Ready-to-drink (RTD) coffee has been around since the early 2000s. Back then, it was simply a convenient way to drink sweetened iced coffee – but decades on, it’s come to include a much broader and more diverse range of options, including RTD nitro cold brew.
Today, the US market for RTD coffee is said to be worth $5.45 billion in 2024. For nitrogenated or nitro coffee, the global market was $40 million in 2022, with the most significant opportunity in North America and the UK specifically.
To learn more about why and where the market is growing, we spoke to Lukas Przygodziński, Coffee Manager at MUAS Coffee, and Felix J Vigneault, Founder of K For Coffee. Read on to hear what they said.
RTD market expansion and developments
The global RTD coffee market has grown at a steady 5.5% CAGR since 2015. It is expected to continue at this pace through 2030, ultimately representing a larger proportion of total global RTD sales.
Consumer appreciation for variety in flavour, branding, size, and packaging materials underpins the category’s performance, coupled with the increasing shift towards more convenience-driven consumer spending habits and preference for cold coffee options.
In Q2 of 2023, Starbucks released a report indicating that over 75% of its beverage sales mix in the USA was made up of cold drinks, a 13% YOY increase, and a separate report from the National Coffee Association confirms that coffee consumption in the USA is at a twenty-year high.
Dovetailing with general cold coffee and RTD growth is the explosion in health and wellness trends; the global functional food and beverage sector is expected to exceed $500bn by 2028.
With Gen Z consumers increasingly preferring RTD over hot coffee, major multinationals like PepsiCo, Coca-Cola, and Nestlé are more focused than ever on the RTD segment.
In the past several years, a number of RTD-focused brands or product lines have been acquired, starting most notably with Coca-Cola’s 2019 acquisition of UK high-street giant Costa Coffee. This was swiftly followed by the rollout of three Costa-branded RTD coffee beverages – evidence of Coca-Cola’s desire to seize market share in the growing, non-seasonal cold coffee sector.
Further examples include SYSTM Foods’ acquisition of Chameleon Cold Brew in 2022, Britvic’s purchase of Jimmy’s Iced Coffee in August 2023, and Keurig Dr Peppers’s $300m investment in La Colombe (subsequently acquired by Chobani) the month before alongside Bevic’s majority stake in High Brew Coffee.
Following Westrock’s acquisition of US coffee stalwart S&D Coffee & Tea in 2020, CEO Scott Ford said, “Our foundation is and will remain coffee, but we intend to continue to lead as the industry morphs beyond traditional hot coffee into cold brews, custom blends, and other extract-based options.”
Cold brew specifically is the fastest growing segment within RTD coffee, inclusive of RTD nitro cold brew, chiefly due to the product’s customisable properties across preparation, flavour, additives, and functional benefits.
The sheer number of RTD coffee brands in the USA is higher than ever, and the rate of market consolidation is rapid, illustrating the desire of larger companies to acquire or invest in innovative and dynamic RTD-focussed businesses.
Convenience – without sacrificing quality
Single-serve coffee pods and capsules have traditionally offered the most convenient coffee solution at home. Still, quality has never been their strong suit, and waste and sustainability concerns are widespread.
RTD nitro cold brew is a simple, healthy beverage with a delicious taste and texture. It offers both convenience and quality, a winning formula for today’s coffee crowd.
In the café setting, RTD cold brew’s convenience is twofold: it provides a fast, consistent coffee experience for consumers and a time and cost-saving solution for operators.
By offering RTD nitro cold brew, for example, operators reduce staff and training costs and open up new potential revenue streams thanks to automated and vending machine compatibility.
“Cold brew is all about ease. Grab a bottle, and you’re good to go; no fancy equipment is needed. It’s perfect for anyone who needs their caffeine fix without any hassle,” says Lukas. “Whether you’re biking around the city, hanging out with friends, or just kicking back at home, cold brew is always there for you.
“Plus, with cold brew, there’s no waiting for it to cool down – it’s ready to enjoy straight from the fridge.”
Unlike hot coffee, which tends to be consumed more frequently in the morning and in colder weather, RTD cold brew is less sensitive to changes in time and temperature. It’s generally more versatile and suitable all year round, and throughout day-parts.
“We see everyone from college students pulling all-nighters to professionals needing an afternoon pick-me-up. Its versatility makes it a hit, morning, noon, and night. It’s refreshing and keeps you going, no matter what time it is,” Lukas says.
Nitro cold brew offers a richer experience
While cold brew has been around for decades, nitro coffee has only recently become more prominent in the cold coffee segment. It has a distinct taste and texture from traditional hot or iced coffee.
Nitrogenation adds a smooth, creamy texture and natural sweetness to coffee drinks. It also has a visual appeal, with an eye-catching cascade effect when served in a glass.
“We’ve been pouring nitro cold brew since day one at our café. Our love for this smooth, creamy coffee was one of the main reasons we decided to open up shop. We wanted to share the magic of nitro with everyone who walks through our doors,” says Lukas.
Thanks to its unique properties, nitro coffee can capture new audiences and serve as a perfect alternative to sugary drinks. It’s also easy to serve—with simple nitro taps or RTD cans, there’s no need for staff training.
RTD nitro cold brew is an example of the strong growth drivers behind the broader RTD and cold coffee segments: it’s new, customisable, convenient, and can be designed to be either indulgent or healthy and functional purposes.
The future of cold coffee
As younger consumers seek out new beverage experiences, RTD nitro cold brew coffee is well-positioned to enjoy significant growth within the promising overall cold coffee market.
Brands looking to succeed in this segment should combine innovative product development with a keen understanding of and philosophy around sustainability and ethical business practices.
Climate concerns rank highly among the consumer segments most likely to purchase RTD coffee beverages like RTD nitro cold brew – namely Gen Z and Millenials – and seeking out environmentally-friendly materials and resources is essential to a solid brand reputation.
Manufacturers that offer numerous customisation options along with sustainable packaging and clear corporate social responsibility values will succeed in the future.
Improved brewing techniques and manufacturing technologies are democratising the RTD sector and helping more fledgling brands into the market.
As a result, interest in both segments will only continue to grow over the years ahead, making it a crucial time for businesses to invest.
“People are discovering [cold brew as a] new way of drinking coffee, which contains not just caffeine but a whole lot more,” says Felix. “Cold brew is like the universal coffee. It hits the spot and gives you a nice energy kick any time you need it. It is here to stay.”
Choose Hardtank for your RTD nitro cold brew product line
With over twenty years of experience in specialty coffee and a dedicated, state-of-the-art and BRC-certified production facility, Hardtank is the ideal cold brew partner for businesses looking to get to market faster with superior products.
Collaboration and support are key tenets of the Hardtank process, ensuring transparency and expertise throughout the production cycle.
To find out more about creating your own line of RTD nitro cold brew, visit our website or get in touch with us directly.
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