Something’s Brewing in RTD Beverages

Coffee is poised to bring growth to cold-vault sales
Photograph: Shutterstock

With the energy category maturing, many in the convenience-store channel are wondering what’s next. While energy is still a major contender, its years of double-digit growth appear to have slowed1. Even traditional energy trademarks are looking to expand into other categories to maintain growth. But c-stores may just find growth for the future by looking to the past.

In the United States, coffee has been a mainstay of beverages since the Boston Tea Party. After seeing double-digit growth in ready-to-drink (RTD) sales over the last four years, coffee is poised to break $1B in channel sales this year2and become a pillar of cold vaults as well. If RTD coffee maintains its current growth rate, it will more than double 2017’s dollar sales by 20223, challenging sports drinks for the fourth largest category in the vault (by dollar sales)4.

The number of RTD coffee variants is exploding, up 37% from 2014 to 20175. To be successful, retailers need to be familiar with the current options and their key differentiators—and use that knowledge to recognize interesting new products.

Flavor is one of the most recognizable differentiators in the category. While more indulgent coffeehouse branded coffees were the first to the RTD category, new entrants such as Peet’s® are focusing on healthier options. This summer, they launched their True Iced Espresso range, offering flavors such as caramel macchiato and vanilla latte as a lower-sugar, lower-calorie RTD option.

Another differentiator is the caffeine level, which can vary dramatically between products. Some new products focus on the traditional function of coffee: delivering energy. Forto® has developed lines of coffee-based energy shots and RTD coffees that deliver “natural energy” with almost double the amount of caffeine offered in competitors’ products. They are also the only USDA-certified organic RTD coffee and provide an innovative package with a leak-proof sip top.

Finally, brew type is another significant point of differentiation. Currently, the dominant type is traditional hot brewed; however cold-brew coffees, such as High Brew®, have carved out a growing niche, offering higher caffeine levels with less acidity. Cold brew, while still a relatively small segment of the category, has almost doubled in dollar sales YTD, contributing almost one third of the category’s growth6.

Flavor, caffeine and brew type are only a few of coffee’s major differentiators, and the number of current variants is almost dizzying. All that growth in the category poses a difficult challenge—identifying those RTD coffee products that stand out and will bring incremental sales to the cold vault.


1. Total US Retail Sales and Forecast of Energy Drinks – Mintel, May 2018

2. IRI TTL CONV YTD WE 11-11-2018

3. Total US Retail Sales and Forecast of Category by Segment – Mintel, July 2018

4. Total US Retail Sales and Forecast of Coffee by Segment – Mintel, July 2018

5. Mintel GNDP, USA, New Variants of RTD Coffee, 2014-2017

6. IRI TTL CONV YTD WE 11-11-2018

This post is sponsored by Keurig Dr Pepper


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