- Ready-to-drink remains the fastest growing segment of the coffee category, growing 31% in the last two years, driven by innovations to satisfy consumers. These options include antioxidants (47%), promoting brain health (40%), are anti-inflammatory (35%) or have added probiotics (30%), according to a Mintel study.
- The group found that in addition to these and other functional benefits, there is growth beyond just the usual morning or afternoon pick-me-up. More than two in five consumers of ready-to-drink coffee say their ideal bottled/canned cold coffee drink would help them relax, while 35% seek those products with added protein.
- “Consumer interest in better-for-you beverages is also shaping the market as demand for organic and non-GMO coffee or functional formulations enhanced with all-natural flavors, protein and vitamins grows. The broader trend of beverage blurring is also opening up opportunity for innovation and brand extension, especially in the RTD segment,” said Caleb Bryant, Senior Beverage Analyst at Mintel.
With increasingly hectic schedules, it’s no surprise that coffee consumption is continuing to grow. The ready-to-drink (RTD) market is gaining a deeper foothold at a time when gourmet coffee and convenience are taking center stage for U.S. consumers and retailers.
While the correlation between relaxation and caffeine isn’t a traditional association with the beverage, it is a powerful one. Coffee is now being seen as an indulgence, a moment to take a break from busy schedules and immerse in the experience. Although not a functional benefit in the strictest sense of the word, this indulgent ritual may be helping to drive the trend of linking ready-to-drink coffees with relaxation.
According to research by Mordor Intelligence, the U.S. ready-to-drink coffee market is expected to reach almost $2.5 billion in sales in 2018 and mature to more than $2.6 billion in 2023. As a result, more food and beverage companies are entering the space and more coffee brands are joining the growing ready-to-drink trend.
Coca-Cola sells Dunkin Donuts branded coffee drinks and has partnered with McDonald's to distribute a line of ready-to-drink McCafe Frappes in grocery stores. Last month, Coca-Cola took another big step into the world of coffee when it announced its plans to acquire Costa Coffee, the second largest coffee chain in the world, for $5.1 billion.
And Nestlé is paying $7.15 billion to Starbucks to sell the coffee chain's coffee beans and drinks in grocery stores and other outlets around the world. This comes a year after Nestlé bought a majority stake in Blue Bottle Coffee and acquired Chameleon Cold-Brew. Similarly, Keurig Green Mountain acquired the Dr Pepper Snapple Group for more than $18 billion — creating a company that offers a large array of both hot and cold products that people can consume throughout the day — from morning coffee, an afternoon tea to a late-night soda — while accessing a vast distribution system.
The focus for ready-to-drink beverages is driven mainly by millennials and other young consumers, according to the Mintel report. Consumption in the cold, ready-to-drink category grew by almost 8% from 2015 to 2016. As demand grows, other outlets such as convenience stores, fast-food restaurants and gas stations are now selling high-quality coffee — and often at much lower prices than the premium coffee shops. Busy consumers appreciate being able to pick up a cup of coffee on their way to or from work, or for a quick afternoon pick-me-up, so the trend also is responding to their lifestyles. It's no wonder why large food and beverage companies are eager to enter the space, and will likely continue to bulk up their presence in the coming months and years.