Gen Z consumers are redefining coffee and tea consumption with demand for specialty and RTD drinks, personalization, and convenience via digital ordering. They seek novelty, social media-driven experiences, and value sustainability and wellness in products and packaging. To succeed, hot drinks players need to launch products appealing to Gen Z’s values of personalisation, novel experiences and wellness.
Delivery
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Key findings
Gen Z consumers’ spending power is set to increase in the long term
Gen Z’s spending power is set to grow over the forecast period, as they mature and enter the workforce in greater numbers. This is especially evident in emerging markets like India, where the average gross income of those aged 20-29 years is set to be the fastest growing between 2024-2029, at a 5% CAGR.
Gen Z is reshaping the coffee and tea industry, with distinct emerging preferences
Gen Z consumers are eager to try new products, looking for novel experiences and personalisation as a means to unwind and indulge themselves, and enhance their quality of life. This is evidenced in the rise of new product flavours, formats and channel experiences, providing them with an all-round consumption experience.
Wellness and sustainability features resonate highly with Gen Z consumers
Gen Z consumers are seeking value-added functionality in their coffee and tea. This goes beyond energy, and includes digestive health, focus and beauty. Furthermore, Gen Z consumers are increasingly conscious about sustainability and ethical sourcing, preferring to drink coffee and tea with ethical sourcing claims or recycled packaging.
Digitally savvy Gen Z increasingly regard social media as a trusted source
Social media platforms such as TikTok are increasingly important for Gen Z. This is driven by the growth of creator-led content and social media influencers, as well as Gen Z’s digital savviness. They use social media to explore and engage with their coffee and tea, posting moments of shared expression and connection.
Gen Z consumers seek to replicate the café experience at home
As Gen Z consumers are increasingly curious about their coffee and tea, they seek to have a hands-on, personalised coffee experience. As such, they are investing in coffee machines to brew their own coffee at home, where they can control the brewing process, enabling experimentation and skill development.
Why read this report?
Key findings
A generation with growing influence and the power to shape trends and demand change
Who is the Gen Z coffee and tea consumer?
Gen Z consumers seek more from hot drinks, prioritising novel experiences
Gen Z’s growing influence is reshaping emerging regions
Gen Z’s spending power impacted by high cost of living but set to grow in the long term
Caffeine consumption remains relevant for Gen Z consumers amidst health concerns
Gen Z consumers are reshaping the consumption of coffee and tea
Personalisation remains important for Gen Z’s consumption of coffee and tea
Cold coffee remains appealing due to appeal for personalisation and convenience
Convenient formats are spilling over from cold coffee, exciting Gen Z consumers
Coffee beyond caffeine: new functional positioning in the form of focus and beauty
Fiboo is set to strengthen its competitive positioning by offering functional health claims
Sustainable coffee increasingly valued, despite high cost of living
Navigating product preferences of Gen Z consumers: Growth opportunities
Digitally savvy Gen Z consumers increasingly regard social media as a trusted source
Identifying top flavours through social media is key to connect with Gen Z consumers
Starbucks launches Coco Matcha and Coco Brew to appeal to Gen Z consumers
Creative social media campaign serves to engage Gen Z consumers
Cross brand collaborations serve to create novel experiences for Gen Z consumers
Leveraging social media and influencers is critical to connect with Gen Z
Gen Z’s caffeine consumption is shaped by occasions and convenience
Home consumption: Gen Z consumers seek to replicate their café experience at home
Direct-to-consumer (D2C) serves as an attractive online platform for Gen Z
Rise of digitalisation has fuelled the trend of online takeaway and delivery options
Convenience stores serve as an alternative channel for a quick caffeine fix
Coffee Banhada’s unmanned drive-through stores offer Gen Z convenience
Exploring new channels that appeal to Gen Z consumption occasions is important
Recommendations/opportunities for growth
Evolution of Gen Z consumption of coffee and tea
Questions we are asking
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