In the rarified world of high-end coffee, there’s a broad discussion of whether the post-Starbucks rise of independent coffee shops and specialty roasts comprises a third wave or fourth wave of coffee culture in the U.S.Regardless of the wave number, however, there’s something gathering out there on the horizon; it’s cold brewed iced coffee, and it’s headed for a store near you, and likely sooner than you think.
Consider the impact of the second wave: Starbucks and its competitors, like Peet’s and Caribou, fomented a taste revolution among coffee consumers, creating an understanding that better-made Java could be sold as an affordable luxury at both cafés and at home. That success created an opportunity for brand extensions into RTD that gave rise to the Frappuccino and the Doubleshot. That’s a billion dollars, and also a generational shift: just as the millennials are the first generation of “digital natives,” they’re also coffee natives, the first group of kids to grow up with the expectation that they could get high-quality coffee on every corner, whether the weather is cold or hot.
Now, subsequent companies are refining the Starbucks idea, building a higher level of quality, sustainability, and personality onto an American coffee zeitgeist that’s already designed for snob appeal.
“Our assessment of why it’s getting traction now as a unique set is that the quality is higher than it was in the past,” says Chameleon Cold Brew co-founder Chris Campbell. “It didn’t taste like the crop out there now that are done really slowly, expensively, using really high quality coffee. As well, there’s the extra caffeine that comes into it. You put that together into a handful of scrappy brands that naturally appeal to the skinny-jean Brooklyn crowd as well as the people who believe in taste, and that leads to traction.”
Chameleon Cold Brew pulled in investment capital earlier this year and has been growing across the country, getting its 32 oz. and 16 oz. bottles into Whole Foods and independent specialty retailers via UNFI and Green Shoots distribution. The company is one of several that are growing independent of a brick-and-mortar presence; but those companies also are beginning to edge into the fray as well, with popular – and venture capital backed – coffee roasters like Stumptown and Blue Bottle joining other stores like Gorilla Coffee and La Colombe with cold-brewed line extensions.
“I think the category is taking off as we speak,” said Kyle Buckley, one of three partners behind bottled, New Orleans-inflected concentrate brand Grady’s Cold Brew. “It seems to be doing well for the people involved right now, but it’s still really a regional thing. It’s gonna be cool when all of these brands start overlapping and developing a craft coffee section of the grocery store.”
That “craft coffee” idea that Buckley mentions is the one that has many buyers excited. Just as small beer brewers have gradually created a category for better-tasting, small-footprint craft beer through a mix of consumer education, increased availability, and cultural attenuation, so too are the coffee brewers trying to convince the Starbucks consumer that there might be something even better than the ubiquitous chain.
“It’s the same reason why, 30 years ago, craft beer started to emerge on the scene,” said industry veteran Joth Ricci, who was recently hired as the president of Stumptown Coffee Roasters. “The beauty of beverage – and it’s always been this way – is that it’s always reinventing itself with the new thing, the next flavor, the next way of doing things. Coffee is a big business with a lot of consumers – just like they did with Starbucks 20 years ago, this third generation group is the evolution of the next wave of coffee.”
And while Starbucks seems to hold a stranglehold nationally, the change is happening faster than you might think: independent stores and tiny chains (fewer than six stores) now account for more than 45 percent of the brick-and-mortar coffee specialty stores in the U.S. – although only about 30 percent of the revenue – according to the Specialty Coffee Association, a trade group. As some of those cult roasters have gained notoriety, they have also begun to look a bit more at the opportunity that they can find in the grab-and-go cooler or the dairy aisle, in addition to their stores.
The cold brewed phenomenon, both in-store and ready-to-drink, has been picked up by high-end and even mainstream food and lifestyle magazines, Campbell pointed out.
“When people start showing up in Bon Appetit, that’s a trend,” he said.
There have been several approaches to this new craft coffee segment; to date, the most widely distributed brands have been Chameleon and Grady’s, both of which are concentrates that come in large bottles; so too do less-well-known brands like Secret Squirrel, Dave’s, and many others. Products from independent coffee shops have come in more disparate formats: some include smaller bottles – popular versions include Stumptown’s 10.5 oz. “stubbies” and La Colombe’s glass bottles of Pure Black cold brew, which offers two 8 oz. servings. – while others have taken concentrate and put it into Tetra Pak (like Gorilla Coffee) or have aped the emerging craft beer growler scene by offer the big bottles for delivery.
