Consumers Demand Cold Coffee

The cold beverage resonates most with Gen Z, but also with the morning hot-coffee consumer who wants an afternoon pick-me-up.

August 04, 2022

Cold Iced Coffee

ALEXANDRIA, Va.—Cold-brew coffee orders soared 27% in the 12 months ended in April 2022, reports QSR Magazine, while iced-coffee orders were up 11% in the same time frame. Even though sales of iced coffee increased less than cold-brew, iced coffee is still the cold coffee beverage of choice, with customers ordering 2.8 billion servings in the calendar year up to April, compared to 373 million servings of cold brew.

Frozen/slushy coffee orders also climbed by 3% in the 12 months ended in April 2022, showing that consumers are open to having their cold coffee in other ways.

Starbucks recently reported better-than-expected quarterly earnings and revenue, reports CNBC, thanks to demand for its cold-coffee beverages. Cold beverages made up three quarters of U.S. sales during the most recent quarter. The company said its customers are more likely to request add-ins to their cold drinks, such as syrups and milks, than they are to their hot beverages, which raises the price of the beverage. Starbucks also said that cold beverages are popular with Gen Z customers.

Additionally, the company’s CEO Howard Shultz reported on a quarterly earnings call that the chain is not seeing is customers trade down or reduce their spending (unlike McDonald’s customers). Shultz said trading down hasn’t happened because of the company’s pricing power and customer loyalty. Starbucks also reported that morning sales are returning, with half of its revenue coming from the morning daypart, as consumers are resuming their pre-pandemic routines.

Cold coffee also transitions well to the afternoon daypart, with many consumers who may buy a hot coffee in the morning, buying a cold coffee in the afternoon.

“What we really see, especially with that younger demographic, is that afternoon bounce-back with a cold brew product,” Bad Ass Coffee CEO Scott Snyder told QSR. “The cold brew packs quite a punch so you can make it straight up or with cream or flavors and it can be both a treat and a pick-me-up. We see a bigger influx [of these] in the afternoon.”

At Dutch Bros., cold drinks make up 70-80% of sales, QSR Magazine reports.

“Cold travels better and more of our drinks are traveling with us as opposed to being enjoyed in the moment,” CMO John Graham told QSR.

Like Starbucks noted, cold beverages in general tend to appeal more to younger demographics, reports QSR, and they provide an option for the much-younger consumer—those customers that may not drink caffeine yet but want a drink when their parents are ordering a coffee.

NACS Magazine recently explored coffee trends in “Craft Coffee Haven” and “Not Your Average Joe.”

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