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Cold brew at an inflection point

4/3/2018
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This article is featured in the March issue of Tea & Coffee Trade Journal.

Cold brew remains one of the most talked-about areas in coffee today. What was once a difficult-to-find novelty is now relatively mainstream, available in many leading coffee shop chains and in ready-to-drink (RTD) versions in several retail channels. Cold brew’s success somewhat paradoxically raises questions about its future. What will it mean for the category once it is no longer the trendy coffee of the moment?

Highlighting the benefits of cold brew

Cold brew retains a numbers of advantages that can help it transition into the long-term. The lower acidity of cold brews is one example. Many coffee drinkers tried cold brew for the first time out of curiosity or desire for novelty, discovering that cold brew was easier on their stomachs and that they liked the less acidic taste, thus becoming long-term drinkers.

Most importantly though will be cold brew’s ability to function as a clean and natural source of energy. Demand for functional beverages among consumers is high; high enough, in fact, that energy drink sales continue to grow even as other high-sugar categories struggle. According to Euromonitor International, carbonates total volume sales declined 8% from 2012 to 2017 in North America whereas energy drinks experienced 30% growth over that same period. While consumers are looking to cut down on sugar, the need for energy is great enough that many of them are willing to overlook the high sugar levels of mainstream energy drinks in order to receive the functional benefits. This suggests that clean, natural functional beverages that do not force consumers to choose between energy and low-sugar content have great potential.

This is an area in which cold brews, particularly in RTD formats, are positioned to excel. Their natural sweetness mitigates the need for high amounts of sugar and now that cold brew is mainstream, there is a high enough degree of familiarity that many consumers would feel comfortable making the switch. The distinct possibility of new taxes on sugary beverages could accelerate this process. The United Arab Emirates has gone so far as to tax energy drinks at double the rate of other sugary drinks, one of the first times the category has been so singled out. If this becomes a trend elsewhere, it would create a stronger demand for alternative sources of functional energy.

Making cold brew new again

In the foodservice space, the key to growing cold brew is to continue innovating to keep it fresh. There are methods of making cold brew that remain unknown to most coffee consumers whose adoption can keep excitement percolating and thus keep consumers interested. The most important of these is nitro cold brew, which can create creamy beverages in coffee shops and other foodservice locations. Nitro is not the only option though. Another example is Kyoto-style, a method that returns cold brew to its Asian roots by using ice dripping through coffee grounds to brew the coffee. Notably, both of these methods are also very visually appealing, something that should never be discounted in the era of Instagram.

Looking ahead: Following in the footsteps of coconut water

Coconut water was the trendy “it-beverage” in the not-too-distant past. Since then growth rates have slowed dramatically as consumers whose motivating interest is trying the hottest new thing moved elsewhere. Sales are still growing though, with North American total volume sales for coconut and other plant waters experiencing 18% compound annual growth from 2012 to 2017, according to Euromonitor International. Consumers who have tried it at first for novelty learned to appreciate its functional benefits and remain in the category. Such is the likely future of cold brews no longer being the hottest thing in coffee but a moderately growing segment of the market thanks to consumers who appreciate its inherent qualities.

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