Bottled coffees from Starbucks, McDonald’s, Dunkin Donuts and Bulletproof are jolting the soda industry.
A battle of the bottled coffees is brewing – and they’ve already capped big soda.
As caffeine addicts have become too busy to make their own morning joe anymore – which the rise of Keurig’s instant K-Cup pods has shown – cafes and coffee brands are rolling out ready-to-drink versions of their most popular blends.
And customers are guzzling these wake-up drinks over soft drinks, whose sales continue to fizzle.
Packaged coffee giant Nestle is expanding its ready-to-drink coffee menu. It bought a major stake in California-based hipster brand Blue Bottle coffee recently for $425 million. They plan to expand the minimalist-style coffee bar to 55 locations by the end of 2017, Reuters reports. And now Nestle can help Blue Bottle produce and distribute it’s road-trip ready sips, such as its New Orleans-style iced coffee and its cold brew bottles.
Bulletproof, which stirred the butter coffee craze of mixing grass-fed yak butter into your java to supposedly burn fat, is releasing a new line of ready-to-drink cold brews. They come in four flavors – original, vanilla, mocha and original + collagen protein – at $19.95 for a four-bottle sampler pack, or $58.95 for a 12-pack online. Five bucks a bottle is pretty rich, but the time you save from not mixing the complicated concoction yourself is priceless.
McDonald’s revealed last week that it’s partnered with Coca-Cola to sell bottled McCafe Frappés in vanilla, caramel, and mocha flavors at nationwide retailers next year. Coke has already hooked up with Dunkin Donuts to produce and distribute the chain’s bottled iced coffee in original, mocha, espresso and French vanilla flavors. It’s Dunkin’s first foray into the ready-to-drink coffee market, which Nielsen told Moneyish is a $2.6 billion industry averaging about $3 a bottle that’s jumped almost 10% from last year.
This market is percolating, all right. The global ready-to-drink tea and coffee industry is expected to hit $116.13 billion by 2024, according to Grand View Research, Inc. That’s a lot of beans!
Meanwhile, soda sales have dropped for the past 12 years straight. So it’s not surprising that Coca-Cola is trying to get a jolt from hopping on the coffee bandwagon. The company also teamed up with the billion-dollar iced tea brand Gold Peak to hawk bottled cold-brew coffees and tea lattes.
Every one of these brews owes a big thank-you to Starbucks’ original bottled frappuccinos, of course – which are produced with PepsiCo., by the way – which debuted the summer of 1996 as a grab-and-go alternative to waiting for a barista to blend your drink. And now 21 years and $2 billion in retail sales later, the Seattle coffee chain is still keeping competitors on their toes. It not only boasts 40 different ready-to-drink beverages itself, but it’s also now bottling its fall-favorite pumpkin spice lattes and pumpkin spice frappuccinos (suggested retail price $2.79 a pop), as well as cold brews ($2.98 each at Walmart).
“Liquid coffees and teas remain two of the fastest growing categories of products across the total store, based on new innovations and new brands that appeal to consumers’ desire to get a cafe-like product that’s on trend and ready to drink wherever they go,” Jordan Rost, vice president of consumer insights at Nielsen, told Moneyish. “Cold brew coffees, kombuchas and more protein-rich varieties of the beverages are reinventing the at home or on the go drinking experience.”
Analysts say that our thirst for these pricey pick-me-ups comes from our growing coffee culture and on-the-go lifestyles that demand instant gratification – like grabbing a bottle of pumpkin spice latte instead of waiting in line for the Starbucks barista to make one by hand. Plus, they’re super popular with Millennials, Mintel reports, noting that 66% of consumers between the ages of 18 and 34 drink iced coffee.
“The name of convenience today is, ‘How can you get me out of my kitchen quickly while still getting something that tastes fresh?’” Darren Seifer, a food and beverage industry analyst at the NPD Group, told Moneyish. “Many people feel like coffee is the way to start functioning in the day … but they don’t want to spend a lot of time preparing.” Or spend any time at all, apparently.
And while many of these pack as much (if not more) sugar than the average bottle of soda, Seifer said consumers consider it an acceptable tradeoff for the caffeine boost. “If you can convince consumers about what else your product is offering – for example, a sweetened juice may contain vitamin C or be fortified with calcium – you can mitigate the sugar factor,” he said. “For coffee, people feel like they need it to function.”
Plus, many find bottled chais and pumpkin lattes the perfect post-3 p.m. treat. “People are now ‘snacking’ on coffee drinks in the afternoon, so it works as an afternoon pick-me-up and an indulgence,” Seifer added.
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