Millennial Cold Brew Obsession Points to Market Opportunity For Coffee Retailers

Posted by: Jeff Fromm

For millennials, the best part of waking up is not Folgers in their cup.

While a cup of regular home-brewed coffee to start the day was and still is a ritual for baby boomers and generation X, millennials prefer the allure of the more gourmet and flavorful drinks found at Starbucks or their favorite local coffee shops – drinks that also require little to no effort on the part of the consumer. Between 2008 and 2016, gourmet coffee beverage consumption among 18-24 year olds and 25-39 years olds rose 23 and 22 percent, respectively.

Chilled beverages, from frozen blended drinks (I’ll take a mocha chocolate chip Frappuccino, please) to iced coffee, are highly popular gourmet products with this generation. According to Mintel, millennials drink iced coffee almost twice as much as generation X, and more than half drink cold lattes compared to one in five among generation X and one in 10 among boomers.

A liking for such flavorful cold-serve drinks coupled with the generation’s passion for authentic and independent enterprises has led to yet another rising product trend in the market – cold brew coffee. The popularity of cold brew is a part of the third wave coffee movement, which is focused on appreciating coffee as an artisan or craft beverage. This means all processes of roasting, from harvesting the bean to brewing, are completed with the same meticulousness as that of a fine wine or craft beer.

Unlike the iced coffee that so many know and love (which is brewed hot and served over ice), the cold brew focuses on a cooler and slower (usually 24 to 48 hour) extraction method to get more nuanced bean flavors that lack the typical acidity and bitterness of a regular cup of Joe. When ready to be served, cold brew contains the rich flavors of the more intricate drinks that millennials favor.

It comes as no surprise that members of the millennial generation are the biggest drivers of the cold brew trend, helping to jump sales by 115 percent from 2014 to 2015, resulting in $7.9 million in total revenue. However, daily consumption rates of cold brew are not exceedingly high in comparison to the overall coffee market.

According to Mintel, typical consumption is on a weekly or monthly basis. This is likely correlated to the fact that smaller, more localized coffee houses have been at the forefront of cold brew production. Together, these two data points suggest that cold brew consumers purchase opportunities are somewhat limited and are most influenced by convenience rather than a loyalty to a particular brand.

Accessibility is key

Bo Nelson, owner of Thou Mayest Coffee Roasters in Kansas City, thinks this is an indicator of the market’s transition to the fourth wave of coffee, which is focused on the accessibility of caliber products.

“Accessibility is taking a top-shelf product and bringing it down to the masses without losing the quality,” he said. “It is going to be the major key in the next generation of consumer goods. As a roaster, I do appreciate that we want to take the time and effort to craft great coffee, but for customers, there’s this thing that happens in between cups of coffee called life that we have to be aware of.”

Nelson suggests that artisanal canned coffee beverages will be the answer, and cold brew is the perfect product to take that step, thanks to its powerful yet smooth flavor.

“Traditionally instant coffee is a last ditch choice, but does it have to be? I don’t think so. The brand that creates a shelf-stable product that also tastes great will blow away everyone else in the market,” he said.

While creating a long-lasting, accessible coffee product that maintains excellent taste in addition to a high level of convenience for today’s fast-paced consumers will no doubt be challenging for retailers in the space, the benefits to be reaped are manifold.

Millennials are constantly on the lookout for new and innovative products that reduce friction in their lives. The brands that give this to them are rewarded with the revenue and brand equity they constantly aim for. Now is the time for organizations in the coffee industry to make their move, as millennials are already heavy consumers and a clear gap exists in the space for this type of frictionless product.

About Jeff Fromm

Although not a Millennial as defined by his age, Jeff Fromm is the Millennial Marketing Guy. Jeff is President of FutureCast, a marketing consultancy that specializes in Millennial trends, and is a contributing writer at...See Jeff's full bio.