US iced beverage sales growth surpasses hot coffee

The inaugural Project Iced USA 2020 report reveals that iced beverages generated US$10.4 billion in sales at United States branded coffee shops during the past 12 months, achieving a 7.3 per cent growth.

Iced beverage sales comprise more than one fifth of US$47.5 billion US branded coffee shop revenues, and now outpace hot coffee sales growth, which increased 4.6 per cent during the period.

Ninety-one per cent of industry leaders surveyed believe the iced beverages sales environment in the US is positive, while 92 per cent report improved iced beverage sales over the past year.

Project Iced says branded chains are driving the popularisation of iced beverages. More than 90 per cent of US consumers surveyed purchased an iced coffee beverage at either Starbucks, Dunkin’, or McDonald’s in the past year.

The report adds that the development of cold brew represents one of the US coffee industry’s major innovations in recent years. The product is now a mainstay of most major coffee operator menus, gaining significant traction among consumers, particularly among younger demographics. More than 80 per cent of industry leaders surveyed identified cold brew as the fastest growing product in coffee shops. More than 90 per cent expect cold brew will become a mainstream staple within the next three years.

The introduction of nitro cold brew coffee experienced more modest success, is less widely available, and yet to permeate the mainstream. Nevertheless, 62 per cent of industry leaders surveyed believe nitro coffee will become a coffee shop staple within the next three years, with market leaders, Starbucks, Dunkin’, and Tim Hortons all offering the product.

Iced beverages typically command a higher ticket price than hot coffee options, greater customisation potential, and enhanced marketability due to their distinctive appearance. Ready-to-drink (RTD) iced coffee is also proving popular with consumers, with a growing number of US operators, including Starbucks, Caribou Coffee, Stumptown Coffee Roasters, and Bluestone Lane launching branded RTD products. Overall, more than 90 per cent of US industry leaders surveyed report consumers are more willing to purchase iced beverages out-of-home than 12 months ago.

Despite wider retail headwinds in an increasingly competitive marketplace, Project Iced forecasts the iced beverage segment will continue to prosper, with sales annual sales growth of 6.6 per cent to US$11.1 billion expected in 2020. Growth will be led by the coffee-focused sub-segment, which is expected to surpass US$10 billion within the next 12 months.

The report concluded that the potential for growth exists for branded operators who innovate and build on the diversity of their iced beverage ranges. Operators who are yet to embrace iced options could invigorate their offer by incorporating these products into their stores.

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