Nestlé takes on Australia’s $500m iced coffee market with Gen Z in its sights

Nestlé is making a major move into Australia’s $500 million-plus ready-to-drink iced coffee market, launching its first NESCAFÉ canned coffee range locally as it looks to capture a new generation of consumers whose drinking habits are reshaping the category.

The launch follows years of consumer research tracking the rise of cold coffee among younger Australians, with Nestlé identifying a growing opportunity to extend NESCAFÉ beyond its traditional at-home formats and into the out-of-home occasions increasingly favoured by Gen Z.

The company has introduced three ready-to-drink varieties, including Iced Latte, Iced Mocha and Iced Caramel Latte, securing partnerships with 7-Eleven and Woolworths for its retail push.

From today, Nestlé is rolling out a $5.6 million national campaign, ‘Always Ready’, developed by Saatchi & Saatchi Australia, with media strategy and execution led by WPP Media’s OpenMind. HERD MSL is leading the campaign’s creator and social strategy, with activity already underway ahead of the broader media launch.

But the decision to enter the market goes well beyond a new product launch.

Melissah Toomey, head of marketing, beverages ANZ at Nestlé, told MARKETING-INTERACTIVE that younger consumers are entering the coffee category differently from previous generations, creating both a commercial opportunity and a challenge for established brands.

“They are coming into the coffee category quite differently to the way the generations before have started,” Toomey said.

Some 40% of their coffee consumption is now cold and consumed on the run, with cafes, convenience stores and other on-the-go occasions playing a much larger role in their daily routines.

“They lead these really busy lifestyles where they’re out with friends, they’re at university and just basically getting out and living the world,” she said.

“If we’re not in that out-of-home occasion, then they’re not going to be able to buy NESCAFÉ.”

That gap in the company’s portfolio is central to the new strategy. Nestlé has already established a presence in at-home iced coffee through NESCAFÉ Espresso Concentrates, but the canned range allows it to compete for consumption occasions that its existing products cannot reach.

So why now?

Toomey said the timing of the launch is the result of a long-running research program. Nestlé already sells iced coffee products internationally, but she said the company had deliberately waited for the Australian market to develop before introducing a local ready-to-drink range.

Its annual coffee landscape study examines how consumers use the category, what they drink, where they consume it and the motivations behind their choices.

That research had identified the growing popularity of cold coffee well before the pandemic, although Covid and subsequent cost-of-living pressures disrupted the out-of-home market.

“The growth of ice has been coming for a very long time, but the out-of-home coffee landscape slowed dramatically through Covid, and actually still hasn’t bounced back to where it was pre-Covid,” Toomey said.

In the past two years, however, the growth of cold coffee among younger consumers has accelerated, even as consumption patterns among older demographics have remained relatively stable.

“In the last two years, cold in particular has started to grow exponentially and it’s really driven by that younger generation,” she said.

The success of NESCAFÉ Espresso Concentrates, launched in Australia a couple of years ago, provided further evidence that younger consumers were willing to engage with the brand in new formats.

“We saw the growth of cold coming. We saw it being really driven by youth, and that was how we made the decision that now was the right time for us,” Toomey said.

While the ready-to-drink category is already worth more than $500 million, Toomey acknowledged that its growth has recently slowed.

Nestlé believes there is an opportunity to bring additional coffee consumption occasions into the category, rather than relying solely on consumers switching between existing RTD products.

Toomey said the category currently serves several different consumer needs, ranging from caffeine and established coffee rituals to the appeal of flavoured milk.

“There are players in there that are catering more to the flavoured milk side. There are some that are catering to both, but we see the opportunity for NESCAFÉ as coming in with real coffee expertise and grounding it as a coffee occasion,” she said.

That positioning will be important as NESCAFÉ competes against established brands with strong consumer recognition and longstanding positions in Australian refrigerators.

The company is drawing on its history in convenient coffee formats while emphasising real coffee and creamy milk in its new product communications.

Building loyalty across coffee occasions

The launch also presents an opportunity to change how younger Australians interact with NESCAFÉ as a brand.

While the company has strong recognition among younger consumers, Toomey acknowledged that its heritage remains closely associated with traditional products such as Blend 43.

Espresso Concentrates helped demonstrate the brand’s relevance to younger coffee drinkers, but ready-to-drink products offer something different.

“There’s a bit more social currency in ready-to-drink. People carry around your can with your logo as a badge of honour,” she said.

“I think Espresso Concentrate proved to us that we can play a role with younger consumers, and RTD takes it a step further, where they actually carry our brand around physically.”

The company has taken inspiration from NESCAFÉ packaging in other international markets, opting for bright colours, minimal design elements and prominent branding intended to stand out in stores.

But building loyalty in the category will be a longer-term challenge.

Toomey said younger consumers are increasingly comfortable moving between coffee formats, from instant and capsules at home to cafe coffee and ready-to-drink products when they are out.

That variety makes it difficult for any single brand to dominate their consumption.

“They are repertoire drinkers,” she said.

“They’re not particularly loyal to one segment of coffee or one format of coffee, which also then limits their brand loyalty.”

Rather than trying to make consumers loyal to one product, Nestlé wants to establish NESCAFÉ as a brand they choose across different occasions.

“The goal for us would be for NESCAFÉ to become their coffee of choice, whether it’s out of home, whether it’s in home, whether it’s on the go. We want to be able to play in every coffee occasion that they’re participating in,” Toomey said.

It is an ambition she said will take longer than the first year of the launch to achieve.

Beyond coffee culture

The marketing strategy is being built around the same consumer research that informed the product launch, with social media and sampling playing central roles.

Toomey said younger Australians are increasingly discovering coffee trends through social platforms, including creators who dedicate their content to coffee products, preparation and consumption.

But Nestlé is looking beyond coffee-specific conversations to build a broader connection with Gen Z.

“I think it’s also really important that we’re bigger than coffee. We need to be able to embed ourselves in culture and make it interesting for them when we’re on social,” she said.

That means treating social media as a distinct part of the marketing strategy rather than simply another distribution channel for traditional advertising.

The ‘Always Ready’ campaign, developed by Saatchi & Saatchi Australia, positions the new range around spontaneity and the changing plans that characterise younger consumers’ lives.

Its hero film is supported by creator-led content designed to engage audiences in the environments where they already spend time.

Toomey said the approach balances product messaging with content that feels relevant to the people Nestlé is trying to reach.

“You can’t do a one-size-fits-all,” she said.

“We want to tell them it’s real coffee with creamy milk, like the things that we know in all of our pre-launch research people said were important about the category.

“But if you don’t speak to them through influencers, through people that they want to hear from in ways that they want to be spoken to, you don’t have that cut-through.”

Michael Barnfield, creative director at Saatchi & Saatchi Australia, said the campaign was developed around the different expectations younger consumers bring to the category.

"Our campaign needed to fit in with the NESCAFÉ brand POV as a whole, so our story involves a moment of connection over coffee," he said. "But it is delivered with more energy and excitement to match our younger audience.

"One in three coffees these days is served cold, which reflects the changing way it is consumed now. Coffee culture includes the sit-down barista experience as well as the grab-and-go convenience of a can. NESCAFÉ wanted to be there with a quality coffee for the times when young people were out and about, going with the flow."

From social to real-world experiences

Nestlé has also sought to translate its cultural research into physical experiences, working with HERD MSL and Yakusan on a creator launch that incorporated the growing popularity of ‘side quests’ among younger consumers.

The event, developed in partnership with 7-Eleven, featured a mock convenience store frontage with a refrigerator door that opened into a hidden event space.

Inside, creators could have their hair and nails done, listen to a DJ and sample the new products before being sent on spontaneous challenges designed around the ‘Always Ready’ campaign.

Each creator was given a different “side quest” to complete, taking their NESCAFÉ iced coffee with them and producing content from the experience.

The launch brought together paid creator partnerships and invited influencers, with Nestlé seeking to generate content that extended beyond conventional product endorsements.

Toomey said the experience was designed around a broader understanding of how younger consumers want to interact with brands.

“They want experiences. They want to be able to see the brands,” she said. “They don’t want to be spoken at, they want to be able to participate.”

Making the switch

While social and creator activity will be central to building awareness, Toomey said sampling will be equally important in converting interest into sales.

View this post on Instagram

A post shared by PEYTON (@peytoncolee)

Taste, she said, is also a major driver of purchasing decisions in the category.

Nestlé’s pre-launch sensory research has given the company confidence in the range’s ability to compete, but Toomey said consumers need to experience the product themselves.

“Sometimes people can be nervous to try something new,” she said.

“So that is going to be critical for us, being able to get cans in hands and actually getting people to try it.”

The sampling strategy will also provide another opportunity for the brand to interact directly with younger consumers, complementing the creator and social activity.

Taste, she said, is also a major driver of purchasing decisions in the category.

Nestlé’s pre-launch sensory research has given the company confidence in the range’s ability to compete, but Toomey said consumers need to experience the product themselves.

“Sometimes people can be nervous to try something new,” she said.

“So that is going to be critical for us, being able to get cans in hands and actually getting people to try it.”

The sampling strategy will also provide another opportunity for the brand to interact directly with younger consumers, complementing the creator and social activity.

With summer approaching, the timing could work in Nestlé’s favour. Warmer weather, more time spent outdoors and a generation already embracing cold coffee provide an opportunity to build momentum behind the launch.

The bigger challenge will be converting that initial awareness and product trial into repeat purchases and, ultimately, brand loyalty.