Summer’s hottest drink is suddenly cold brew, Kyoto or nitro coffee
What are we brewing?
Good luck finding a cup of iced coffee for under $3. Now summer’s refreshing caffeine jolt is slow-dripped, mixed with nitrogen, and costing up to $9 a cup.
First there was cold brew, which steeps coffee grounds in cold water over 12 to 24 hours for a smoother, less acidic drink. It was such a hit the past two years that Reuters reports people kept drinking it after the summer iced coffee season passed. Both Starbucks and Dunkin Donuts added it to their menus, and Peet’s Coffee & Tea’s cold brew outsold its regular iced coffee by 70% last year.
Consumers can’t get enough. “We’re going through 20 to 25 gallons of cold brew on weekdays. It beats out every single other drink,” Jonathan Dreszer, the general manager of Brooklyn’s Cafe Devocion, told Moneyish. And people are dropping $4.50 for just a 12-ounce cup.
Then cold brew went to the next level with the Kyoto method, which can take 24 hours to slow-drip an 1,800 milliliter batch. Dreszer says the Kyoto sells out before lunchtime daily; the cronut of iced coffee. “Depending on the beans we use, the Kyoto starts at $5.50, but can go up to almost $9 a cup,” he said, explaining that the slow extraction process results in richer, bolder drinks than hot coffees.
And now java lovers are buzzing about nitro brew – essentially, Guinness iced coffee – which mixes cold brew with nitrogen for a creamy mouthfeel and chocolatey finish. Market research group Mintel has called 2017 the breakout year for nitro coffee thanks to Starbucks, which began serving it in stores nationwide. Now Dunkin Donuts is also testing nitro brews in parts of Connecticut and Pennsylvania.
“It’s a completely different taste profile when you prepare these coffees without burning them,” Dreszer explained. “And people have gotten accustomed to that.”
But consumers have been acquiring finer tastes for some time now. Craft beer began outselling Budweiser in 2014. And sorry, Mr. Coffee, but now pour-over cones and French presses are how 11% of U.S. young adults are brewing coffee at home.
Plus, we’re just crazy for cold coffee drinks. In 2009, just 18% of coffee items on restaurant menus were cold-serve – and that jumped to nearly a quarter in 2015. That’s largely thanks to Millennials, who drink twice as much of it as Gen Xers, and helped jolt sales at coffee shops to $21.6 billion last year.
So upgrading from just dumping drip coffee over ice was only a matter of time. “People love the ability to get something that they feel is a little more upscale, and a little more customized,” Warren Solochek, food industry analyst at NPD Group, told Moneyish.
“From the consumers’ perspective, here’s something different. It has a little bit of cache and status to it,” he added. “And from the business perspective, it lets you differentiate yourself from all those other guys who aren’t offering those kinds of beverages, and you can charge more for it.”
But why are we paying so much? At Starbucks, an iced coffee runs $2.95 – but a Narino cold brew will set you back $3.45, and a nitro cold brew with sweet cream is $4.45. A nitro brew at Dunkin is expected to cost $3.39, compared to a iced coffee the same size for about $2.49.
The coffee makers say that the drinks are costlier to make. It often takes almost twice as many coffee beans to make cold brew coffee, for example. There’s the time factor. It can take 24 hours to brew a batch of Kyoto or nitro coffee, so you get smaller batches. They also require specialized equipment. Dunkin Donuts told Moneyish that “the different brewing processes and the difference in the quantity of coffee used when brewing” led to higher prices. Starbucks declined to comment.
But customers are also doing this to themselves – 27% of U.S. coffee drinkers are “super spenders” – typically Millennial, affluent and urban – willing to pay more for special drinks or preparation methods. And businesses know it.
“You’re paying for the experience of trying something new,” said Dreszer. “It’s like going out for cocktails. You can get a vodka martini with the house-brand liquor, or the hip drink that smokes or something for five dollars more, just to say you tried it.”
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