Restaurants: How Costa Lost the Matcha Generation: When Coffee Chains Miss Cultural Shift
- InsightTrendsWorld
- 3 hours ago
- 7 min read
What Is the Trend? – Matcha-First, Coffee-Second Culture
The rise of matcha and specialty beverages: Younger consumers are embracing brightly colored, customizable drinks such as iced strawberry matcha or flavored matcha lattes. These beverages feel both indulgent and “better-for-you,” positioning them as affordable luxury treats.Unlike traditional coffee, matcha carries associations with wellness, antioxidants, and balance, making it appealing to Gen Z and Millennials who want both Instagrammable aesthetics and perceived health benefits.
Chains like Costa lagging behind: Costa’s menu offers frappés and fruit coolers, but not the innovative matcha blends popularized by rivals like Starbucks, Pret, Nero, Gail’s, and Black Sheep Coffee.By failing to adapt quickly, Costa risks being seen as outdated, especially in a market where smaller, agile independents move fast to capture cultural trends.
The Blank Street effect: U.S.-born Blank Street Coffee has expanded in London with pastel-hued branding, TikTok-driven buzz, and experimental drinks, creating a “destination cafe” for younger consumers.Its strategy shows how niche formats can scale quickly when they combine social virality, playful aesthetics, and specialty beverages that feel novel and exciting.
Why It’s Trending – Gen Z’s Redefinition of Coffee Culture
Health-conscious appeal: Many young consumers are turning away from high-caffeine drinks, instead opting for alternatives like matcha that feel gentler, cleaner, and trendier.This is part of a broader shift toward functional beverages, where health halo benefits are as important as taste.
TikTok aesthetics as drivers: Drinks that photograph well—like pastel-hued matcha—become instantly shareable on platforms like TikTok and Instagram.For younger generations, a coffee run isn’t just about caffeine—it’s a content opportunity, making visual appeal as critical as flavor.
Affordable luxury in tough times: With the cost of living still high, consumers use specialty beverages as small, accessible indulgences.A £5 matcha latte may feel extravagant, but it’s far cheaper than dining out or other luxury categories, making it an acceptable treat.
Overview – Costa Caught Between Convenience and Culture
Costa sits uncomfortably in the middle of the UK’s coffee market. It lacks the ultra-low-price edge of Greggs or McDonald’s, and it hasn’t pivoted to the premium specialty innovation that rivals and independents embrace. This “middle-of-the-road” positioning has left it vulnerable, as consumers either seek convenience at the cheap end or experience-driven, lifestyle-focused indulgences at the premium end.
Detailed Findings – Consumer Reactions and Market Pressures
Costa’s struggles: Despite revenue of £1.2bn, inflation and rising costs led to a £14m operating loss in 2023. Coca-Cola is now exploring options for the chain, even considering a sale at roughly half its original purchase value.This financial strain reflects not only cost pressures but also cultural irrelevance.
Independent coffee shop boom: Over the last five years, independents have grown from 11,700 outlets to over 12,400, eating into the market share of big chains.Younger consumers actively seek out these shops for taste, aesthetics, and perceived authenticity, often rejecting large chain formulas.
Loyal but aging customer base: While Costa still attracts customers for convenience and familiarity, this loyalty skews older and risks eroding as Gen Z and Millennials dominate future consumption patterns.
Key Success Factors – What Costa and Chains Need to Learn
Menu innovation: Responding quickly to beverage trends like matcha is essential to remain relevant. Chains must offer new flavors and formats that resonate with Gen Z.
Cultural integration: Building experiences that live on social media—through visual products, collaborations, or pop-ups—keeps brands in the cultural conversation.
Clear positioning: Middle-of-the-road strategies fail; brands must either lean into value or lean into premium cultural cachet.
Key Takeaway – Miss the Moment, Miss the Market
The rise of the matcha generation shows that beverage culture moves quickly, and chains that fail to adapt risk irrelevance. Costa’s hesitation contrasts sharply with Blank Street’s agility, and the gap is costing it both cultural momentum and market share.
Main Trend – The Matcha Generation
The core trend is the Matcha Generation: younger consumers who view beverage purchases as lifestyle statements—about health, identity, and social sharing—rather than simple caffeine fixes.
Description of the Trend: “Sip-able Status”
This is Sip-able Status—where drinks function as symbols of taste, wellness, and belonging. Beverages are now small luxury items that double as cultural signals, especially when shared online.
Key Characteristics of the Core Trend
Wellness-first drinks: Matcha, adaptogens, and functional teas are rising.
Visual-first culture: Aesthetic appeal is as important as taste, fueling social buzz.
Affordable indulgence: Premium-feeling drinks at accessible prices thrive.
Independent edge: Smaller players are nimbler in setting trends.
Market & Cultural Signals Supporting the Trend
Starbucks, Pret, and Nero already integrate matcha and flavored lattes.
Independents like Black Sheep Coffee experiment with matcha waffles and creative pairings.
Social platforms elevate drinks to cultural content, making them aspirational experiences.
What Is Consumer Motivation – Why They Choose Matcha
They want healthier alternatives to coffee with less caffeine intensity.
They seek products that feel indulgent but remain within budget.
They want drinks that photograph well and express identity online.
They support independent or trendy chains that feel aligned with youth culture.
What Is Motivation Beyond the Trend – The Deeper Impulse
A desire for self-expression in small, daily rituals.
A craving for “everyday luxury” that doesn’t break the bank.
A search for alternatives that align with wellness and lifestyle identity.
Consumer Profile – The Matcha Generation
Who They Are: Primarily Gen Z and younger Millennials.
Age: Teens through early 30s.
Gender: Skews female but broadening as wellness culture grows.
Lifestyle: Health-conscious, trend-aware, digitally native, values experiences.
Spending Behavior: Sees specialty drinks as affordable status symbols, often willing to pay £4–£6 for novelty.
How the Trend Is Changing Behavior
Consumers are bypassing big chains that fail to innovate.
Specialty drinks become “destination experiences,” with people traveling across cities to try viral beverages.
Loyalty is tied less to brand heritage and more to relevance and social visibility.
Implications Across the Ecosystem
For Consumers: They get more diverse, playful, and health-focused beverage options.
For Brands: Agility and cultural awareness are survival tools—slow movers risk irrelevance.
For Retailers: Coffee chains must redefine themselves as cultural destinations, not just caffeine dispensers.
Strategic Forecast – The Future of Coffee Culture
Expect more matcha-inspired drinks, as well as other functional beverages like mushroom coffee and adaptogenic teas.
Chains will introduce branded collaborations, seasonal “Instagrammable” drinks, and interactive pop-up experiences to capture cultural buzz.
Subscription models (like Pret’s) will expand, blending convenience with premium add-ons.
Areas of Innovation
Matcha + Functional Fusion Drinks – Combining matcha with superfoods, adaptogens, or sparkling formats.
Social-First Cafes – Designing spaces and beverages for visual storytelling and digital sharing.
Wellness-Integrated Menus – Positioning drinks as part of a balanced lifestyle, not indulgence alone.
Limited-Edition Flavor Drops – Seasonal, collectible drinks to build hype and repeat visits.
Flexible Loyalty + Subscription Models – Rewards systems designed around regular, lifestyle-driven purchases.
Summary of Trends
Core Consumer Trend: Matcha as the symbol of Gen Z wellness culture.
Core Social Trend: Beverages as visual identity markers shared online.
Core Strategy: Agility and cultural awareness are more important than scale.
Core Industry Trend: Independents and small chains set the pace; big players risk lagging.
Core Motivation: Desire for affordable luxury and self-expression in everyday rituals.
Final Thought – Miss the Matcha, Miss the Moment
The story of Costa shows that in today’s beverage economy, relevance is currency. Younger consumers want drinks that make them feel healthier, more stylish, and more connected. If major chains don’t adapt quickly to the Matcha Generation, they’ll find themselves left behind, watching independents and agile upstarts sip their market share away.
Costa lost the Matcha Generation for several interconnected reasons — all tied to cultural shifts, consumer expectations, and its own positioning. Here’s the breakdown:
1. Lack of Innovation in Menu Offerings
While rivals like Starbucks, Pret, Nero, Gail’s, and independents leaned into matcha drinks (including strawberry, vanilla, and seasonal variations), Costa stuck with traditional coffee, frappés, and fruit coolers.
Gen Z and Millennials want novelty and wellness-driven beverages. By not embracing these trends, Costa looks outdated.
Specialty drinks like matcha aren’t just beverages—they’re experiences that create buzz on TikTok and Instagram. Costa didn’t provide that hook.
2. Out of Step With Health + Wellness Culture
Gen Z is increasingly health-conscious and seeks “cleaner” alternatives to coffee, with matcha marketed as antioxidant-rich and gentler in caffeine.
Costa’s frappés and syrup-heavy coolers feel indulgent but not aligned with the wellness narrative.
By missing the health positioning of matcha, Costa alienated a generation that equates lifestyle choices with self-identity.
3. Middle-of-the-Road Positioning
Costa isn’t as cheap and convenient as Greggs or McDonald’s, nor is it as premium, playful, and experience-driven as Blank Street or indie cafés.
This “neither here nor there” positioning leaves it vulnerable, especially when young consumers actively choose experiences that signal identity.
For a Gen Z buyer, a Costa latte is a necessity drink, not a status drink. A matcha latte from a trendy café is a status signal.
4. Slow Cultural Response Compared to Rivals
Blank Street Coffee (founded 2020) grew fast by tapping TikTok aesthetics, pastel branding, and viral drinks.
Independent cafés quickly experiment with drinks like matcha waffles, lavender lattes, or superfood fusions.
Costa, by contrast, moved slowly and relied on legacy familiarity. This created a cultural disconnect: it felt like a parent’s or grandparent’s café, not a Gen Z hangout.
5. Value Perception in a High-Cost Era
At nearly £5 a cup, consumers expect something they can’t replicate at home. A straight latte no longer feels worth the spend.
Matcha and other specialty drinks provide that “affordable luxury.” Costa’s more basic menu doesn’t deliver the same sense of treat or differentiation.
Young consumers therefore save their Costa-equivalent money for something more novel, aesthetic, and wellness-leaning.
Costa lost the Matcha Generation because it didn’t keep up with innovation (matcha, functional drinks), health positioning, cultural relevance, and social aesthetics. Instead of being a place for affordable luxury and self-expression, it remained a middle-tier coffee stop.
