Coffee giant Nescafe targets Gen Z as consumption habits shift

ORBE, Switzerland — For almost a century, a nondescript factory in an unsuspecting town beneath the Swiss mountains has played host to some of the most widely consumed coffee trends brewed up by caffeine giant Nescafe.

From the 1938 launch of its flagship soluble powdered coffee to freeze-dried granules and later coffee capsules, the Nestle-owned household brand is now targeting its latest iteration for the next generation of coffee drinkers.

“We have to develop solutions specifically to bring young people into the Nescafe brand,” Don Howat, global category lead for Nescafe at Nestle, told CNBC.

For Nescafe, that means targeting the ballooning cold coffee market. Today, one-third (32%) of coffee consumed out-of-home is iced, according to company compiled estimates. For many younger consumers, namely Gen Z, it’s often their first introduction to the ubiquitous drink.

“Nescafe’s heartland is really in the morning, drunk hot,” Howat continued. “We’re trying to move into a space which is throughout the day — more in the afternoon, consumed cold, retargeting that younger generation.”

“That provides a super exciting growth opportunity for Nescafe.”

Coffee is a big bet for Nestle, with Nescafe and sister brand Nespresso accounting for two of the company’s six key priorities for 2025.

It represents a return to the core for the world’s largest food and beverage company, whose main lines include coffee, pet care and food under popular brands such as Nespresso, Purina and KitKat.

Nestle’s stock has lagged major rivals such as Unilever and Danone over recent years amid weaker sales growth and revised guidance, even as the sector at large has come under pressure from higher commodity prices and increased private label competition.

CEO Laurent Freixe, who took the helm in September, has vowed to refocus the business, saying a slew of acquisitions under his predecessor had “weakened the fabric” of the company.

“We want fewer, bigger, better innovations. We want breakthrough and impact,” Freixe told a media event earlier this month, citing coffee as one of the categories with the highest rate of “clear-cut” wins.

The firm’s latest gambit, Nescafe Espresso Concentrate, nevertheless marks a new approach to product development — one it plans to extend to other categories. The cold liquid concentrate, which can be used as a base for chilled caffeine drinks, was developed in a research and development (R&D) accelerator and trialed in U.S. Kroger stores before its ultimate sign off.

It is one in a stream of cold coffee products to flood the market lately, however the majority have been in the pre-mixed, ready to drink (RTD) space. Nestle says its goal is customization, with the concentrate designed to let consumers “hack” their coffee at home according to their preferences, for instance by adding milk, water, lemonade or other beverages.

“Most young people have…