As the leader in the U.S. coffee market, the J.M. Smucker Company regularly conducts research to see how customers prepare and drink the staple beverage.
One recent interview with a consumer in her early 20s stood out to Joe Stanziano, the company’s senior vice president and general manager of coffee.
“She said, ‘Well, there's no way I could wait for the K-Cup to finish brewing. That way takes way too long. I need something faster than that,’” Stanziano recalled.
There were also young people who felt intimidated by the whole at-home coffee making experience, he said. Some Gen Zers don’t know how to brew coffee. Others might not be interested in making the investment in the equipment.
“We really got good insight to say, ‘Look, what they're looking for is, let's take all the work, all the preparation of brewing a good cup of coffee, and let's take that out of the mix,’” he said.
Smucker’s solution for those consumers will be launching in July: Liquid coffee concentrate under the Dunkin’ brand. The product will be in 31-ounce shelf-stable bottles, which will be on shelves next to coffee beans, grounds, K-Cups and mixes at the grocery store. Consumers will purchase it and dilute it with whatever they want — hot or cold water, dairy products, ice. A regular strength brew can be achieved with liquid at a 1-to-1 ratio.
Liquid coffee concentrates are not new, but this is the first consumer-facing one on the market from a mass-market coffee brand.
It’s a coffee drink that can be ready in seconds, and can easily be made as basic or fancy as consumers want. The concentrate will launch in two varieties: unsweetened black coffee and pumpkin. After October, said Tina Meyer-Hawkes, vice president of Smucker’s liquid coffee venture, the pumpkin flavor will phase out and be replaced with caramel.
“What we always want to bring to the category is our deep expertise in coffee sourcing, roasting, our technology — to be able to deliver that liquid coffee that really stands up and compares to a roasted, fresh pot of coffee,” Stanziano said.
The cold gate to the ‘fourth wave’ of coffee
In recent years, cold and iced coffee have become more popular with consumers. At Starbucks, cold coffee makes up 75% of the drinks sold in warm months, and 60% of the drinks sold in winter, The New York Times reported.
That popularity is coming to the home coffee brewer as well. In the last five years, according to data from the National Coffee Association and Smucker, at-home prepared iced coffee drinks have doubled.
While this trend was already underway, it took off in 2020 as coffee shops and restaurants shut down during the COVID-19 pandemic, said Caleb Bryant, associate director of food and drink at Mintel. Consumers wanted their creative coffee drinks, and they also had more disposable income because there were not opportunities to go out. Many people invested in nicer at-home equipment, started to experiment with different ways to make coffee, and plugged into social media both to share what they were doing and see what others were trying, he said.
The more creative approach to customized coffee, Bryant said, ushered in what’s called the “fourth wave” of coffee consumption in the United States.
“For a very long time, there was this top-down approach in terms of coffee drink innovation,” he said. “What I mean by that is the coffee shops and chains themselves were really the ones setting wider coffee industry trends. But now we’re seeing increasingly individual consumers, individual content creators are coming up with the next big coffee beverage.”
A search for “coffee” on TikTok pulls up thousands of videos of consumers all over the world using different kinds of coffee, a wide variety of creamers, chocolate, caramel, ice cubes, handheld frothers and other tools and ingredients to make decadent drinks.
Stanziano said that Smucker took inspiration from this trend.
“We are the leader in at-home coffee, so we have to play there,” he said.
The right launch and brand
Smucker acquired the license for CPG Dunkin’ branded coffee when it purchased Folgers from Procter & Gamble in 2008.
In the years since, the QSR chain has become well known for its coffee drinks, and its popularity has soared with young and trendy consumers. At the Consumer Analyst Group of New York conference in February, Smucker CEO Mark Smucker said the company is expecting $850 million in Dunkin’ sales this fiscal year, and Dunkin’ is projected to become a $1 billion brand in the next four years.
The liquid coffee concentrate is a quick drop-in and will work with both hot and cold water, Meyer-Hawkes said. However, judging from social media and consumer research, Smucker expects that most consumers will choose to use their concentrate in cold coffee.
Making it easier for consumers to get a cup of cold coffee, Stanziano said, opens up more opportunities for Smucker.
“A hot coffee consumer tends to be mostly in the morning, occasionally in the afternoon,” Stanziano said. “The liquid cold brew folks tend to be drinking it throughout the day.
“You really start to think about this in a different way, because that young consumer, they're coming to coffee — yes for the flavor and the taste — but there's an energy component to that, right?” he continued. “Giving me that boost and keeping me going throughout the day.”
Meyer-Hawkes said that Smucker’s close working relationship with the QSR Dunkin’ helped move this launch along quickly. Smucker presented its ideas and consumer research, and talked with Dunkin’ about the consumer needs it would solve. The QSR gave its blessing for the launch.
“They trust us to take this into spaces that are meaningful for their business,” Meyer-Hawkes said.
Making the old ways new
Coffee concentrate isn’t a new product for manufacturers like Smucker. The company’s away-from-home division, which specializes in branded products for foodservice, already makes liquid concentrates, Meyer-Hawkes said.
The liquid concentrates are actually a direct extract from coffee beans, Meyer-Hawkes said. The process for the Dunkin’ coffee is similar to the foodservice extracts, but not quite the same; those are primarily for hot beverages and formulated to be used in large-scale machines.
Coffee’s fourth wave hasn’t just brought new life to liquid coffee extracts. It’s also reinvigorated instant coffee grounds. While this form of coffee was popular with Baby Boomers seeking a quick caffeine fix a generation ago, it’s become seen as old-fashioned and substandard. But younger consumers, more concerned with speed and customization, are picking up the instant coffee crystals as a base for their new creations, Stanziano said.
The liquid concentrate style will likely spread to Smucker’s other coffee brands in the near future. Meyer-Hawkes said they are currently working on new multi-serve innovations for both Folgers and Cafe Bustelo.
Meyer-Hawkes said Smucker sees this as a gateway to the future of coffee. Today, it represents about 30% of the larger category, but she said it will continue to grow.
“Younger consumers want something fast and don't want to have to worry about brewing, [so] instant is starting to come back into the portfolio,” Stanziano he said. “For us, it's keeping those opportunities and then dialing up that communication with certain consumer groups. I think it is really going to be our opportunity.”