Cold brew is a hot commodity in the United States.
Continue Reading Below
Iced beverages generated $10.4 billion in sales at U.S.-branded coffee shops during the last year, achieving "exceptional" 7.3 percent growth, according to an industry report published by Allegra. Iced products are growing significantly faster than their hot coffee counterparts, sales of which increased 4.6 percent during the time period.
The rise of cold brew is a major factor in iced coffee's success, along with pre-packaged, ready-to-drink products.
"The development of cold brew represents one of the US coffee industry's major innovations in recent years," the report found. "More than 80 percent of industry leaders surveyed identified cold brew as the fastest growing product in coffee shops."
Cold-brew coffee, whose production process uses cooler water, different ingredient ratios, and takes longer than traditionally brewed coffee to make, has caught on quickly with customers – resonating particularly well with younger demographics. Year-round appeal is another beneficial factor, with thirty-six percent of consumers saying they still drink iced coffee throughout the winter.
The more recent introduction of nitrous-infused "nitro" cold brew coffee has been met with more modest success, but the report says that "62 percent of industry leaders surveyed believe nitro coffee will become a coffee shop staple within the next three years."
Several major brands already offer nitro cold brew products in some locations, and Starbucks says it will have nitro cold brew in all its U.S. locations by the end of the year.
Allegra forecasts iced beverages to grow another 6.6 percent in 2020, led by the iced coffee sub-segment as major brands continue to innovate and diversify their coffee offerings.