Move Over Millennials! It’s Time to Pay Attention to Gen Z

Who is Generation Z? What do they like and buy? For the youthful and discerning Generation Z, not any brand will do, nor does advertising do the trick. These consumers seek products that reflect themselves, their beliefs and their values.
By Anne-Marie Hardie

Whether you call them Generation Z, the iGeneration, or post millennials, this demographic has been raised in a period of political and global upheaval creating a generation of realists. They are not easily persuaded by marketing and advertising, in fact, the majority will opt out of watching traditional ads. Instead they are looking for products that are authentic, respond to their needs, and reflect their values.

For millennials, it was all about the messaging and the identity of the brand, for Generation Z, they are the brand. “It is not about how the brand is evolving, but how this generation is interacting and applying the brand in their lifestyle,” shared Locke Hildebrand, chief insights officer, Culture Waves, a market research firm based in Springfield, Missouri. “Their sense of brand loyalty is completely different than anything we’ve ever seen before. They are continually questioning what can the brand do for me?”

Today, “Gen Z” – born between 1997 and 2011 – comprises 27 percent of the population, and these digital natives are adopting high expectations both for the products themselves, and the brands that they choose to interact with. Social media is not just an influence, it is a part of their every day existence. “This is the generation that can Facetime their friends, text their moms, and order pizza all at the same time,” said David Portalatin, vice president, food industry advisor, The NPD Group, based in Port Washington, New York. “They are the true digital natives, technology is a deeply inherent thing.”

Gen Zers can stream their own television programs and music, design their own clothing, and customize their own beverages. Menus are approached as simply suggestions, not prescriptions. This demographic has developed a refined palate for food and beverages, including being exposed to dairy-free products, super foods, specialty coffee and loose-leaf tea. This is a cohort that is not intimidated by flavours, but instead, wants to experiment with it and share their experimentation online. “Sixty-four percent of 13-17-year old’s who had a brewed or ready-to-drink coffee yesterday said it was pre-flavoured,” said Cheryl Hung, market research consultant for Toronto, Ontario-based market intelligence firm, Dig Insights.

They are actively seeking unique flavour profiles, providing an opportunity for tea and coffee companies to engage and connect to this group through product innovation and sampling. “Food is pop culture, it is entertainment,” said Hildebrand. “At the same time, Generation Z is focused on health and wellness, providing great opportunity for green and black tea, and ingredients such as turmeric, ginger, and floral, which not only add flavour but provide the health benefits that interest this group.”

Non-dairy has exploded, with Generation Z approaching milk-free as simply another ingredient that they can use to customize their own beverages. This is a generation that wants something to talk about. Craft, customizable beverages is a natural solution. “Our Generation Z attendees seem to lean towards the unique (creative) signature drinks. These are either drinks that the participating shops have on their seasonal menu or are testing a new concoction,” said Jason Burton, founder, Caffeine Crawl, based in Kansas City, Missouri. “These customized drinks often take the preparation time and amount of ingredients that you would find in a craft cocktail.”

 

The Parental Influence

Largely still at home, Generation Z viewpoints of life are shaped by either a millennial or Generation X parent, providing an interesting dynamic on the collective group. “The highest rated consumption of organic products is amongst young children,” said Portalatin. “It’s the parents who are really influencing this subset of Generation Z.” Tea companies that offer herbal and rooibos products would benefit by creating both children-centric product lines and messages that appeal to these discerning parents.

With a little bit of money in their pocket, the 13-20 subset is participating in away-from-home food and beverage consumption. They are looking for the relative value of products and are willing to spend the money on items that they believe they will get value for in return. “Take the example of footwear — this subgroup will spend crazy amounts of money if they feel that it will fit with their own brand,” said Portalatin. “They are not looking at the price point of items, but the way that they can build their own personal expression and, in turn, engage with brands.” Social media platforms such as Instagram and Snapchat, are providing a platform for this digital generation to share their story and develop their unique brand.

For the older Generation Zs, they are delving into creating their own beverages like tea-based cocktails, part for the beverage itself, but also because it’s beautiful, creative and is going to get the user likes. Product launches, such as Starbucks Unicorn Frappuccino, appealed to the consumer behaviour of taking a photo and sharing it online. While events, like caffeine crawls (adapted from the concept of a traditional pub crawl where “crawlers” engage in a presentation by the coffee shop or a hands-on activity and enjoy a free drink or chocolate – redeemable by attendees only) and sober raves, create a social sober scene that encourages entertainment, product sampling, and sharing the story of a beverage.

“Our younger audience has been our most engaged with the presentations,” said Burton. “They are the first generation to grow up with specialty coffee, but they still take in the information and really seem to enjoy the drinks.” The Generation Z audience for the caffeine crawls tends to consist of small groups of college students, or middle/high school students attending with a parent, evolving the crawl into a family outing.

Brand loyalty has become an interesting kind of dance, shared Hildebrand. On the one side, they understand what a legacy brand is from their parents – Star Wars, Avengers, Wonder Woman, but on the other side, the new wave of Generation Z YouTube celebrities are influencing which brands to gravitate towards, and which to stay away from. “For them, Generation Z is the brand, collecting pieces and parts to tell the story of who they are,” said Hildebrand. “One of the great examples is the resurgence of the enamel pin [collectible small pins with various images that brands produce] which brands are creating and encouraging Generation Z to engage and share their story.”

Generation Z are interested in the story behind the products and looking for companies that will share not only about the product, but where it came from, and who created it. “They are looking for authenticity, it has to be real,” explained Portalatin. “This group has immediate access to a plethora of information sources and can quickly discern what is true and what is just marketing.”

Tata Tea, a division of Tata Global Beverages, has used the digital medium to initiate conversations and activism among youth. “While traditional mediums of marketing will continue to be employed, digital is a particularly powerful route,” said Sushant Dash, regional president, India, Tata Global Beverages. “Our strategy is to have a long-term conversation with them and not rely on merely push communication.”

Their campaign, Jaago Re (wake up), focused on two prevailing issues that were impacting India: women’s safety and sports. Their hope was to urge individuals to act now to prevent future crisis. In the end, Tata Tea collected 1.8 million signatures across the nation, which advocated to include gender sensitization and sports in the school curriculum.

 

New Wave of Coffee Drinkers

Unflavoured bottled water remains the most popular beverage for this segment group. In the 2017 National Coffee Drinking Trends report, commissioned by the New York-based National Coffee Association (NCA) and conducted by Dig Insights, a total of 1,060 individuals, aged 13-18 were sampled, providing one of the first in-depth analyses of coffee and tea consumption practices for this cohort.

Although coffee was not the most popular beverage sampled in the previous day, 70 percent of the coffee that was consumed was gourmet. Tea consumption, noted Hung, was higher than past day level for coffee. This number has been consistent for the past few years, hovering slightly under the 40 percent mark.

The follow-up study, conducted in 2018 (with a substantially smaller sample group), found that the gourmet category continued to track upwards. “The gourmet category continues to be very youth driven,” said Hung, “with the majority skewing towards espresso-based beverages. While the ready-to-drink segment and innovative beverages like bubble tea, continue to be largely driven by this younger demographic.”

The most popular beverages among this group are frozen blended coffee (19 percent), lattes (18 percent), and cappuccinos (16 percent). Espresso-based beverages are also strong among the 19-24-year old’s (which encompasses both Generation Z and young millennials), with lattes (27 percent) being the most consumed beverage in the past week.

One of the interesting findings from these studies, Hung revealed, was that there were marked gender differences on their attitudes towards coffee. Males in this group tended to focus on the health (they pay a lot of attention to medical news) and sustainable (coffee grown in an environmentally sustainable way) attributes about coffee, while females were more likely to agree with the productivity-driven statements (coffee helps me get things done). And, even though Gen Zers were extremely low (six percent) in agreeing that coffee was good for their health, 26 percent stated that coffee was a trendy thing to drink.

For the discerning and youthful Generation Z, not any brand will do. These consumers are seeking products that will help to share the story of their own brand. Tea and coffee companies can respond to these consumers by offering products that can be customized, personalized, and easily shared. At the same time, they can engage this community of influencers by sharing their own story and appealing to this sector’s interest in activism, equality and change.

Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at: annemariehardie1@gmail.com.

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