What is the ‘fourth wave’ in the coffee world?

As part of the long and varied relationship us humans have had with caffeinated drinks, we are now entering what’s known as the ‘fourth wave of coffee’. Caleb Bryant, associate director of food and drink at Mintel, explains that while the first wave (which began in the 1800s) was coffee becoming more accessible, the second saw the rise of coffee shop chains and speciality coffees, and the third was all about quality, the fourth wave is about coffee being centred around the home.

The Covid effect

This is partly due to the pandemic and the rise in working from home. Mintel’s research shows that a third of Americans now own a speciality coffee machine. Rather than being an issue to battle with, Liz Orgill, marketing director at Owens Coffee, said this adds another arm to business.

“Lockdown periods created a huge uptake in the brew-at-home coffee market. Customers wanted ways to recreate their barista-style coffee, and this is still something we see a move towards today. Customers want the specialist brew kit and an ongoing supply of coffee. They want to find a favourite coffee they can always rely on (though they often enjoy trying out new coffees alongside their regular order), and they want information on how to make the coffee. We have seen lots of interest in our coffee masterclasses and experiences. Our trade business has fully recovered, and we now have a solid at-home business too.”

Finding the nuggets of gold in a difficult situation might not be as tough for the coffee industry as other speciality sectors. Andy Cross at Two Chimps Coffee believes Covid may have shifted perspectives on coffee, but it didn’t necessarily damage the industry.

“It’s difficult to talk about the positives when it comes to Covid, but if there was a small silver lining, many people suddenly had the extra time to explore and learn about coffee. Coffee has become a hobby, and the associated demand for great coffee at home has continued to benefit us.”

What is Coffeetok?

Caleb notes that this focus on the home as the centre of our coffee experience also encompasses how we learn about and find out about coffee and trends. Coffeetok is the name for the band of coffee enthusiasts who take to TikTok to talk about coffee and, in some cases, dictate future coffee trends. Mintel’s research shows that 49% of young US coffee lovers get their information from Tiktok. Tom Saxon from Batch Coffee knows about the importance of having a strong online presence and believes in using this to educate and inform customers, and this can, in turn, drive sales.

“We use content to promote our business, specifically in the form of articles on our blog. We write a host of useful informational content around coffee that our customers or future customers can find on our website. We mainly promote this content through our email list and on socials. As we have grown to become an authoritative website in the specialty coffee niche in the UK, we find that our content now features fairly high on the SERPs.”

For Andy Cross, this creates a dialogue between Two Chimps, customers, and potential customers, that can’t be had in any other way. “We focus on creating a two-way conversation. We’re keen to make speciality coffee accessible, and social media is a fantastic platform for this, allowing us to create guides, answer questions, and chat about all things coffee in an open, informal way.”

A sustainable story

Although Mintel’s research showed that only 29% of surveyed coffee lovers said sustainability was important to them, Steve Perrett, founder of Norfolk Coffee Company, knows that speciality coffee drinkers in the UK want to know where their coffee comes from and what its story is.

“The traceability of speciality coffee is very important to us. We want to know that the farmer who grows the coffee trees gets paid a decent amount for his work and expertise. We find that most of our customers are interested in this too. We like to have information about the farmer and his farm on our retail bags and on our website. This helps our customers feel a connection with the person at the very beginning of the process.”

As these stories grow, so too does the demand for more. Liz has found it’s often the customers who are driving this shift towards greater sustainability in coffee.

“When we first started roasting, it was unusual for a roaster to offer 100% organic-certified coffees in their range. However, customer demand for organic coffee has grown since then, and we’ve seen more organic coffee entering the market. We don’t view this as hurting our business. On the contrary, what it means is there is increased demand for green beans which are certified organic. We can offer customers even more choice.”

Sustainability is a global problem with global solutions. Mintel found that 51% of consumers worldwide believe their country is suffering from climate change. This is reflected in different ways in different countries, but Steve knows that his coffee customers place importance on this.

“Sustainability is extremely important to us, and increasingly so for our customers. We recently purchased an electric van in which to deliver to our local customers. All of our retail packaging and takeaway packaging is compostable or recyclable. We all need to be mindful of the environment and do what we can. Most customers want to see the businesses they purchase from doing their bit for the environment.”

The future is young

When it comes to looking ahead, independents are well placed, as the desire for something different amongst consumers continues to hold. Offering experiences and distinctive spaces is what independents do well, and this appeals to most coffee lovers.

“With the abundance of chains and major brands on the high street, it’s the uniqueness of independents, how they stand out, and the package they offer which is attracting customers and where they want to spend their money,” says Alex Crepey from Amelie. “People want to go out and buy their coffee from indies, and more and more now they are also using other local shops and services. This shift towards individuality is very much part of the future.”

That individuality can alter from place to place, but it is on the rise everywhere and has been for some time now. The UK might once have lagged behind, as Tom from Batch Coffee found, but the UK’s love of indies, especially amongst the younger generation, is blossoming.

“Having lived in Sydney for many years, where independents rule, moving back to the UK was a bit of a culture shock, as every high street throughout the country looked the same. I think, over the last few years, however, we are starting to appreciate independent business again, and enjoying the benefits of a diverse high street sprinkled with independents. Alongside this is the UK’s taste for speciality coffee amongst younger generations, which will surely cement independent coffee shops on the local map.”

Research from Mintel found that in the UK, 57% of coffee consumers drink instant coffee at home, which on the face of it sounds depressing. But with Coffeetok on the rise, and independents flourishing on high streets all over the country, it’s the younger generation who are changing the trend.

“Gen Z is progressively moving away from alcohol, from pub culture towards café culture,” says Liz Orgill. “Younger people are also increasingly becoming coffee drinkers instead of tea drinkers, which is quite a shift in the UK.”

Riding the fourth wave

The home-based approach to coffee is on the up. But customers still appreciate good coffee. According to Mintel’s research, 31% of 16 to 44-year-olds agree that reducing opening hours is their preferred solution for operators to take as a result of rising costs, while 33% of over-65s would prefer to see the price of drinks increase rather than a reduction in quality and portion size. So quality wins and coffee isn’t going anywhere.

“Our experience is that speciality coffee is even more popular now than it has ever been,” says Steve. “People are getting more and more discerning about the coffee they drink and seem to be prepared to pay more for good coffee, whether that is in a coffee shop or coffee to make at home. The vast majority of our customers know a good coffee from an average one. Many people still want a flat white, latte or cappuccino. They like having that choice.”

And the choice seems to be the answer. Artisan coffee is still important, even if it’s enjoyed in different ways. The trick is learning how to ride the wave.