How flavoured coffees help brands reach the next generation of consumers

flavoured coffees are massive for the younger generations
  • The global flavoured coffee market is estimated to grow by 4% annually, reaching a market size of $8.6 billion in 2028
  • Starbucks has sold more than 420 million pumpkin-spiced lattes since 2003, generating an estimated $2 billion in revenue.
  • Flavoured beverages are used as a marketing tool to introduce young people to the coffee market

DEMAND FOR flavoured coffees demonstrates that the next generation of coffee consumers are after something different in their cup.

While the pumpkin spiced latte from Starbucks is now infamous, flavours such as strawberry cheesecake, s’mores, twinkies, and cinnamon toast are all increasingly being added to drinks in large coffee chains around the world.

The US National Coffee Data Trends report from Autumn 2022 suggests more young people are drinking coffee than ever before. The survey shows 51% of the 18-24-year-olds surveyed reported drinking coffee within the last day – an increase of 21% from January 2021.

Young people may be drinking more coffee, but they are far from “purists”. Opting for syrups when ordering from a coffee shop, or an RTD can out of a grocery store fridge, young consumers show a preference for adding flavours to their coffee.

Miranda Caldwell is the founder of The Coffee MBA. “Younger generations, particularly Gen Z, want to have fun with their beverages and don’t mind indulging in caffeine, sugar, flavours, fats, whatever pleases them,” she says.

Young consumers care less about the exclusivity of specialty coffee, instead valuing choice and convenience – customisation is becoming an increasingly important conversation point.

“Gen Z was raised during tough times, through recessions and a global pandemic,” Miranda explains. “Candy-flavoured coffee is a way of rebelling against the super-functional perfection that millennials have been seeking.”

flavoured coffees help introduce young people the industry

These flavours unlock a new market segment

Generally speaking, flavoured coffees are more accessible – if they’re not already accustomed to the taste of coffee on its own, younger consumers can now choose from a range of flavours

According to Glen Poss, the founder of Disruptive Coffee Technologies, the popularity of sugary drinks is nothing new. “It’s biological. We are wired to like sweetness which provides simple, quick calories. That’s why bitter flavours have never really sold.”

Glen gives an example of the continued success of Coca-Cola products. “What do you get if you combine our bodies’ biological desire for sugar with our psychological dependence on caffeine? Billions and billions and billions of dollars,” he says.

Understanding this is a great way to secure new market segments. If we look back in the 1970s, we can see how Nestlé was struggling to find success in the Japanese market, where consumers valued tea over coffee.

Japanese consumers had childhood memories of tea, rather than coffee. To counteract this, brands started introducing more coffee-flavoured desserts for children. Products like the “cafe au lait Kit Kat” created an imprint on children, who grew up to be active consumers with a palate tailored to coffee, rather than tea.

While 50 years ago Japan was considered a difficult market to enter, its coffee sector is now worth $46 billion and is expected to grow annually by 5% between 2023 and 2025.

Globally, sugary drinks have become a lucrative investment – introducing young people to the flavours of coffee with the understanding that they will later become full-fledged consumers.

And at the same time, some of these sweeter drinks might not be stepping stones at all. Starbucks has sold more than 420 million pumpkin spice lattes in the last 20 years, generating an estimated $2 billion in revenue.

This shows that as well as being a great way to introduce new people to coffee, it’s also a valuable segment that’s being capitalised on in its own right.

flavoured coffees offer an exciting range of flavours

Are flavoured coffees a gateway to a bigger problem?

While adding syrups helps cafés to bring more people through the door, flavoured coffees might not be all good news. 

Little is being done about the sugar content in sweetened coffees. A 2019 study by Action on Sugar found that 98% of 131 hot flavoured drinks from various coffee chains contain three times the recommended daily intake of sugar for adults.

Sugar content in coffee continues to be largely unregulated around the world, with companies taking advantage of this to mask negative flavours and attract younger generations.

Flavoured coffees are a great way for coffee businesses small and large to reach more consumers. Increasingly, more coffee shops are beginning to cater to sweeter taste preferences as Gen Z becomes more influential in the market.

Glen believes this is a natural market reaction. “If you want to make a lot of money, you sell sweet, caffeinated, fatty drinks,” he says. “You make what the customer wants and sell it for the highest price you think they will pay.”

With sugary drinks experiencing a surge, the concern is that demand for higher-quality coffee will reduce – leaving some farmers with little choice but to produce cheaper coffee.

However, Miranda points out that young people are ethically conscious. “Quality and sustainability are all wrapped up in their decision-making and should be made clear on-pack and in brand communications,” she says.

While the high-sugar beverages they drink may not demand it, Miranda believes ethically sourced coffees are being sought-out regardless.

This means there’s a good argument that coffee businesses large and small should embrace syrups – especially if they come to be made with higher-quality ingredients.

“The world is smaller than ever and there’s inspiration in every country and culture that consumers might want to access,” she says. “But whatever the inspiration is, the drinks should be punchy and over the top.”

As they offer a wider range of people more opportunities to drink coffee, it’s clear that flavour syrups and high-sugar coffee drinks aren’t going anywhere. While this is certainly positive for coffee shop footfall, there are likely other consequences that remain to be seen.