Sales of cold-brew coffee soar

The popularity of cold-brew coffee in the United States has exploded in the last year, according to global market research firm Mintel. Retail sales of cold-brew coffee rose an estimated 115 percent growth from the year prior, reaching $7.9 million. However, cold-brew options remain a small part of the overall ready-to-drink (RTD) coffee segment, making up only an estimated 0.4 percent of sales in 2015.

Overall, 24 percent of consumers currently drink retail-purchased cold-brew coffee. Older millennials, those age 21 to 38 (55 percent), and men (30 percent) stand out as groups most likely to drink this type of coffee, Mintel said. Mintel research indicates that more than one-third U.S. consumers (37 percent) are interested in cold-brew coffee because they enjoy trying new styles of coffee preparation

Despite the rising popularity of cold-brew coffee in the United States, the majority of cold-brew coffee non-drinkers (58 percent) are not interested in trying the product, Mintel said. While cold-brew coffee has a smoother, less acidic taste and a naturally sweeter flavor, Mintel research shows that the majority of consumers (48 percent) who have tried the preparation style but do not like it say it is because of the taste. The higher price point is a detractor for a mere 9 percent of cold-brew drinkers. Highlighting a potential need for consumer education, nearly one in 10 consumers (9 percent) who have not tried cold-brew coffee and are not interested in trying it do not know what cold brew is.

“Retail sales of cold-brew coffee reflect its rising popularity as growth has been steady since 2010, shooting up rapidly from 2014-2015,” said Elizabeth Sisel, beverage analyst for Mintel. “While cold brew represents a small portion of the overall category, our research indicates curiosity about trying a new style of coffee is driving current consumer demand. However, this may foretell future challenges for the beverage; when a newer coffee brewing method begins to trend, it may easily overshadow cold brew’s current popularity.”

Roasted coffee, which includes grounds and beans, remains the largest retail coffee segment by sales in (estimated) 2015, boasting an approximate 44 percent market share, Mintel said. However, it has struggled in recent years as coffee prices increased, and single-cup coffee popularity challenges its growth.

Single-cup coffee continues to see strong year-over-year growth, comprising approximately 33.4 percent market share in (estimated) 2015, Mintel said. Single-cup coffee is forecast to see 19.6 percent sales gains, the greatest gains of all coffee segments in 2015, reaching $4.3 billion. Mintel forecasts single-cup sales to surpass roasted coffee by 2018. Sales are expected to grow 81 percent from 2015 to 2020 to reach $7.75 billion.

“With the majority of consumers using single-cup coffee because it helps them reduce unused coffee waste, we see general coffee trends moving toward the single-cup coffee segment, Sisel said. "Consumer preferences for premium and craft coffee brews are creating demand for better quality in single-cup form."

Still, single-cup packaging poses environmental concerns for consumers. According to Mintel data, more than two in five single-cup coffee consumers (44 percent) are drinking single-cup coffee less often because of its environmental impact and are looking for a change to help ease their conscience about usage. Nine in 10 single-cup coffee users (88 percent) say all packaging should be biodegradable or compostable.

“Manufacturers need to address the environmental concerns consumers have related to single-cup coffee packaging in order to increase consumption volume, as the majority of users say that biodegradable or compostable packaging would encourage them to drink more single-cup coffee,” Sisel said. “Reusable pods offer an environmentally safe option for single-cup coffee machines, as well as an affordability benefit when consumers use their own grounds. Single-cup recyclable programs also offer a possible solution as they provide consumers an opportunity to take control of their own environmental concerns.”