Has there ever been a segment that caught fire on the supply side quite so rapidly as cold-brewed coffee? It’s gotten to the point where even those of us who’ve long proselytized for it have gotten a bit spooked at the sheer volume of entries that are invading the market. Though the cold-brewing process is by no means novel, it’s only in recent years that it’s come to prominence in the U.S. It offers a lot of ways for individual brands to express themselves, both on-premise and off-premise, and after all, as a caffeine delivery system, it serves an overtly functional role. So there’s no reason it can’t blow up as a significant category. Still, there’s reason for concern that it’s drawing too many entries, too fast, at a time consumer awareness is still quite low, Starbucks’ rollout of in-store cold-brews last summer notwithstanding.
Like many others, I was initially skeptical of cold-brew, which is made by dripping water over unheated beans for a long period – 12 hours or more. My baptism occurred six years ago when San Francisco’s Blue Bottle opened its New York outpost in Williamsburg, complete with the cold-brewing “chemistry set” arrayed along the wall for all to observe. I biked over with my wife, whose blue-collar roots and general skepticism of hipster proclivities made it impossible for her to pay $4 for what was than an 8- or 10-oz. pour of iced coffee. (There must have been a lot of folks like her, because the serving size soon went up.) What kind of idiots do they think we are? she said. But this idiot was sold immediately: for this lifelong coffee drinker, who often jokes that brewed coffee never tastes as good as the beans smell in the bag, cold-brew was a revelation in how rounded and bitterness-free a glass of coffee could be. And soon enough, she was, too. These days, we often have a bottle of Chameleon cold-brew concentrate lodged in our fridge, and marvel at how the range of consumption occasions constantly expands. Soon we may be bathing in the stuff! With cold-brew, unlike some other purported beverage innovations, there really is a there there, to paraphrase Gertrude Stein.
But there are so many entries already! Austin may be a hotbed of all things artisanal, but it alone has five by now, four of them rolling out well beyond the local market: Chameleon, Kohana, High Brew and Cuvee. (The other is Third Coast, and they’re getting ready to go bigger themselves.) Very quickly, you have major coffee roasters in the game, like Stumptown and La Colombe; local roasters like Third Coast; packaged goods players like Califia Farms and WhiteWave Farms; major coffee chains like Dunkin’ Donuts, and myriad independent café and restaurant operators.
Starbucks, of course, prefers to wait a bit until new coffee trends are getting established, then swoop in and take ownership, as it did, say, with the Australian flat white style. Last summer it rolled out cold-brew in its own stores, with an abundant array of signage and social media promotion, and it’s now testing a bottled version via its Pepsi alliance in a handful of western markets. Dr Pepper Snapple Group recently invested in High Brew. As far as I know, Coca-Cola has no real play in that segment yet, but you know that’s bound to change.
Beyond the sheer number of entries is the wild diversity in approach. Some are concentrates, some are ready-to-drink. Most are refrigerated but a few like High Brew and Kohana are shelf-stable. And quite a few – too many in my opinion – are slathered with so much milk and sugar that the core virtue of cold-brew in taste and aroma is lost; to a casual consumer who purchases one, these would seem to be a modest upgrade over that milkshake for grownups, Frappuccino, at a considerably higher price. Then again, can black cold-brews support the range of diversity that, say, the IPA style does in craft beer? In a recent review of Zingerman’s cold-brew, the BevNET review team observed: “As we continue to sample new unflavored and unsweetened cold-brew coffee entrants, the liquid becomes something that’s harder and harder to remember, as they all deliver something that’s pretty similar. Yes, some are better than others, but the range from the top to the bottom is relatively narrow compared with other beverage categories.” That could be a problem, too.
Throw in the expanding legion of nitro pours, and and kegged and bag-in-a-box items, and it’s a complex ecosystem that’s sprung up in just a handful of years. Heck, Stumptown just launched Cold Shots and Cold Brew Sodas in its 10 stores. The diversity is both remarkable and a bit worrisome from the point of view of consumer confusion and scalability. As I’ve noted before, it may have been a similar kind of confusion that hindered adoption of acai a decade ago, in contrast to a rival emerging segment, coconut water, in which all three main entries were formulated, packaged and positioned identically as natural hydration straight from the plant. The painstaking production method and need to keep most entries refrigerated poses a further challenge to scaling up, particularly as the DSD system for refrigerated items is still constrained.
Against all that, one must balance the sheer wonder of the product, the opportunity for margin it offers retailers and the momentum and awareness being lent by the entry of mega-roaster Starbucks. I would even posit that the style also benefits from the way the phrase “cold-brewed” offers an implication of artisanal workmanship, a kind of dark art, the way “fire-brewed” once did for Stroh’s beer. Consumers may not completely understand what it means, but it sure sounds like somebody is doing something special with their coffee. So let the avalanche of entries come on and the market sort out the winners and losers. As many predict with craft beer, many of the players may eventually fade but the style seems here to stay. Once consumers try it, they’re not likely going back.
Longtime beverage-watcher Gerry Khermouchis executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.