Coffee Megatrend #5: Cold-brew IS its own category and will go mainstream

By John Buckner — SVP, National Account Sales

 

As the largest coffee and tea manufacturer and supplier to restaurants and convenience stores in America, we are in tune with the trends of the away-from-home market for coffee — which entails 10 billion servings annually and is growing at a 6 percent clip. In this blog series, we will walk through 10 mega trends we’re seeing in the coffee industry.

Cold brew is the biggest story in ready-to-drink coffee — growing almost 350 percent over the last five years. It still has a relatively small base in terms of volume, but plenty of believers in the industry.

The big questions surrounding cold brew are:

  • Will it migrate from ready-to-drink to the away-from-home market?
  • Will it go from coffeehouse to mainstream?
  • Is it a new category or just a line extension to iced coffee?

Let’s look at these questions one at a time and see how the answers support our next megatrend: Cold brew IS a New Category and Will Go Mainstream.

Why will it go mainstream? Cold brew seems in step with the trends, so the migration seems probable. The critical factors include:

  • It is a better-for-you beverage, enjoyed for its pure, unadulterated coffee flavor
  • The millennial generation has adopted this beverage
  • There is a marketing hook — cold brew appears to be a strong method or technique story

Why is cold brew a new category? The distinctiveness around its smooth, subtly sweet taste, the technique of using time not heat and its pure coffee flavor make it different from traditional iced coffee. Cold brew is more than just an attribute. In fact, it’s a lifestyle beverage. Sometimes referred to as the “craft beer of coffee,” cold-brew carries with a certain swagger, not unlike the craft beer aesthetic. So, yes, I have to believe that it stands alone as a distinct cold coffee offering delivering unique benefits to that of traditional iced coffee.

Availability begets awareness which begets trial. Availability is the trigger for mainstream acceptance.

Since “America runs on Dunkin’” their cold brew success is a strong indicator for acceptance. We believe others in the limited serve space are likely have to join.

As the industry moves toward mainstream uptake of cold brew, there is plenty we need to consider. For the multi-unit chain operator, we must dial-in:

  • Recipe stabilization (e.g. appropriate blend, water to bean ratio, etc.)
  • Consistency, cleanliness and food safety
  • Batch management and availability
  • Positioning vs. other iced coffee beverages

Stemming from these considerations, S&D recently launched cold brew concentrates to help simplify cold brew for foodservice operations. Using the filtration system at scale, this method delivers a superior craft cold brew coffee flavor in an easy-to-use concentrate. More information about these concentrates can be found on this website.

The last item on the list — positioning vs. other iced coffee beverages — is the one that worries me. Somehow, we have to be careful to preserve the whole culture around cold brew. We can’t afford to lose that rebellious adventurer who is attracted to cold brew — and there is always a risk that we’ll lose the edge when we go mainstream. Authenticity will be key, while still making it accessible to a whole bunch of new users.

So, in the away-from-home market, we see some cannibalization, but then the enlargement of the overall cold coffee segment. We are at about 1 billion servings of traditional iced coffee in the U.S. That will dip to 900 million as people switch , but we expect a pick-up of another 500 million servings over the course of the next several years as consumers find more cold-brew in the market and switch because of the superior cold-brew taste, unique technique and cool aesthetic.

We’re halfway through our look at the top 10 Coffee Megatrends. You can find the first four blog posts in the series here, and we’ll be sharing the next five in the coming months.