Nescafe Aims to Capture Gen Z Amid Evolving Coffee Preferences

In the small town of Orbe, Switzerland, beneath the towering mountains, stands a historic factory where Nescafe has crafted popular coffee products for nearly a century.

Since its introduction of instant coffee in 1938 and improvements like freeze-dried granules and capsules, Nescafe is now gearing up to cater to the next wave of coffee enthusiasts.

"Creating innovative solutions to draw young consumers towards the Nescafe brand is essential," said Don Howat, Nestle's global category lead for Nescafe, during a CNBC interview.

With a significant shift towards cooler beverages, Nescafe is eyeing the expanding market for cold coffee. Approximately 32% of coffee consumed outside the home comes as iced, especially popular among Gen Z, introducing them to the coffee culture.

"Traditionally, Nescafe has been synonymous with hot, morning coffee," Howat remarked. "Now, we're venturing into a versatile space, serving cold coffee throughout the day to appeal to a younger demographic."

"This opens up vibrant growth possibilities for Nescafe."

Appealing to a Younger Audience

Nestle places significant emphasis on its coffee segment, with both Nescafe and Nespresso being strategic priorities for the company through 2025.

The brand is reaffirming its commitment to core products like coffee, alongside other renowned labels such as Purina and KitKat, essential to the world's largest food and beverage conglomerate.

Despite facing stiffer competition and market fluctuations, CEO Laurent Freixe, who assumed leadership in September, is determined to revitalize Nestle's focus by prioritizing impactful innovations and veering away from past acquisition strategies.

"We're investing in fewer but quality breakthroughs," Freixe announced, underscoring coffee's potential in yielding significant wins.

Nescafe's latest innovation, Espresso Concentrate, signifies a fresh direction in product advancements. This cold brew base, optimized for DIY cold drinks, was piloted in Kroger stores across the U.S. before broader approval.

While numerous ready-to-drink cold coffee options inundate the market, Nestle emphasizes personalization with this concentrate, granting consumers the liberty to craft beverages to their liking.

"Today's youth are accustomed to cold coffee with varied flavors and textures," added Howat.

After launching in Australia in 2024, the concentrate has reached major markets, including the U.S., U.K., and several Asian countries, with expansion plans underway. Notably, Nescafe's collaboration with influencer Zach King underscores its marketing strategy.

"Our objectives are being fulfilled," Howat concluded. "We're redefining our brand presence."

Exploring Coffee as an Alcohol Substitute

Nescafe is keen on tapping into broader consumer segments and diverse consumption patterns, potentially catalyzing growth into related categories.

The brand is exploring markets traditionally dominated by tea, such as India, and focusing on customization and premium experiences.

"Younger generations are notably consuming less alcohol," noted Howat.

Despite mixed data on declining alcohol consumption among Gen Z, Nescafe sees potential in offering coffee as a stylish, alcohol-free alternative.

"Young adults socializing in the evening might prefer a sophisticated beverage without alcohol," Howat remarked.

"This opens up prospects for Nescafe, with offerings ranging from decaffeinated or indulgent cold brews."