Cold brews and iced lattes have soared in popularity at coffee shops. Now brands made to be drunk at home want a piece of the action.
Keurig Dr Pepper plans to launch a machine this fall that can both brew and chill coffee in under three minutes. Nestlé has started selling a version of Nescafé that quickly dissolves in cold liquids. And J.M. Smucker is pushing a Dunkin’ branded cold-brew liquid concentrate it says lets consumers make drinks similar to those made by baristas.
“We’ve seen an explosion in interest in cold coffee,” says David Rennie, Nestlé’s head of coffee brands. One out of every five cups of coffee around the world is now drunk cold, the company says, up from one in 14 cups a decade ago.
Consumers have historically shown a willingness to pay high prices for cold coffee at cafes. Starbucks says its iced shaken espresso—which in Manhattan costs $6.95 for a 16-ounce cup—is one of its fastest-growing drinks. Starbucks says some 63% of its drink sales in the U.S. in the second quarter were cold, a figure that hit 75% last summer. The company says Gen Z and millennial customers drink cold coffee daily.
Packaged coffee makers see cold coffee as a way to woo younger consumers, particularly when many Americans are cutting back on dining out in response to high prices.
Brands also say cold coffee could help them appeal to people looking for a treat in the afternoon and better compete with energy drinks.
In a survey of U.S. consumers by the World Coffee Portal, some 24% of respondents said they drank iced coffee daily in 2023, up from 7% in 2022. Servings of cold coffee in cafes and other out-of-home locations rose 4% last year while hot coffee servings declined 1%, according to research firm Circana.
As the world becomes hotter, cold coffee is becoming more of a year-round drink, says Peter Giuliano, director of the Coffee Science Foundation, a coffee research nonprofit. He points to the popularity of ice tea in the U.S. to support his forecast that cold coffee will make up most of the category by 2030.
Cold coffee had long been an afterthought for many packaged coffee makers who limited their involvement in the category to milky, ready-to-drink bottles and cans. Figuring out how to get products typically brewed hot to taste good cold was a challenge.
Keurig in 2018 launched a “brew over ice feature” for its machines that brewed a hot coffee at 198 degrees Fahrenheit and then cooled it to 150 degrees. “We knew it wasn’t going to deliver on that true cold experience consumers were after,” says Morgan Lombardi, a senior director of product management at Keurig. “It was seen as a hack.”
To deduce what temperature consumers consider to be cold and how long they would be willing to wait, the owner of K-Cups and Green Mountain had panelists test coffee at different temperatures that took varying amounts of time to brew.
Eventually, Keurig determined that consumers would wait three minutes at most and that the optimal temperature was 50 degrees. Any cooler and people couldn’t tell the difference. Very cold coffee also didn’t melt the ice, leaving drinkers with an empty glass full of it, which Keurig says they disliked.
Lombardi says consumers usually add ice to cold coffee because they think “that jingle in the cup” is an integral part of the experience. She also says coffee should always be brewed hot to extract the full flavor.
“It’s easy to chill something with lots of ice or to put coffee in the fridge and wait,” says Lombardi. “Our challenge was trying to chill the coffee very quickly without impacting the flavor.”
Earlier versions of Keurig’s new machine were too big or took too long to cool the coffee down. The breakthrough came at a hackathon last year, when engineers found a way to cool hot coffee by passing it through a chamber containing aluminum and water that absorbs the heat.
It plans to launch the new $200 machine in the fall with ads touting the affordability of the drinks it brews vis-à-vis what consumers get from coffee shops.
Nestlé has also overcome technical hurdles to tap in to the cold-coffee trend.
The company says it picked up social-media chatter during the pandemic about consumers experimenting with cold coffee at home. To cater to the rising demand, it decided to reformulate its instant coffee granules so they dissolve quickly in cold water.
“That sounds easy but actually all our technology was around making Nescafé soluble in hot water,” says Rennie.
Nestlés scientists ultimately concluded they should crystallize roasted coffee more slowly to yield a powder that is finer than typical granules. The finer powder dissolves faster at lower temperatures.
The world’s largest packaged coffee maker rolled out Nescafé Ice Roast in the U.S. in April. It chose to lightly roast the coffee used because bitter notes from heavier roasting would be more apparent in a cold drink.
Nestlé has also launched an iced-coffee blend under the Starbucks brand, which it owns the rights to sell in grocery stores. Consumers can use either pods or ground coffee to make a hot brew that they pour over ice.
The packaged coffee makers are emphasizing that their cold-coffee offerings can be customized, an attribute coffee chains have said draws consumers. Part of the reason people are willing to pay higher prices for cold coffee is the variety of flavors, textures and toppings they can get. Starbucks says “cold foam” is a particularly popular ask at its coffee shops.
To emphasize how its Dunkin’ cold-brew liquid concentrate, launched last year, can be drunk in various ways, J.M. Smucker has been running an ad in which Goldilocks lets herself into the three bears’ house and drinks three cold coffees—an iced black coffee, an iced coffee laced with milk and another one blended with ice and cream. She says are all “just right” as the bears look on forlornly.
Nestlé says global consumption of cold coffee has climbed 15% in the past four years and the trend has staying power. “For young people this isn’t just an entry into coffee but the way they drink coffee,” says Rennie.
Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com