Since the earliest days of the Second Wave – defined by the appearance and growth of multi-outlet branded coffee shop chains like Starbucks and Costa – the coffee culture has developed in lockstep with generational preferences.
In the 1990s and early 2000s, consumers valued consistent, repeatable coffee experiences, identified by familiar branding on high streets and in commuter hubs. Specialty or higher-quality coffee beverages were a new concept, and Baby Boomer and Generation X customers began associating today’s household names with quality.
As the Third Wave began to emerge from 2005 onwards, specialty coffee took centre stage, initially supported by younger Gen X’ers and older millennials whose buying habits began to value craftsmanship, coffee shop experience, and traceability.
The coffee industry has not collectively defined which wave we find ourselves in today; some suggest the Third Wave still applies; some feel the Fourth Wave has already been, and others claim today’s coffee culture is a firmly Fifth Wave environment. What is agreed upon, however, is that consumer preferences have changed yet again.
As before, younger generations push the coffee industry into new waters, each with a different definition of great coffee. The rise of products like RTD coffee, functional coffee, nitro cold brew, and coffee cocktails and mocktails is thanks to the newest consumer groups.
As coffee companies look forward, a prescient question needs to be answered: What kind of coffee will Gen Alpha want? We spoke to Jim Cleaves, a coffee consultant in Massachusetts, USA, to learn more.
Gen Alpha: how will they spend their money?
Generation Alpha encompasses those born between 2010 and 2025 – some are yet to be born, and the eldest are just fifteen years old. Despite their youth, Gen Alpha have been found to have purchasing power far beyond their years.
Today’s youngsters are expected to be the most materially-endowed generation yet – digitally native from increasingly young ages, tech-savvy by definition, and, through social media and connectivity, the most globalised and connected consumer group in history. And they are already influencing global markets.
A recent report found that Generation Alpha is driving 27% of household monthly spending, with a third of purchases dedicated to digital products and services. This has contributed to an overall rise in total digital spending, which is now over a fifth of household outgoings. Half of Millennial parents have spent money on digital education tools, and 33% on entertainment streaming services.
Parents still dictate the majority of Generation Alpha-associated spending. Still, an increasing number of young people have access to their own bank accounts and the freedom to make independent purchases. In China, for example, 65% of 15-year-olds make their own choices regarding where to spend their money.
Key trends are already forming. Gen Alpha spending will be dictated by digital fluency, social and environmental concerns, and convenience, which means personalised and highly customised products and experiences backed by informed and inquisitive decision-making will be valued most.
When it comes to coffee, Gen Alpha is expected to mimic the preferences of their Millennial parents and Gen Z older siblings to an extent, but with increased price sensitivity, greater demand for product variation and alternatives, and less brand loyalty.
Gen Alpha coffee: What will they like?
As mentioned, coffee trends have evolved alongside generational change. Baby boomers sought bold, strong coffee from chains they recognised. Gen X appreciated flavoured, espresso-based options, and Millennials wanted experience and craftsmanship.
Convenience has always been key to success as a coffee operator, but Gen Z has set the highest bar, demanding cold and iced options that are not just made quickly and conveniently but can be consumed just as fast. Gen Alpha is expected to value similar features.
The social importance of a shared coffee experience or workday pause has diminished while functionality and immediacy have become more valuable. Coffee needs to fit into increasingly busy, active lifestyles, and as coffee quality has increased across the board, there is less need to take a time-consuming break at a specialty coffee shop to get the best drink.
Gen Alpha is growing up in the most health-conscious era of global consumerism. Individualised diets, functional foods, and gut health are examples of purchasing decision factors for future shoppers. The growing appeal of RTD and cold brew is a testament to the trends: a coffee drink with a more mellow profile, lower acidity, and natural ingredients conveniently packaged.
Specialty-grade RTD coffee, with cold brew bases and nitro-infusion or plant-based milk, can be picked up on a supermarket shelf or ordered online and slid into a backpack or back pocket, satisfying the functional and nutritional needs of young people.
“In my opinion, cold brew still has great potential for growth,” says Jim.
“Consumers seem to like the name itself, similar to other ‘can’t miss’ names like Swiss Water Process, etc. Something about these names evokes healthy, clean, and fresh, and that’s how many consumers today like to think of their beverage selections. More consumers prefer more body and less acidity, too.
“Cold brew is also perceived to provide more caffeine per serving, which meets the common consumer demand for functionality, even while maintaining its healthy halo effect. All the elements are there for future success.”
Modern coffee companies should already have a keen eye on the next generation of coffee customers. The youngest end of the market will be the most demanding of innovative change. Coffee-based products with enhanced functionality, convenient packaging, novel flavours, and eye-catching designs will be celebrated.
Price, convenience, and quality are multigenerational, but their definitions change with the times. It used to mean a household brand in a supermarket aisle, but Gen Alpha has other ideas.
To source your own line of private-label RTD nitro coffee with added adaptogens, nootropics, plant-based milk and custom branding, visit our website or get in touch with us directly.
You can still catch a recording of our recent webinar on customised RTD beverages here.
Gen Alpha
