Steeped 12 hours or more in unheated water, cold brew has amassed a loyal following among the younger set for its smooth texture and sweeter taste compared to drip and iced coffee. Its expansion from specialty coffee shops onto grocery shelves in ready-to-drink (RTD) cans and bottles has contributed to the sector’s impressive growth in recent years, according to market researchers.
“It’s really the younger consumers driving this market,” says Caleb Bryant, associate director of food and drink for market research firm Mintel.
Cold brew has provided an entry point into the coffee market for young consumers not only because they like its more pronounced coffee flavor, but also because it’s available nearly everywhere (like convenience stores), Bryant notes.
A third of Gen Z (coffee drinkers 22 and younger) have had cold brew in the last month, Bryant reports. Cold brew has been popular with millennials (aged 23 to 38) for a while, but Gen X consumers (aged 39 to 54) are not immune to its charms either, Bryant adds.
“There’s an opportunity to target Gen X — they are interested in premium coffee drinks,” he says. “A premium RTD cold brew positioned in the right way could definitely appeal to Gen Xers.”
Younger consumers favor a wide variety of coffee drinks, including flavored RTD beverages (cold brew among them), and are responsible for driving major shifts in coffee consumption trends, Mintel observes in its July report, “Coffee U.S.”
The New York Times saw this coming. Cold brew changed the coffee business, and the United States is becoming a cold-brew nation, as many millennials make it their drink of choice, the newspaper declared in a June 5, 2017, article written by Oliver Strand.
Asked which RTD coffee beverage they drank most often, flavored cold brew coffee was the choice of 32% of those aged 18 to 34, 26% of the 35 to 44 age group, 22% of those aged 45 to 54 and 6% of the 55 and older group, according to a Lightspeed/Mintel online poll of 2,000 adults conducted for the report.
Convenience and the popularity of innovations such as cold brew drove significant growth in the coffee market (and in particular the RTD coffee market) from 2013 to 2018, according to Packaged Facts’ “U.S. Food Market Outlook, 2019 (Coffee).”
Sales of all RTD coffee increased a whopping 84% from 2014 to 2019, Bryant reports.
RTD coffee sales increased another 11% from 2016 to 2018, reports Packaged Facts. This compares to an increase of slightly more than 1% in traditional ground and whole bean coffee for the same period.
Innovations (and millennials) are driving the growth of cold brew, agrees Tyler Kneubuehl, director of marketing and analytics for Berner Food & Beverage in Dakota, Ill.
Berner makes milk-based RTD coffee and tea beverages for private label retailers, including cold brew coffee in caramel, vanilla and mocha flavors; iced lattes; coffee energy beverages; and coffee nutrition beverages.
As consumers continue to shift away from traditional carbonated soft drinks, sales of RTD coffee drinks are expected to continue to grow, Packaged Facts states. Increasingly, consumers are reaching for higher-priced, gourmet, small batch, local, niche and artisanal coffees, Packaged Facts adds.
It’s even possible that RTD coffee could end up leading the entire coffee segment, given its strong following among influential and growing groups such as young consumers, Hispanics, lower- and middle-income consumers, Mintel projects.
Cold brew’s unique flavor profile has much to do with its success, Bryant says. “Taste is most important. The customization aspect is also important,” he adds. “You can get it flavored, unflavored, sweetened or unsweetened.”
There’s also an uptick of interest in cold brew that has some type of texture component, whether it’s creamy nitro cold brew, sparkling cold brew or citrus-flavored sparkling cold brew, the latter which seems to be functioning as a direct competitor to soda pop, Bryant notes. Its variations allow it to appeal to different consumers and consumption occasions.
“Carbonated and nitrogenated offerings are affecting mouthfeel and unique flavors (including cayenne) are also driving innovation,” Kneubuehl says.
Innovations in flavor and textures, which are ongoing throughout the Starbucks chain, are “all building on what has been the success of cold brew,” Bryant adds.
Flavor innovation in the packaged retail market is ongoing as well, Bryant says, pointing to examples like Trader Joe’s Cold Brew Coconut Cream Lattes (in original and caramel spice flavors). “By and large, consumers do prefer a flavored coffee,” he adds.
The Kroger Co.’s Simple Truth Organic private label offers RTD cold brew vanilla Arabica and cold brew black brew Arabica Fair Trade coffee in 12-ounce cans. The label also includes 32-ounce jars of refrigerated, preservative-free cold brew concentrate in original, toasted coconut, French vanilla, Kona blend and French roast flavors.
Innovations around dairy substitutes, such as oat milk, are another important trend, and health-conscious consumers are taking notice, Kneubuehl adds.
And now for something completely different: convenience store chain 7-Eleven’s private label Fizzics Sparkling Cold Brew Coffee, launched in mid-2018, adds a twist with self-chilling cans. The cans cool the coffee in 75 to 90 seconds after the user turns the can upside down and twists the base until a hissing sound is heard. The cans are recyclable, but increase product costs and retail price, Packaged Facts reports.
Future innovations to look for include draft latte cold brew (a creamy coffee milk drink served on tap that was introduced by La Colombe Coffee Roasters) and more complex flavors such as salted caramel, whisky, oak and botanicals, Packaged Facts says. Flash brew and cannabidiol (CBD) coffee are also future trends to watch out for, Mintel notes.
In private label, “we’ve seen the most success come from introducing a National Brand Equivalent (cold brew) and then spinning unique products off of that,” Kneubuehl reports.
Cold brew is a good fit for private brands because it can come in at a slightly lower price point than name brands, allowing consumers to try out new products without much risk, Bryant adds, pointing to a Mintel survey that showed about 21% of consumers think cold brew coffee is too expensive.
“I definitely think it’s something that’s here to stay. If it was a fad it would have died away by now, but instead we’re seeing growth and innovation,” Bryant adds.
“It’s not going anywhere anytime soon,” Kneubuehl agrees.