Sara Babb
Research Paper
Research Question: Why are Millennials dominating the coffee industry? Report: A Millennial (aka Generation Y) is defined as a person born between the early 1980’s to the early 2000’s. The U.S. Census Bureau defined the millennial generation as ages 18-34. 1
First off, Millennials are influential. This digital generation makes up approximately 23
percent of the population, according to the U.S. Census Bureau. It is expected to number over 75 million young adults in 2015, surpassing the Baby Boomers and becoming the largest living generation. Its purchasing power is approximately $200 billion annually, and its members are approaching their peak earning and spending years (Fromm & Garton, 2013). This correlates with the coffee industry because, they have all the numbers backing them! Companies that know this are targeting them. Companies who haven’t taken advantage of this (and by “this” I mean them) yet are highly devoted to their more promising targets, because let’s face it, when it comes to millennials they can be fickle. Therefore, they can be considered a risk. Although, there is a strong possibility these companies are happily living under a rock, since even the “Mom and Pop” are now active on Facebook. Coffee-consumer behavior is shifting in general, but the millennial generation is drinking more coffee than any previous generation of the young adult cohort. Based on the National Coffee Association’s 2014 Annual Drinking Trends report, daily coffee consumption among ages 18-24 more than doubled (to 51 percent) in 2014, up from 25 percent in 2000. Daily consumption among ages 25-39 increased to 62 percent in 2014, up from 42 percent in 2000. This is an indication of a long-term trend.
1
http://www.scaa.org/chronicle/2015/04/06/the-millennial-marketplace-shifting-values/
Sara Babb
Research Paper
Mintel simplified this statistic into two groups, the Older Millennials and Younger Millennials and goes to explain their reasoning for the overall group’s dominance. 2
Older Millennials are those most likely to drink coffee and are the heaviest consumers of
each coffee type. Their median household income exceeds $50k, which supports their premium
2
http://academic.mintel.com/display/748887/
Sara Babb
Research Paper
coffee preferences. The group is also more likely to be parents of children under the age of 18, which is also an indicator of heavier consumption. Millennials have grown up with Starbucks, introducing them to a higher standard of coffee at a young age and have thus had the opportunity to develop a coffee palate early on. They likely have a greater understanding of and demand for a variety of coffee tastes and flavors and have enjoyed broad experimentation with new types of brewing methods – all rationales for their interest in cold brews. As mentioned earlier, millennial purchasing power is approximately $200 billion annually, and its members are approaching their peak earning and spending years. So, they are willing to spend a little extra, but not without researching first. According to the Specialty Coffee Association of America (SCAA), they are the most skeptical coffee-drinking group, and are more likely to question company ethics. Once Millennials interact with a product, they turn to social media to review or ask friends for advice on making a purchasing decision. However, once they deem a company or product worthy, they will invest in it (with money they don’t really have).
3
3
https://blog.mint.com/trends/millennials-the-true-cost-of-a-pumpkin-spice-latteinfographic111414/?display=wide
Sara Babb
Research Paper
There are many reasons why Millennials are making such an impact in the coffee market. One can be that as the Millennial gets older, their income may increase, but so will their responsibilities with families and careers. Mark Inman, a coffee trader and sales manager for Olam Specialty Coffee, and a past president of SCAA believes that it might be a custom and curated need to admire something real and tangible in our digital and virtual world. Inman also believes that this movement is happening with such intensity because we are living, historically, in stable financial times where people have more disposable income than ever before.4
4
http://www.scaa.org/chronicle/2015/04/06/a-gen-xers-informal-review-of-the-millennial-coffee-scene/
Sara Babb
Research Paper
In conclusion, a millennial is ambitious, tech-savvy, entitled, young and hungry thirsty. They are a primary target to most coffee companies, but a risk to some. They are skeptical at first, but after they have received opinions from their families and friends, they will either avoid or invest in the products. Once they love a product, they are loyal to it. Out of older millennials and younger millennials, the older ones consume more coffee. Millennial’s interest in coffee is on the rise. This could be a need to admire something real and tangible in our digital and virtual world. We are living, historically, in stable financial times where people have more disposable income than ever before.5 The reason might also be that they have early experience with coffee and they responsibilities increase as they grow older.6 Whatever the reason may be, millennials have nearly doubled daily coffee consumption since 2000. Analysis: This project has helped me learn how to utilize the tools I have on my personal computer as well as tools offered to me by UCO and possible future employers. It shows me that Excel isn’t as intimidating as I thought. I’ve learned how to turn credible research from sources such as Mintel and Simmons into a fully written report. This applies to Strategic Communications because there is no advertising without research. If agencies presented advertisements on a whim without knowing how it could affect people, there would be chaos across all mediums. The limitations I experienced for this project was that only two of my four sources were trustworthy (since they were provided by an institution). I also had to make a graph based off the numbers presented from an internet article, it was fun! This project overall shows me that I am capable of turning research into a report to catapult an advertising campaign.
5 6
http://www.scaa.org/chronicle/2015/04/06/a-gen-xers-informal-review-of-the-millennial-coffee-scene/ http://academic.mintel.com/display/748887/