Cold Ones

COLD BREW’S EVOLVING ROLE IN THE ICED COFFEE CRAZE

By Martín Caballero

It may be hard to believe, but there was a time when the world didn’t know about cold brew coffee.

Look back to the mid-2010s, and you’ll find that the rumors are true: cold brew, in which coffee grounds are steeped in water for hours and kept cold throughout the brewing and bottling process, was a game changing innovation for the RTD coffee business. Iced coffee was already a massive category, fueled by Americans’ clear preference for chilled-over hot java and led by giants like Starbucks/Pepsi, but cold brew’s taste profile, premium price and ability to draw high-end specialty roasters into the market injected new life into the coffee space. With coffee shops helping drive awareness, packaged cold brew was suddenly viewed as the next essential addition to the cold case at grocery and convenience, populated by names ranging from the ultrapremium set (Stumptown, Blue Bottle) to those with more broadly appealing flavors and vibes (High Brew, Stok).

This nostalgic reverence isn’t to suggest that the category has come crashing down since then, however. Americans’ thirst for the stuff remains insatiable — QSR Magazine reported that cold brew coffee orders rose 27% year-over-year through April 2022, outpacing iced coffee by more than double. Ready-to-drink coffee is reflecting that growth: in the shadow of the massive conglomerates, innovative young brands like RISE Brewing Co., Nguyen Coffee Supply, Taika, Jot, Pop & Bottle and others have developed their businesses around their unique takes on cold brew.

But on the top end of the market, things look different. Coca-Cola, Pepsi and other major players have mostly consolidated their RTD coffee portfolios around a handful of straightforward, flavored iced varieties. Iced coffee is still the cold coffee of choice, with customers ordering 2.8 billion servings in the calendar year up to April, compared to 373 million servings of cold brew, according to QSR. That preference can also be seen in RTD; IRI data from MULO through November showed iced coffee sales growing 4.8% (over $3.3 billion), against a 14.5% decline in cold brew.

Whatever the brewing method used to make them, it’s clear that younger consumers in particular are eager for more RTD coffee options. And while cold brew itself may no longer be novel, its impact continues to shape the way brands, corporations and entrepreneurs are approaching the category.

Chasing Energy

For some of the biggest strategic beverage players, good coffee is where you find it.

More specifically, whether it’s coffee or not, American consumers are craving drinks that provide a boost of energy, and companies like Coca-Cola and Pepsi are primed to deliver them to those consumers in high volumes. Against that backdrop, coffee appears to have increasingly become one piece of a broader energy strategy that is reshaping the identity of its portfolio brands, and of the drink itself.

For Pepsi, that means leveraging its category-leading partnership with Starbucks to break into adjacent segments. As seen at the National Association of Convenience Stores (NACS) trade show in 2021, the beverage giant has aligned its energy portfolio around brands targeted to a specific demographic and experience: MTN

DEW for gamers, Rockstar for “mellow” and Starbucks for the “positive” natural consumer with its Baya Energy line.

Meanwhile, the continued success and expansion of Java Monster suggests that coffee as a flavor, even in nonpremium products, remains a strong purchase driver for consumers. Within the energy drink brand’s portfolio, cold brew is being deployed as a way to attract traditional coffee drinkers via the nitro-infused Java Monster Cold Brew, introduced last year in Sweet Black and Latte flavors in 16 oz cans. Now standing at nine SKUs, Java Monster has faced increasing competition from energy-adjacent products like Starbucks’ Double Shot and Triple Shot, as well as coffee products from male-skewing brands like Bang Energy and Black Rifle Coffee. The latter company’s fast expansion in RTD, to over 70,000 doors nationwide, has encouraged it to lean further into the category across multiple formats including high payload (300mg caffeine) 16 oz. cans, 11 oz. and 15 oz. cans for the cold box, and 6.5 oz. double shots.

It also seems worth noting that international brands have had mixed results in breaking into the U.S. cold brew market lately. BOSS Coffee, one of Japan’s largest brands and backed by spirits giant Suntory, quickly retreated to international markets after launching in the States, while Italian brand illy’s distribution presence has dwindled since its partnership with Coca-Cola ended. Elsewhere, family owned roaster Lavazza has committed to making its mark in the U.S. with its 4-SKU line of 8 oz. cans, launched in April 2022 and produced at its recently expanded roasting facility in West Chester, Pennsylvania.

The convergence of RTD coffee and energy drinks may be having other consequences, particularly for distributors.

Back in 2020, La Colombe’s announcement of a 10-year distribution pact with Molson Coors for its canned Draft Latte drinks affirmed the shared belief that coffee represented a strong opportunity for the company to grow its portfolio of non-beer beverages. But just over two years later, in November 2022, having taken the product into national chains like Kroger, Walmart and Target, Molson Coors announced it had reached a mutual agreement to end its partnership with the Philadelphia-based coffee roaster effective March 31, 2023. Meanwhile, the beer distributor’s attentions have shifted to energy via a splashy alliance with superstar Dwayne Johnson’s ZOA Energy, which grew volume over 117% in 2022.

Though other factors are also clearly at play, that divorce represents another instance of coffee failing to find its place within the corporate mix. Despite being Coca-Cola’s largest ever acquisition, and being positioned as its flagship coffee brand, Costa Coffee has been sparingly deployed as an RTD brand; a three-SKU line of flat white iced espressos in 11 oz. slim cans, available in Signature Blend, Mocha and Caramel flavors, were teased at last year’s NACS show but have yet to receive a national rollout. Elsewhere, Keurig Dr Pepper’s (KDP) multiple forays into the category over the years with the likes of Peet’s, Forto and High Brew all quickly stalled. Having recently made an $823 million bet on the future success of Nutrabolt’s C4 energy platform, KDP’s desire to take another crack at RTD coffee isn’t clear.

Against that backdrop, it’s worth watching what develops at Anheuser Busch, which aligned with Austin, Texas-based functional coffee maker Kitu Super Coffee as a distributor and minority investor in 2020, and which also has more than one iron in the fire; see fastrising energy maker GHOST, which did $195 million in sales last year according to NielsenIQ data, growing volume over 1136% in that time. Recall that AB previously splashed into the coffee-andenergy space with the 2017 acquisition of Hiball, which has since gone quiet.

New Brands, New Ideas

Following cold brew’s initial wave, other brewing techniques have had their say in the RTD category, from California-based Verve’s flash-brewed to the decidedly forwardlooking bean-less “coffees” from names like Atomo and Minus Coffee. But even though its newness may have worn off, cold brew remains a worthy vehicle for disruptiveminded entrepreneurs.

For Nguyễn Coffee Supply, the translation into RTD was intuitive. Its founder, Sahra Nguyen, had already built her New York-based company into a growing specialty roaster of Vietnamese-grown robusta coffees, the bean variety often overlooked in favor of its better known sister, arabica.

CAPPUCCINO/ICED COFFEE

RFG READY-TO-DRINK COFFEE

SOURCE: IRI, a Chicago-based market research firm-@iriworldwide% 52 Weeks through 01/01/23 cates that innovative cold brews still have space to expand into other channels. Pop & Bottle’s latest release — a three-SKU line of shelf-stable, organic, Direct Trade coffee “super concentrates” that can make 16 servings per 8 oz. glass bottle (MSRP $13.99) — was launched as a Walmart exclusive last year, giving the brand a presence outside of single serve coolers and allowing the store to upscale its center aisle coffee set.

Having poured time and energy into helping win convert consumers’ hearts and minds to Vietnamese robusta, translating that stronger, less acidic experience into a cold brew became the next step. After launching last year with a single Classic Black SKU, the brand expanded early this year at Whole Foods stores in New York City with two new flavors, Condensed Milk and Coconut, that further showcase Vietnamese coffee culture and traditions.

Another women-led coffee maker, Pop & Bottle, has validated the belief that innovative independent brands can make headway against larger competitors. The brand has seen its line of adaptogen-powered, oat milk-based cold brew lattes steadily claim a piece of the category; according to SPINS data shared by the company, its Vanilla Collagen Oat Latte was the top-selling shelf stable RTD coffee in the natural channel through August 2022, with its Mocha and Matcha SKUs also making into the top ten. The brand also saw total distribution points increase more than 15% from the year prior, outpacing all brands save for RISE Brewing Co.

Perhaps more importantly, those brands’ ability to grow outside natural retailers indi-

Meanwhile, RISE has targeted its expanding family of canned nitro cold brews at cstores; the latest addition is Salted Caramel with a 12 oz. can introduced last summer. Steady growth from its core line — unit sales (+18.2%) and dollar sales (+25.2%) are both up, per IRI — has given the Connecticutbased brand breathing room to push further into non-coffee products like oat milk in multi serve cartons and espresso-based RTD cocktails. The company’s experimental Nitro Shot — a concentrate capsule that can make rich, foamy nitro cold brew on-the-go when mixed with water — suggests it is still testing its boundaries.

Those experiences, and others, reflect how cold brew has for many brands become a significant piece of a larger business rather than its singular driving force. According to Caleb Bryant, Associate Director for Food and Drink at Mintel, inflationary pressures are creating opportunities for RTD coffee brands to take advantage of a shift to athome consumption.

“Consumers’ investments in their home coffee bars made during the pandemic are paying off as consumers increasingly experiment with new coffee drinks within the home, offering growth opportunities for coffee brands, coffee additives, and coffee accessories,” Bryant said.

SANG launched earlier this year with a range of ready-to-drink Vietnamese iced coffee, better known as cà phê sữa đá. The brand’s canned iced coffees come in three tasty flavors: SANG Traditional, SANG with Oatmilk and Straight Black with Vanilla.

More coffee. Less waste. Cuvée’s new packaging is environmentally and economically friendly with 40% more coffee per container. That’s more brew for you and less waste for our planet.

After its Classic Black cold brew flavor was recognized as one of 2022’s Best New Products at BevNET Live, Nguyen Coffee Supply is thrilled to be launching two new cold brew flavors: Condensed Milk (dairy) and Coconut (non-dairy) and. All 3 cold brew SKUs of the brand’s Vietnamese coffee launched with Whole Foods at the new store opening of One Wall St.

RISE Brewing Co., the organic nitro cold brew coffee and oat milk company announced the launch of its newest flavor: RISE Salted Caramel Nitro Oat Milk Latte. The nitrogen-infused cold brew latte enhances the brand’s signature organic coffee with dairy-free, organic oat milk, sea salt and deliciously sweet caramel. It’s creamy, slightly sweet and refreshingly smooth.

Super Coffee is proud to launch its latest bottled coffee innovation: Strawberry Glazed Donut. This limited time offering will kick off the New Year with zero sugar, 70 calories, 200mg of caffeine and all of the flavor of your favorite Strawberry Glazed Donut.

Oaza Beverages, winner of the 2022 InnoBev most functional beverage launched chain-wide at Wegmans. Available in 3 flavors - Black, Oat Milk and Cacao Mocha - each 7.5 oz. can features electrolyte-infused cold brew and has 200mg of caffeine.

Explorer Cold Brew, which produces a range of coffee and chai concentrates in various caffeine levels, completed a

$2.5 million seed raise to fuel expansion into retail and grow their existing ecommerce business and Delta Airlines partnership. The round was led by consumer fund NewBound Venture Capital and Bill Ackman’s family office Table Management, and included Justin Robinson, Raphael Farasat, Sara Brooks, Timo Weiland and more.

Direct-to-consumer coffee brand Wandering Bear is expanding its ready-todrink line of eco-friendly 32oz “extra strong, surprisingly smooth” cold brew cartons to include their online bestsellers (Vanilla, Mocha, and Caramel). As always, all products are USDA organic and zero-sugar. The new items will be available nationwide beginning in February.

Following the successful introduction of new flavors Nitro Black and Nitro Sweet Cream, High Brew is extending the line to include Nitro Caramel. High Brew Nitro flavors introduce Nitrogen at the point of consumption leading to a frothy, vibrant mouth feel.

Atomo was recently featured in TIME’s Best Inventions of 2022 as one of the most innovative beverages. Atomo’s beanless cold brew was recognized by the magazine as “a shockingly close coffee dupe at a fraction of the environmental cost”. Creating a great tasting coffee that is better for the planet, Atomo’s cold brew contributes 93% less carbon emissions and uses 94% less water than conventional coffee.

JavaTwist is a refreshingly cool twist on coffee and fruit. The brand has just launched the “Naturals” line of beverages beginning with its Zero Added Sugar LemonBrew. This beverage pairs cold brewed coffee with lemonade using monk fruit as its sweeter.

NuRange Coffee has revamped its packaging based on market feedback. Additionally, its distribution has grown to over 1,200 stores including Whole Foods, Hy-Vee, King Soopers, City Market and many more.

Jibby Coffee has been named the first Fair Trade Certified line of CBD-infused coffees and lattes. Available in four varieties – Mocha Latte, Oat Milk Latte, Matcha Latte and Cold Brew Coffee – each 11 oz. can has 25mg of hemp CBD and 110mg of caffeine.

Bizzy Coffee, which manufactures organic cold brew coffee in Minneapolis, Minn. is the fastest growing brand, year-over-year, in dollar and unit sales in the refrigerated ready-to-drink coffee category (among top 25 brands).

Taika has made distribution gains, opening the following accounts and more in 2022: Gelson’s, Lassen’s, Tocaya, Earthbar, Fresh Thyme, Nugget Market, Oliver’s Markets, Draeger’s Market, goPuff, Thrive Market, Foxtrot, and Kehe. The creative fuel brand also added a new flavor to the lineup: Mocha Latte.

After 18 months of battling “external factors,” Super Coffee has transi- tioned its glass multi-serve bottle into a new rPET Super Coffee Multi Serve, chief revenue officer Jake DeCicco announced in a LinkedIn post. The rPET multi-serve bottles are now available at Whole Foods Market nationwide.

Specialty coffee roaster La Colombe celebrated the winter holiday season by bringing back its Peppermint Mocha Latte for a limited time. Additionally, the brand rolled out a new dairy-free version of the festive drink: Oatmilk Peppermint Mocha Latte. Both varieties are crafted with 100% Arabica single-origin Brazilian cold brew coffee.

Although official details remain scant, Sylvester Stallone has apparently entered the RTD coffee world with the launch of Tiger Eye drinks on GoPuff. Available in three varieties – Iced Coffee Latte, Iced Coconut Latte and Iced Coffee Mocha – the 8.5 oz. cans are available for $2.99 each or $8.97 per 3-pack.