In the United States, chilled coffee grew at least 10 percent annually between 2013 and 2017. In fact, 56 percent of new ready-to-drink (RTD) coffee launches in the U.S. were cold brew in 2017, up from 38 percent in 2016. U.S. cold-brew retail sales reached an estimated $38 million in 2017, representing a single-year growth of 137 percent.

RTD coffee is also building momentum in China where Mintel forecasts annual growth of 20 percent in the next five years as RTD steals more share from instant coffee. Globally, Japan leads in RTD coffee innovation, accounting for 18 percent of all iced RTD coffee launches in 2017, followed by the U.S. at 13 percent, up from 10 percent in 2016.

Despite the rapid rate of growth of RTD, Europeans remain resistant to the lure of iced coffee. While Spanish consumers are most likely to have tried iced/chilled coffee in Europe, only 10 percent have purchased it either from a store or online. In “coffee purist” countries like France and Italy, iced/chilled coffee sales among all adults is just 3 percent and 4 percent, respectively.

While Europe has been slower to follow the iced coffee boom, there is strong potential among younger drinkers, Mintel noted. Sixty-six percent of 18- to 24-year-old coffee drinkers in the United Kingdom say chilled coffee is a good alternative to sugary drinks, compared to 26 percent of drinkers aged 45+. This echoes what’s happening in the U.S. where younger drinkers, who are less ingrained in the ritual of drinking coffee hot, have driven RTD coffee growth. Some 68% of 18- to 34-year-olds in the United States currently consume single-serve, RTD coffee (in bottles or cans) compared to 43 percent of total U.S. adults.

“Global investment in chilled, RTD coffee has increased as producers target a younger drinker who enjoys the format’s taste, refreshment and indulgence. RTD coffee is proving a better format for innovation than other hot-serve formats and, in 2017, manufacturers continued to push the format’s boundaries,” said Jonny Forsyth, associate director, Mintel Food & Drink. “Cold brew is helping to premiumize the RTD category and is growing fast in the US, albeit less so in other markets. But while new product launches of iced coffee have reached record highs globally, in the U.S., cold brew has emerged as a vibrant growth segment of chilled coffee, and could prove to be the tipping point for take-up of cold coffee in Europe. The key to success lies with the younger generation which has been introduced to chilled coffee in branded coffee shops, which are growing quickly in Europe.”

Market Opportunity

The U.S. is also at the forefront of innovation, accounting for 11 percent of all global coffee launches in 2017, more than double the innovation of its nearest competitors Japan, France and the UK, each accounting for 5 percent of global coffee innovation in 2017.

While the U.S. is the leader in volume sales, North European countries have high per capita consumption of coffee—especially in Finland where consumers drank 7.91 kg per person in 2017, and Norway, where they consumed 6.62 kg.

“The continued growth of US coffee sales demonstrates how even mature markets can expand thanks to innovation. While total roasted coffee sales are flat, consumers are ‘trading up’ from national coffee brands to foodservice and third wave coffee brands,” said Caleb Bryant, senior foodservice analyst (US), Mintel. “RTD coffee remains one of the fastest growing non-alcoholic beverage categories in the U.S. thanks to innovation coming from brands both big and small. Even instant coffee may be due for a renaissance as some brands attempt to take instant coffee into the third wave movement.”

Better-For-You Options

More brands and coffee shops are realizing consumer desire for better-for-you products and rolling out coffee packed with health benefits such as added coconut oil, chia seeds, protein and grass-fed butter. This trend opens the door to capture health-conscious consumers.

In fact, one in six (17 percent) 18- to 34-year-old U.S. male coffee drinkers view added functionality as important when choosing which coffee to drink. In Germany, 41 percent of 16- to 44-year-old coffee drinkers are interested in trying coffee with added protein versus 21 percent of drinkers aged 45 years and older.

What’s more, in 2017, 10 percent of global coffee launches claimed to be organic, up from 8 percent in 2016. This rise was led by the U.S., where organic accounted for 22 percent of all coffee launches in 2017, up from 15 percent in 2016.

“Coffee with added protein is still a relatively unexplored area of global coffee innovation despite Starbucks targeting this space in the U.S. market since 2015. Increasing attention to health and wellness among consumers globally will result in specific opportunities for coffee with added protein, as well as organic coffee, in the next two years. Europe has particular potential given rising interest in high protein diets and the popularity of milky coffee among younger adults,” Forsyth said.