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Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Coffee talk: Research shows Gen Z craves RTD beverages

Shutterstock

Shutterstock

With people working (and going to school) from home, it’s changing how people consumer coffee: Think less take out and more at-home creations.

New research from Mintel suggests that the at-home coffee market is set to grow by 4.9% this year to reach $15.6 billion (in the United States), compared to a total of 3.9% growth experienced between 2015 – 2019.

Mintel’s consumer research shows that as many as two in five (39%) people are willing to pay more for premium coffee at home and, in turn, finding their inner barista.

Caleb Bryant, associate director, food and drink, Mintel, said that many are buying coffee shop branded coffee to recreate that authentic coffee shop experience: “Despite the fact that many Americans are facing economic uncertainty, premium and foodservice-branded coffees have an opportunity to market themselves as affordable luxuries. The purse strings may need to tighten but a premium home-brewed coffee is still less expensive than drinks from a coffee shop.”

For those without the patience or know-how to satisfy their caffeine cravings at home, ready-to-drink (RTD) coffees are a favoured alternative. Leading the way in this at-home craze is Gen Z, with 46% opting for RTD coffees. Only 45% of Gen Z consumers drink ground coffee compared to 63% of millennials.

Mintel research shows that not only are Gen Zs not brewing their own coffee, they have yet to develop brand loyalty when it comes to coffee: only 33% say they typically stick to the same brand of coffee, compared to 44% of Gen X and 50% of boomers.

“Gen Zs in particular are set to adopt the trend for enjoying specialty coffee at home. Before COVID-19, many Gen Z consumers bought their coffees out, treating themselves to cold coffees from their preferred coffee chain. But with these younger consumers experiencing the sharpest rise in unemployment and already on lower incomes, they are the most price-sensitive to coffee drinks. We’re likely to see Gen Zs reduce their coffee shop purchases, possibly dramatically depending on the severity of the recession, giving retail coffee brands a golden opportunity to connect with this next generation of coffee lovers,” Bryant said in a release.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Case in point is the photogenic Dalgona frothy coffee craze so popular on social media. From March 1, 2020 through June 15, 2020, there were more than 440,000 posts mentioning Dalgona coffee on Instagram, Pinterest and Twitter. As a result, sales of instant coffee – the primary ingredient for Dalgona – are poised to experience  a 5% rise in sales growth this year.

“Consumers are discovering it is safer and more cost-effective to have their own coffee at home and this trend is likely to continue even once the virus is under relative control,” said Bryant. “This shift opens up a real opportunity for products, machines and gadgets that will help people create their favourite coffeehouse drinks at home.”

Key takeaway: Coffee brands (both retail and RTD) have the opportunity to build long-lasting loyalty among Gen Z consumers and can use flavoured coffee varieties to appeal to these consumers (42% of them are interested in unique flavours of coffee). C-stores can capitalize on this trend with the right product assortment.