Iced coffee. Cold brew coffee. Frozen coffee.
These aren’t just variations on a theme; each is a distinct member of a larger beverage category that is gaining prominence: cold coffee.
When it comes to the cold coffee category, operators need to pay attention. Here are three reasons to care about the cold coffee category.
1. It has seen historic growth.
A 2017 Technomic study looked at the growth rates of a variety of cold beverages ranging from juices and milk to smoothies and iced/frozen-blended coffees.
From 2014-2016 the two-year volume Compound Annual Growth Rate (CAGR) for these beverages grew 1.7%. Iced/frozen-blended coffee volume, however, increased at a rate more than 5 times that — making it the fourth highest growing cold beverage in the study.
Additionally, 20% of consumers report drinking more iced coffee than they did 2 years ago, driven in large part by improved taste and availability.
2. The category projections are impressive.
The 2017 Technomic Study also projects the CAGR for cold beverages between 2016-2021. Whereas the total cold beverage category has a projected growth rate of 1.4%, cold coffees are predicted to grow at nearly seven times that rate — 9.5%. The specific coffee drinks that fall into this category have the following projected growth rates:
Frozen coffee 6.0%
Traditional iced coffee 7.0%
Cold brew/nitro coffee 26.5%
3. It appeals to Millennials & Gen Z.
We can see the impact of younger generations on the cold coffee category when we review year-over-year changes in iced coffee consumer profiles. Although still a small base, the percentage of Gen Z and Millennial iced coffee consumers grew significantly from 2016 to 2017, 50% and 20% respectively.
Gen Zs and Millennials are driving the cold coffee trend. They are well above the general population average in consumption of a variety of cold coffee options, outpacing them by an average of 12 points (Gen Z) and 13 points (Millennials) for these types of beverages.
Their high consumption could be attributed to the fact that many Millennials and Gen Zers view cold coffee as being interchangeable with hot coffee. They drink it in the morning and consider it a social beverage to enjoy with friends in the afternoon. Their familiarity with the category may also make it an easier sell to them when compared to some members of older generations.
Right now, the cold coffee category consumer base is small, but it won’t stay that way. As more and more industry leaders fully commit to the cold coffee category, offering a variety of flavors boosted through LTOs, menu penetration across the foodservice industry for prepared cold coffee beverage will increase.
The S&D team can help you determine how to best implement cold coffee category options into your beverage portfolio. Take the next step — or risk getting left out in the cold!
For an in-depth look at a cold coffee category leader — cold brew coffee — download our latest white paper.
Pam Everett is the Director of Strategic Research & Insights with S&D Coffee & Tea
/// S&D Coffee & Tea, in continuous operation since 1927, serves over 90,000 customers through national distribution and direct store delivery. Operators can learn more about the innovative beverage solutions that S&D Coffee & Tea offers by visiting the company website at www.sdcoffeetea.com or by contacting Jim Edmonson at edmonsonj@sndcoffee.com.
The opinions and advice given by guest contributors are not necessarily those of NATSO Inc. The posts should not be considered legal advice. Qualified professionals should be sought regarding advice and questions specific to your circumstances.
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