Coffee Cold Coffee Heats Up (with Brand News

Ready-to-drink coffee is among the fastest growing categories in beverage, with dollar sales up 20.1% in retail channels in 2021 to $3.4 billion, according to NielsenIQ, and growing 35.4% on a two-year stack basis. Bottled java is now outpacing the (still significantly larger) energy space on shelf and, as consumers increasingly stock multiserve cold brew in their fridges and grab canned lattes from their local convenience stores on the go, many of the smaller players are feeling the lift from that good ol’ rising tide.

But even with a large array of brands growing their share of the space, Starbucks is still the leviathan of RTD coffee, with dollar sales up 11% last year to $2.4 billion, per NielsenIQ. The second largest player, Danone’s STOK, accounted for a relatively smaller $331 million.

For years the Seattle icon has been steadily bleeding market share to the crop of emerging brands that have redefined the space over the past decade, and its growth is decelerating further (sales were up just 1.1% in the 12-weeks ending January 1) while its rivals differentiate through flavor, texture, and functional innovations. STOK might be a fraction of Starbucks’ size, but the brand was up 36.8% in 2021. Meanwhile, competing conglomerate CocaCola (Dunkin’, McCafe) rose 62.7% and independent brand Califia Farms reported coffee sales up 21.1%.

That’s to say nothing of the emergence of brands like Super Coffee and La Colombe (up 45% in MULO and convenience last year, according to the company) which have fueled their nationwide expansion through DSD partnerships with beer giants Anheuser-Busch InBev and Molson Coors Beverage Company, respectively, who are looking to make up for the decline in the beer category by diversifying into non-alc.

Industry followers know the RTD coffee revolution has been long underway, but since the onset of the pandemic –which drove the expansion of the multiserve cold brew set for at home consumption – the space has further cemented itself in retail and consumers are becoming more familiar with a diversified set. However, with brands like Califia Farms, Super Coffee and La Colombe winning in the mainstream, there are also signs that a shakeout in the category is now underway. According to SPINS data for MULO and convenience, as of December 26 there were 326 active coffee brands (excluding private label) in the market, down from 350 in 2020 and a peak of 357 in 2019.

Jim Watson, senior beverage analyst for Rabobank, told BevNET that although the category’s sales are strong, the category is more established and the glitz has worn off, meaning retailers aren’t necessarily allotting additional shelf space at the rate they were several years ago. As well, dedicated coffee brands large and small are also now fi ghting for placements with established companies who decide to launch coffee line extensions (see Chobani’s multiserve cold brew line, for one example).

“I think one of the biggest challenges, especially for the smaller players, is that the big players know that they can introduce a lot of new fl avors, they can add nitro, functionality, all the different things that you can do, and take up a lot of space,” Watson said. “And I think retailers are happy to give it a little extra space, but I mean, it’s no longer that ready-to-drink coffee is outgrowing the market in a signifi cant way. So, they’re really not going to be getting more than compared to the fi rst couple of years of the category.”

NEW OPPORTUNITIES EMERGE

While Starbucks may have plenty of share to spare for startups to get in the door, it’s primarily the large players and the brands that align with them who are making the biggest gains. But the door is by no means closed for independent companies to win in the set, particularly if they’re positioned to take advantage of the uncertainty within the category and able to provide meaningful differentiation.

Grant Gyesky, co-founder and CEO of nitro cold brew coffee brand RISE Brewing Co., said he has seen the shakeout occurring in the set and that it has been accelerated by supply disruptions. Out-of-stocks from smaller companies have led some retail buyers to seek out coffee brands with more fortifi ed supply chains to fi ll empty shelf space, he noted, which is now benefi tting the established brands and forcing many of those small players out of the market entirely. For RISE, the company has worked with its co-packers and ingredients suppliers since the beginning of the pandemic to ensure stable inventory and consistent fulfi llment, and that has positioned the brand to maintain high levels of growth without a distribution deal with a major strategic partner.

“I think the challenges from the pandemic and supply chain issues have made it more diffi cult for new brands to enter into the space,” Gyesky said. “And that certainly benefi ts the brands that have established themselves and gotten national distribution and have the supply chains in place. So it will also be interesting to see how far that trend goes and what the set looks like a year from now or two years from now if there’s a continued high water mark that brands need to get over in order to stay in the category.”

When RISE was founded in 2014, the brand differentiated itself as one of the fi rst nitro cold brew makers on the market. Now, in an environment where Starbucks has its own nitro line and consumers are more familiar with the concept, RISE has focused on innovation in plant-based oat milk lattes and multiserve formats to help draw in new consumers. According to Gyesky, the company is currently producing a new 12 oz. slim can line to drive an expansion in the convenience channel, while the multiserve products are fi nding placement in conventional grocery.

The pitch that many coffee brands made early on that consumers would adopt black cold brew as an alternative to sugary energy drinks has not entirely panned out yet. Starbucks’ Frappuccino (over $1.3 billion in sales per IRI) and Double Shot remain the number one and two best selling lines in the space and Java Monster is a not too distant third. But where indulgence will continue to play a signifi cant role, health and functionality are also places for companies to differentiate.

La Colombe EVP Kyle O’Brien said he’s seen retailers beginning to “clean up” the category, particularly in regards to differentiating between the cold case and the dry shelf. As consumers “basically know what they want” from their coffee, the shakeout in the set is expected and the company is now focused on continuing to expand its presence throughout the store, whether that be its beans in the dry shelf, multiserve cold brew in refrigerated and single serve lattes in grab-and-go cold brew in refrigerated and single serve lattes in grab-and-go sections. sections.

“There’s been a lot of ready-to-drink [coffee products] that “There’s been a lot of ready-to-drink [coffee products] that have come out, and they’re just going to throw everything and have come out, and they’re just going to throw everything and anything at the shelf. It’s taken a while for the retailers to fi ganything at the shelf. It’s taken a while for the retailers to fi gure out ‘Okay, how does this [set] need to look?’ What should ure out ‘Okay, how does this [set] need to look?’ What should be in the dry aisle, what should be in the refrigerated aisle? be in the dry aisle, what should be in the refrigerated aisle? And, you know, we need to help them fi gure that out, and And, you know, we need to help them fi gure that out, and they’ve been great in terms of doing just that.” they’ve been great in terms of doing just that.”

At Super Coffee, co-founder and CEO Jimmy DeCicco has At Super Coffee, co-founder and CEO Jimmy DeCicco has made health and wellness a key trait of the brand and most remade health and wellness a key trait of the brand and most recently launched an industry action group, Alliance to Control cently launched an industry action group, Alliance to Control Excessive Sugar (ACES), to promote better-for-you food and Excessive Sugar (ACES), to promote better-for-you food and beverage options. He noted that to succeed in the mainbeverage options. He noted that to succeed in the mainstream today, brands entering the space likely need to be both stream today, brands entering the space likely need to be both fl avorful and functional, noting that “functional” could mean fl avorful and functional, noting that “functional” could mean anything from added protein to plant-based. But perhaps anything from added protein to plant-based. But perhaps more importantly, they also need to more importantly, they also need to be able to draw in new be able to draw in new consumers who aren’t already coffee drinkers. consumers who aren’t already coffee drinkers. “A buyer only has such limited space, right? They have “A buyer only has such limited space, right? They have four feet and they need that shelf to generate so much four feet and they need that shelf to generate so much revenue. So if they’re generating revenue. So if they’re generating $1,000 from Starbucks alone, $1,000 from Starbucks alone, and this next brand comes in and this next brand comes in and says, ‘Hey, we genand says, ‘Hey, we generate $500 a month erate $500 a month

and we steal so much business from Starbucks,’ that buyer doesn’t really care because they were already getting $1,000 from Starbucks. They don’t need that $500, they need $500 from people who don’t drink Starbucks, and that’s where function is so critical.”

DeCicco said that Super Coffee, whose product portfolio includes coffees with added MCT oil and L-theanine, has largely brought protein shake and energy drink consumers into the coffee set by providing a cleaner label alternative to those products. The brand, which signed a master distribution agreement with AB InBev in 2020, has been one of the largest drivers for incremental dollar sales in coffee over the past year and has focused on growing its presence in grocery and convenience. However, even as a health focus fuels expansion, DeCicco said the move away from sugar is still slow rolling.

“Health is here to stay, function is here to stay,” he said. “Flavor is not going anywhere anytime soon, meaning people are still going to drink Starbucks and Monster despite the sugar and calories, because it tastes good. I think we’re probably, I don’t know, maybe fi ve years away from the seismic shift of recognition that ‘Just because it tastes good, doesn’t mean I should buy it.’”

NEW WAYS IN TO THE SET

It may be a lofty challenge for a new brand to establish itself in the RTD coffee category today, but there is one signifi cant new entrant emerging as a potentially signifi cant player: Black Rifl e Coffee Company. The Utah-based brand, founded in 2014, launched a ready-to-drink line of iced coffees in 2020 and is now among the fastest growing in the category. The brand’s RTD products rose 1,602% to $32.1 million in MULO and convenience sales in the 52-weeks ending October 3, according to IRI, positioning it below Super Coffee but above brands like Peet’s and International Delight. In November, Black Rifl e was acquired by SilverBox Engaged Merger Corp I, a SPAC that is now in the process of taking the company public at a valuation of $1.7 billion. The company will receive $225 million in the deal, which will support its growth as it expands both its cafe chain nationwide and its RTD line. According to the company, total revenue between 2019 and 2020 grew 100% to $164 million, driven by direct-toconsumer sales. “The proposed business combination with SilverBox Engaged Merger Corp I (NASDAQ: SBEA) will provide signifi cant resources to expand our primary mission,” Black Rifl e co-CEO Tom Davin told BevNET in an email. “[Black Rifl e] will accelerate the implementation of our omnichannel strategy and support continued rapid growth across all of our formats, which RTD is certainly a primary focus. This will provide the capital Black Rifl e needs to expand growth, serve great coffee, and move us closer to our goal of hiring 10,000 Veterans.” Black Rifl e’s sudden rise in retail is primarily a translation of their success building the brand online and via on-premise, Watson noted, and their credibility in other channels helped set the stage for quadruple digit growth barely one year after launch.

The company can point to high caffeine and premium quality as the reasons for its success in retail, but it’s also succeeded in large part due to its branding. Black Rifl e has not shied away from partisan politics, and established a strong conservative consumer base in 2017 when it announced its plan to hire 10,000 veterans in response to a pledge by Starbucks to hire 10,000 refugees. Political associations have often sparked controversy -- Black Rifl e has grown cautious to temper those associations amidst its expansion -- but its strong branding attracted a large, loyal American consumer base seeking an alternative to Starbucks’ corporate identity.

Looking ahead, Starbucks’ status as the coffee category leader is not in any immediate danger. But as consumers seek out more from their coffee, a diverse set of established brands will continue to seize their piece of the pie. Gyesky said that while Starbucks may still be over 50% of the category, he thinks the shift will come sooner than later.

“I think the opportunity now for the brands that have established themselves and have grown and found themselves in the majority of retailers is to begin attracting the consumers that no longer want to be owned by Starbucks,” he said “And I think we’re all there’s a lot of opportunity for all of us to be successful in trying to attract that consumer and that’s going to begin to get refl ected in the sets over the coming years. Starbucks won’t own 50% of the ready to drink coffee space in two years.”

Led by creative agency Wonderkind, Jibby’s craft coffee with CBD unveiled its new packaging refresh alongside an illustration of its whimsical brand mascot, Mr. Jibby. The new look comes after a successful preseed raise and will help solidify the brand within the CBD category as it continues expansion throughout Florida and NYC, the company said.

Coffee maker Projo* has gone from bottles to bags with the launch of its new instant Projo* packets. The grab-and-go format maintains Projo*’s key attribute – to provide energy without any crash – with the brand’s flagship use of pure egg white protein and monk fruit extract in a proprietary coffee blend. Projo* instant packets are available online in Cacao, Cinnamon, and Original flavors.

MADE Coffee has unveiled its newest innovation: Cold Brew Con Leche. The new product is cold brew forward, contains 100 calories and is made with specialty coffee, real cane sugar and milk. Con Leche is available at Publix Supermarkets and Whole Foods as well as online for home delivery and via subscriptions on the brand’s website.

Explorer Cold Brew - known for offering cold brew concentrates in four caffeine levels - has launched a 16 oz. format of its concentrate. The coffee is “super concentrated,” and makes a full cup with only 1 to 2 oz., depending on the consumer’s preference. The new large format concentrate makes the equivalent of 10 cups and comes in the brand’s four signature caffeine levels: No Caf, Low Caf, Reg Caf, and Extra Caf. All Explorer coffee products are organic, fair trade and made with a proprietary process that allows it to be shelf-stable for up to a year.

Austin-based Daysmith Coffee+ recently made its debut with a line of functional, vitamin-infused, low-sugar, ready-to-drink coffees. Designed for energy, focus, and immunity support, Daysmith offers three varieties: Focus Vanilla Oat Milk Latte, Immunity Mocha Oat Milk Latte and Multi Straight Black Coffee Brew. Each coffee is packaged in 7.5 oz. cans and is available in single flavor and variety 12-packs online and at select Austin-area retailers for $48.00. Sir Owlverick’s announced that its Original Cold Brew and Maple Cold Brew bottled coffees have been awarded an USDA Organic Certification by BioAgriCert. The brand said this announcement has reaffirmed its commitment to the premium taste and smooth coffee flavor that are firmly rooted in its original company pledge to “always value taste, quality, and authenticity,” now verified with the USDA label.

Combining caffeine and the energy of nootropic L-Theanine, REBBL Stacked Coffee launched at Whole Foods stores nationwide. Layered with oat milk, Reishi, Lion’s Mane and MCTs, Stacked Coffee provides immune support and comes in four flavors: Cafe Mocha, Vanilla Latte, Hazelnut Latte and Straight Black. The coffees are certified organic, certified Fair Trade, non-GMO, dairy-free, soy-free, gluten-free and made without cane sugar or artificial flavors. REBBL Stacked Coffees come in 100% recycled and recyclable plastic bottles.

‘Jitter-less’ coffee maker Quokka Brew unveiled its newest SKU, Chocolate Cereal Milk Latte. The company said the liquid is best described as the milk left at the bottom of a bowl of chocolate cereal combined with cold brew coffee. Each Cereal Milk Latte is vegan-friendly, organic and contains 60 calories, 135 mg of caffeine and 5 grams of sugar.

Cold brew coffee maker Volant Coffee has launched its 32 oz. Cold Brew Concentrates in Original Black and Toasted Coconut flavors nationwide at Sprouts Farmers Market. The concentrates are available in 12 oz. glass bottles and the brand also makes Classic Vanilla and Wild Blueberry flavors.

B Sweet Beverage Co.’s Nitro cans have returned to SoPac Whole Foods shelves with a new shelf-stable formula and refreshed branding. The company has made its return with its original four SKUs – Nitro Cold Brew Coffee, Nitro Matcha Green Tea, Nitro Hibiscus Tea and Nitro Thai Tea with Oat Milk – and will be announcing a new flavor at Expo West 2022. All of the beverages are vegan/dairy free, low or no calorie, keto-friendly and available in 8.4 oz. cans.

Altitude Beverages is excited to announce the addition of Matcha and Chai to its Everything Latte line of superfood oat milk lattes. Building on the success of its Coffee latte, Matcha and Chai will provide the same functional blend of CBD and adaptogens for relaxation support.

Groundwork Coffee, one of the first certified organic coffee roasters in Southern California, debuted its brand refresh that reflects a down-to-earth attitude, eco-friendly practices and community-driven approach. This year it will showcase the new look on its line of ready-to-drink cold brews and add a new variety, Angel City Organic Nitro Cold Brew, inspired by its bestselling light roast signature blend.

Arizona-based Press Coffee is made in a state-of-the-art facility with natural Brazilian beans that result in the perfect balance of flavors, with tasting notes of chocolate and peanut butter. Press has been making cold brew since 2011 and recently rolled out its Nitro Cold Brew can.

Vietnamese Cold Brew Coffee maker Omni Bev entered the bean segment with its premium roasted coffee beans, grown sustainably on multi-generational family estate farms in the Central Highlands of Da Lat, Vietnam. The company also reformulated its Black Cold Brew coffee with a proprietary blend that offers a unique, premium and robust taste with zero calories. Keto-friendly. Omni beverages are available in over 2,500 locations across 38 U.S. states.

Big Watt Beverage Co. announced a new look along with new flavors, functionality and products. The company unveiled its re-imagined logo and brand expression spanning across its product line of clean label, plant-based beverages. Additionally it will begin to roll out its new non-dairy, plant-based Oat Milk Latte, made with responsibly sourced coffee beans and featuring an adaptogen boost.

La Colombe introduced its 42 oz. Extra Bold Cold Brew last summer. The singleorigin, fully washed and sun-dried coffee beans are sourced from Brazil and highlight the naturally bold and nutty flavors of Brazilian coffee. The new product is sugar free, dairy-free, non-GMO, glutenfree and vegan, and contains 275 mg of caffeine per 12 oz. serving

Based in Costa Rica, Pura Coco is a new RTD cold brew coffee made with coconut water in the brewing process, resulting in a sweet taste with no added sugars. The company works directly with coffee and coconut farmers in Costa Rica to ensure fair trade practices and its facility is powered by 100% renewable energy.

Sunup Pure Green Coffee has earned USDA Organic certification and through distribution partner UNFI is now offered in four regions of Whole Foods Market.

Cuvée Coffee launched a shelf-stable cold brew concentrate made from smallbatch roasted, 100% Arabica beans. The cold brew comes in a refrigerator-friendly, 36 oz. fridge pack and contains zero sugar and 7 calories. The beverage can be made into a traditional strength coffee by mixing 6 oz. of concentrate with 6 oz. of water, or to make a latte with 1-2 oz. of concentrate to 8-10 oz. of milk.

Functional coffee brand Super Coffee has introduced its Tasty Pastry lineup in three flavors: Cinnamon Roll, Blueberry Muffin and Caramel Waffle.

LaDiDa has introduced its latest flavor: Oat Milk Coffee Latte with hemp CBD. The clean coffee beverage contains sunflower oil and hemp extract and does not contain any added sugar or sweeteners. The beverages are available online and at select retailers in Los Angeles and New York City.

Madrinas Coffee has a new look, feel and online experience. The new branding tells the story of delivering great flavor-forward coffee to coffee drinkers worldwide: from fresh roasted Whole Bean Coffee to Cold Brew to their Green Coffee Fueler. Madrinas uses all natural ingredients and encourages consumers to choose #coffee4fuel and make the switch away from chemically charged energy drinks to all natural Madrinas Coffee.