A new report suggests that Starbucks, Dunkin' Donuts, McDonald's, and other coffee purveyors may have a love-hate relationship with young millennials. The group doesn't have a brew fixation like older consumers. But when they want a kick, they head out the door rather than make it themselves. And millennial "peak coffee consumption" could mean a business boost.
Coffee has long been a driver of commerce, whether for those that sold it or businesses that relied on caffeine-fueled employees. There's been a tug between saving money and making coffee at home (even when the beans are old and stale), or picking up a cup at a café, but paying multiple times more.
For millennials, the desire for coffee seems relative low, according to new research from asset management company AllianceBernstein, as reported by Business Insider.
In a survey, 48 percent of those 18 to 24 years old -- the younger part of the millennial generation, which started with those born in 1981 -- had coffee in the past 24 hours. That compares to 58 percent of older people. This is coffee like, not coffee lust.
However, only 31 percent of older coffee drinkers went out for their cup, the rest opting to make it at home. Among young millennials, 42 percent had someone else brew it for them. That's good news for the likes of Starbucks, Dunkin' Donuts, and McDonald's, which, according to AllianceBernstein estimates, are the three big food service coffee sellers.
Even though the younger set isn't as driven for a caffeine hit, at least not through coffee (there's always tea, cola, and energy drinks), the good news for chains is the willingness to go out. If you are less likely to want coffee, you also might decide not to keep beans and brewing paraphernalia in the house. After all, why not get a fresher cup?
The answer is, of course, that it's still cheaper and it's not like beans suddenly go bad overnight. However, rational reasoning doesn't necessarily translate into consumer behavior. As interest in coffee among millennials grows -- as they reach peak coffee consumption, as they are expected to -- the inclination to buy out should mean a boost for those that sell. Or, as an AllianceBernstein analyst wrote today:
Our analysis suggests that away-from-home (AFH) coffee consumption is growing faster than the broader restaurant industry, driven by demographic shifts in the coffee-drinking population.
It's evidence of that move toward peak coffee. Inc editor Danielle Sacks wrote a few years back at Fast Company, Inc's sibling publication, about the money-fueled drive to perfect cups of coffee as an experience -- basically, promoting coffee snobbery at $4 to $7 a cup.
I do wonder whether investors misread the public. Among the regular devotees, convenience and speed play an important part in their coffee rituals. The question is whether an age cohort less taken with the drink will pay higher prices and spend additional time (this isn't mass drip brewed stuff) for what they're told is a more sophisticated cup, or if Starbucks, Dunkin' Donuts, and McDonald's will have the last sip. My bet's with the companies that have perfected the drive-through window.