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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.”
Targeting Gen-Z
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.
Nestle, Unilever and Danone.
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 grown up with coffee cold … their expectation is for cold coffee, lots of flavors, textures, additions,” Howat said.
Launched in Australia in late 2024, the product has since expanded to the U.S., U.K., Canada, Japan, China and Singapore with plans for further markets underway. Meanwhile a collaboration with influencer Zach King is seen marketing the product at social media users.
“It’s achieving what we set out to achieve,” Howat said. “It just takes the brand into a different space.”
An alcohol alternative
The coffee giant is now hoping that by targeting new consumers and consumption habits, it could pave the way for further expansion into adjacent categories.
That includes penetrating traditional tea markets like India, China and Japan, building out customization and premiumization, and targeting new consumption occasions.
“What’s interesting about younger consumers is they’re drinking a lot less alcohol,” Howat said.
Successive studies have pointed to lower alcohol consumption habits among Gen Z compared to previous generations, sparking a surge in non-alcoholic and health and wellness-oriented alternatives. July research from an ISWR survey sought to debunk that narrative, however, citing the cost-of-living crisis as a source of the perceived abstinence trend.
Nescafe nevertheless said it sees new scope to position coffee as an all-day product and sophisticated alcohol alternative.
“When they socialize in the evening with their friends, they’d like to drink something which is adult but perhaps doesn’t have alcohol,” he continued.
“That provides an opportunity for Nescafe to get into that space, perhaps with decaffeinated products, with cold products, indulgent products,” he said.