Born in an era with a smartphone in every hand, a coffee shop on every corner, and organics lining pantries and closets, the steadily expanding Millennial demographic has set the bar high. Comprising 75.4 million 18 to 34-year-olds in the United States – they surpassed the number of Baby Boomers in April – brands, retailers, restaurants, and service providers are all fighting for the US$200 billion in annual buying power this group controls. Millennials have clear expectations, too: they seek out an experience, innovation, and authentic values in everything they buy. Especially in the coffee industry, Millennials are helping drive change at every link of the supply and demand chains: sustainability and ethical farming, microroasting, innovative brewing, and photogenic pours. “Through the rise of the Third Wave of coffee, which happened as Millennials were coming into their buying power, there has been a much bigger focus on trying to push the coffee industry,” says Groundwork Coffee Co. Partner Jeff Chean. “This means taking a look at every aspect along the supply chain to improve the quality of the beverage.” Having been in the industry for 25 years, Groundwork and its leaders have been affected by the trends that characterise the Third Wave of coffee, which focused on specialty, artisanal coffee. But while Baby Boomers may not have had specialty coffee, or even an espresso beverage, until they were well into their adulthood, “Millennials were the first generation to grow up with specialty coffee as a given”, says Patrick Main, senior beverage R&D Manager for Peet’s Coffee. “I think Millennials had a head start when it comes to appreciating specialty coffee.” According to the National Coffee Association’s (NCA) latest “National Coffee Drinking Trends” report, Millennials drink more specialty coffee than any other generation and started doing so at the earliest age among generations (14 to 17 years old). From 2008 to 2016, daily consumption of gourmet coffee beverages soared from 13 per cent to 36 per cent among 18 to 24-year-olds and from 19 per cent to 41 per cent among 25 to 39-year-olds. The increase in consumption is largely driven by espresso-based beverages, the favourite among Millennials. Overall, daily consumption of espresso-based beverages has nearly tripled since 2008. How do you take your coffee?
While Millennials clearly have a thing for specialty coffee beverages, there’s a greater movement toward coffees that are new or innovative. “They are more adventurous when it comes to trying new ways of experiencing coffee,” says Main. The NCA’s latest research supports his observations, indicating that Millennials are more open to experimenting with new beverages or preparation methods. That fact inspired the addition of three new beverages in the association’s 2016 NCDT report: the flat white, cold brew and nitrogen-infused. Cold brew has proven to be the biggest trend of the three in recent years, largely driven by independent coffee shops and retail brewers. It’s of course been popular with the Millennials, who appreciate its newness and innovative brewing method. “Cold brew coffee is probably one of the biggest shifts in coffee drinking habits I have seen since the mainstreaming of caffè latte in the 1990s,” Main tells Global Coffee Report. “[At Peet’s] we switched to cold brew last year and saw our cold coffee sales double immediately.”
Starbucks, Coffee Bean, and Dunkin’ Donuts have also added cold brew to their menus in the past year. The unique brewing method makes cold brew less acidic and naturally sweeter, which also appeals to audiences who have yet to mature as coffee drinkers. According to a recent study by Datassential, commissioned by S&D Coffee & Tea, Millennials generally enter the industry via sweeter coffee drinks and then swing to brewed coffee over time. The study points to sweeter, hot espresso-based, iced, and frozen-blended coffee as the “gateway beverages” for new coffee drinkers. But even as Millennials mature towards drinking regular hot brewed coffee, the standard drip coffee that older generations are used to is getting less shelf space at coffee shops and grocery stores. Some work places are even doing away with drip brewers and replacing them with single-cup Keurig machines, and an increasing number of employees are using their own French presses or pour-over devices at work. Specialty coffee has become a staple at startup companies and shared work spaces, too, which are generally dominated by Millennials. Facebook CEO Mark Zuckerberg even built a Philz Coffee, known for its artisanal pour-over coffee, in the tech giant’s Menlo Park headquarters. The median employee age at Facebook is younger than 30. At Philz, and with pour-over coffee in general, each cup is brewed separately and customised to preference, which can mean more wait time per customer. Surprisingly, the “now generation” that is known for thriving on instant gratification doesn’t mind waiting, seeing it as part of the greater coffee experience. It’s all in the experience
Also emphasised in Datassential’s study is the notion that Millennials see coffee as much more than a drink: “It’s an experience. The language Millennials use and the attitudes they have indicate that they are deeply connected to coffee on an emotional level.” That experience largely happens away from home, different from generations in the First Wave when household brands such as Folgers were brewing in every kitchen across America. The trend toward retail purchases of coffee helped spur the Second Wave, where then-new coffee chains enticed customers into their shops with higher-quality coffee. Today, nearly half of the US population younger than 40 is more likely to consume coffee outside of the home, according to the Specialty Coffee Association of America. Convenience is a big driver, but it largely comes down to Millennials’ experiential nature. As much as the coffee they’re drinking matters, where they drink it makes the experience. From brewing methods and presentation to branding and values, companies have had to keep up with the experience Millennials seek to earn their business. These days, coffee shops are hip and cosy, and packed with people reading, working, and studying. They’re equipped with Wi-Fi (sometimes free) and active on social media networks. “All aspects of the experience – all aspects of the company, really – contribute to the experience,” Chean tells GCR, stressing the importance of consistency and authenticity. “We’ve added some menu items and made some tweaks to our cafés to better represent the Groundwork ethos, as well as make them more visually appealing.” Not only do Millennials thrive on experiences, but they also want to capture those experiences; hence, Groundwork’s focus on visuals. From reviews on Yelp to photos on Instagram, Millennials are always dialled in and want to share their experiences instantly. “We’ve seen the industry become a lot more visually focused,” continues Chean. “Shops, drinks, and presentation all had to become ready for an Instagram snap.” Peet’s has also made adjustments to boost visual appeal, repurposing the microfoam it perfected in the late ’80s into a canvas for latte art. “It has become a customer expectation,” Main says. “We trained all of our baristas to free pour traditional cappuccinos with latte art.” Aligning with their values
Another aspect of the experience that appeals to Millennials is a focus on values. In general, more than 50 per cent of Millennials make an effort to buy products from companies that support causes they care about, according to research from Barkley, an independent ad agency. Naturally, this flows into the coffee industry. From ethical farming practices to organic
beans to sustainable storefronts, Millennials gravitate towards coffee companies with values. Datassential’s study found that 82 per cent of Millennials are familiar with “sustainable coffee” as a term and 45 per cent think more positively about a place that offers sustainable coffee. What’s more, greater than one-quarter would go out of their way to buy coffee from that shop and a whopping 86 per cent would pay more for that cup of sustainable coffee. “Now that the [entire] industry is coming around to sustainability, ecologically and socially, we’re finding it easier to get traction for programs,” says Chean, “which is great for Groundwork because that’s what the company was founded on.” Other values uncovered in the study include serving and using organics, waste and carbon footprint reduction, ethical sourcing, donating to charities, community involvement, and water and energy conservation. The study also found that third-party certifications resonate with Millennials. They are more likely than other generations to have heard of fair trade certification, the Rainforest Alliance, Shade Grown, and Conservation International. While the Millennial generation isn’t responsible for these initiatives and many companies have long been committed to various causes, the importance of values with the group has supported a widespread shift in the industry. “Millennials get it,” says Chean. “They see themselves as the heirs to all the damage previous generations have done to the environment. They’re not too happy about [it] and that’s why they gravitate toward products that have more depth than, ‘tastes great!’” Coffee brands both conglomerate and independent are adopting sustainable practices, launching environmental programs and evaluating ethics at every stage. For instance, as part of annual global responsibility initiatives, Starbucks increased its purchases of renewable energy to 100 per cent last year, and 99 per cent of its coffee was verified as ethically sourced. Where coffee companies can find themselves in trouble, though, is focusing on and touting values as a marketing strategy. Millennials are skeptical coffee consumers who are more likely to question a company’s ethics – and they won’t hesitate to do it on social media. Use of unsupported labels and language will render brands powerless to “sharp-eyed Millennials”, warns the Datassentials report. “Millennials value authenticity, so use of terms like ‘sustainable’ should be deliberate and keep with what they mean to Millennials specifically.” Millennials spurring a Fourth Wave?
While coffee experts will argue over which wave the industry is currently riding – some say it’s entered a fourth – they all agree that Millennials have had a drastic impact. Experts and major players alike see technology continuing to play a major role. Millennials will continue to demand social and digital relationships with their favourite brands, Instagram-worthy experiences, and innovative, high-quality coffee beverages. Behind the barista counter, technology will drive brewing innovation. “We will begin to see more technology in coffee as soon as technology can catch up with the need for a high-quality brew,” says Chean. “And Millennials will continue to demand new and better ways to brew coffee, so in terms of innovation and quality, we think the envelope will continue to get pushed. Third Wave coffee roasters will continue to pull ideas from other industries and apply them to coffee.” Whether that denotes a Fourth Wave of coffee can be left to the sceptics; Millennials are keeping coffee companies in business as it is. GCR
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