined Nescafe’s earlier success.
“Most young people have grown up with coffee cold … their expectation is for cold coffee, lots of flavors, textures, additions,” explains Don Howat, global category lead for Nescafe at Nestle. This isn’t simply a preference; it’s a fundamental shift in how coffee is perceived. It’s no longer solely a morning ritual but an all-day beverage, a social lubricant, and a canvas for creativity.
Beyond Coffee: The Unexpected Opportunity in Alcohol Alternatives
But Nescafe’s ambitions extend beyond simply capturing the cold coffee market. The company is strategically positioning itself to capitalize on a surprising trend: declining alcohol consumption among younger generations. Studies indicate Gen Z is drinking less alcohol than previous cohorts, driven by factors ranging from health consciousness to financial constraints. This creates a void that coffee, particularly in sophisticated, non-alcoholic formats, is poised to fill.
“When they socialize in the evening with their friends, they’d like to drink something which is adult but perhaps doesn’t have alcohol,” Howat notes. This opens the door for Nescafe to explore decaffeinated options, indulgent cold coffee creations, and even coffee-based beverages designed to mimic the experience of alcoholic drinks without the alcohol content. This isn’t about replacing alcohol entirely, but offering a compelling alternative for social occasions.
The Premiumization Play & Expanding into New Markets
This shift towards “adult” beverages also necessitates a focus on premiumization. Consumers are willing to pay more for higher-quality ingredients, unique flavor profiles, and sophisticated experiences. Nescafe’s expansion into customization with the Espresso Concentrate is a key component of this strategy, allowing consumers to create cafe-quality beverages at home.
Furthermore, Nescafe is eyeing expansion into traditional tea markets like India, China, and Japan. While coffee consumption is growing in these regions, tea remains the dominant beverage. By adapting its offerings to local tastes and preferences, and by emphasizing the versatility and customization of coffee, Nescafe aims to gain a foothold in these lucrative markets.
Nestle’s Broader Strategy: Fewer, Bigger, Better Innovations
Nescafe’s transformation is part of a larger restructuring effort at Nestle, led by CEO Laurent Freixe. Recognizing that past acquisitions had “weakened the fabric” of the company, Freixe is prioritizing “fewer, bigger, better innovations.” Coffee, alongside Nespresso, is identified as a key growth driver for the company, representing a return to its core strengths.
However, Nestle faces challenges. Its stock performance has lagged behind competitors like Unilever and Danone, partly due to weaker sales growth and increased competition from private label brands. Successfully navigating this landscape requires not only innovative products but also a streamlined supply chain, effective marketing, and a deep understanding of evolving consumer preferences.
The Role of Influencers and Social Media
Recognizing the importance of reaching Gen Z where they spend their time, Nescafe is leveraging the power of social media and influencer marketing. The collaboration with Zach King, a popular content creator known for his visual illusions, is a prime example. By partnering with influencers who resonate with their target audience, Nescafe can build brand awareness, generate excitement, and drive trial.
Frequently Asked Questions
What is Nescafe’s Espresso Concentrate?
Nescafe’s Espresso Concentrate is a cold liquid coffee concentrate designed to be mixed with milk, water, or other beverages to create customized coffee drinks. It allows consumers to easily create cafe-style coffee at home.
Is declining alcohol consumption a significant trend?
Yes, multiple studies suggest that Gen Z is drinking less alcohol than previous generations, creating an opportunity for non-alcoholic beverage alternatives like coffee.
What markets is Nescafe targeting for expansion?
Nescafe is focusing on expanding into traditional tea markets like India, China, and Japan, as well as continuing to grow its presence in existing markets like the US, UK, and Australia.
How is Nestle restructuring its business?
Nestle is streamlining its operations and focusing on “fewer, bigger, better innovations,” with coffee and Nespresso identified as key growth priorities.
Key Takeaway: The Future of Coffee is Customizable, Convenient, and All-Day
Nescafe’s strategic pivot towards cold coffee, customization, and the alcohol-alternative market isn’t just a response to current trends; it’s a proactive attempt to define the future of coffee consumption. By embracing innovation, understanding the evolving needs of Gen Z, and leveraging the power of social media, Nescafe is positioning itself to remain a dominant force in the global coffee industry for decades to come. The question now is whether other coffee giants will adapt quickly enough to keep pace.
What are your predictions for the future of coffee? Share your thoughts in the comments below!
