Cold Brew Coffee Market Analysis

Cold Brew Coffee Market Deep Dive – PESTLE, Porter, SWOT

In recent years the cold brew coffee market has undergone a great transformation, prompted by changing consumer tastes and the growing demand for convenient and easy-to-consume coffees. And with the growing popularity of cold brew as a smoother, less acidic alternative to the traditional brew methods, it has become popular with a wide range of consumers, from millennials and health-conscious consumers to the more mature coffee drinkers. Also driving the change is the growth of the speciality coffee culture, which puts quality, taste and artisanal methods at the forefront. The growth of e-commerce and the development of new packaging solutions have made cold brew more accessible than ever before, helping brands to reach a wider audience and cater for the busy lifestyles of modern consumers. As the cold brew market continues to grow, it is important to understand the key drivers, trends and opportunities that will shape its future.

PESTLE Analysis

• Political:
  In 2024, the cold brew coffee market is influenced by various political factors such as trade policies and agricultural regulations. In 2023, the United States imported coffee in the amount of approximately 105 million 60-pound bags, and this is expected to be similar in 2024. The discussion about imposing tariffs on imported goods, especially on coffee from coffee-growing countries such as Brazil and Colombia, may affect the price and availability of coffee. The political situation in these countries is also important, because any disturbances could lead to supply chain fluctuations.
• Economic:
  In 2024 the economic environment of cold coffee is characterized by the behavior of consumers and the rate of inflation. In 2023, the Bureau of Labor Statistics showed an increase of 4.5% in the food and beverage index. This led to an increase in the price of coffee products. The average annual expenditure per person on coffee was estimated at $1,100, indicating an increase in the consumption of premium coffee. This economic environment indicates that consumers are willing to invest in premium coffee, including cold brew.
• Social:
  In 2024, social trends showed that cold brew coffee was particularly popular with the younger generations, especially millennials and generation Z. In a survey by the National Coffee Association, 45% of the 18–24-year-olds who drank coffee regularly said they drank cold brew coffee. In 2022, the figure was 36%. The trend was driven by the fact that people's lifestyles were changing, and they were looking for convenient, ready-to-drink beverages to suit their busy schedules. Also, with the growing trend towards a healthy diet, cold brew coffee was more popular than regular coffee because it was less acidic.
• Technological:
  The cold coffee market is expected to be influenced by technological advancements in 2024. New brewing technology has been developed, which enhances the flavor profile and reduces brewing time. For example, the cold brew method, which uses nitrogen infusion, has become increasingly popular. The nitrogen infusion has the advantage of improving the taste and shelf life of the coffee. Also, the e-commerce platform is expected to increase, and the sale of coffee will be $ 6,000,000,000 in 2023, which is expected to increase cold coffee delivery and purchase services.
• Legal:
  By 2024, the legal factors that will affect the cold coffee market include food safety regulations and labeling requirements. The Food and Drug Administration has introduced new caffeine labeling requirements, requiring manufacturers to indicate the amount of caffeine in their products. This rule is designed to protect consumers, especially since cold coffee has a higher caffeine content than regular coffee. Brands must comply with these regulations, as noncompliance may result in fines of up to $ 500,000 per violation.
• Environmental:
  In the cold-brew coffee market, which is increasingly becoming aware of the environment, the importance of the environment is becoming increasingly important. By 2024, it is estimated that about 30% of coffee brands will adopt sustainable sourcing practices, with organic and fair trade certifications as their priorities. But the coffee industry is also facing challenges due to climate change. It is estimated that coffee production will decrease by 50% in some regions due to changes in temperature and precipitation by 2050. This is driving the industry to adopt sustainable farming and eco-friendly packaging.

Porters Five Forces

• Threat of New Entrants:
  “Cold brew coffee has been growing at a rapid rate, attracting new players. ” But the initial investment in equipment and branding is a deterrent for some. Brand loyalty and distribution are also obstacles. Nevertheless, the growing popularity of cold brew coffee is likely to encourage new players to enter the market.
• Bargaining Power of Suppliers:
  The suppliers of raw materials for cold-brew coffee, such as coffee beans and packaging, have relatively low bargaining power. There are many suppliers, and companies can buy the raw materials from different regions. There is a large number of suppliers, and the price and terms of purchase can be negotiated, which reduces the bargaining power of suppliers.
• Bargaining Power of Buyers:
  The consumers have a wide choice of brands and flavours to choose from when it comes to cold brew coffee. And the competition is also very tough. The consumers have a strong bargaining power because they can easily turn to competitors if they are dissatisfied with the price or quality of the products. The trend towards health and premium products also increases the consumers’ bargaining power.
• Threat of Substitutes:
  The threat of substitutes in the cold brew coffee market is high. There are many beverages to choose from, such as iced coffee, energy drinks and other caffeinated beverages. These alternatives can be chosen by consumers based on price, taste and health considerations. The popularity of ready-to-drink beverages has increased competition for cold brew coffee.
• Competitive Rivalry:
  The competition in the cold-brew coffee market is fierce, with established brands and new entrants all vying for a share of the market. And as the companies compete to attract consumers, they are constantly innovating, introducing new flavors, new packaging and new marketing strategies. This can lead to price wars and higher marketing costs, which can cut into the bottom line of all market players.

SWOT Analysis

• Strengths:
  • Growing consumer preference for cold beverages, especially in warmer climates.
  • Perceived health benefits associated with cold brew coffee, such as lower acidity.
  • Diverse product offerings, including ready-to-drink options and flavored varieties.
• Weaknesses:
  • Higher production costs compared to traditional coffee brewing methods.
  • Limited consumer awareness in certain markets, affecting potential sales.
  • Shorter shelf life for some cold brew products, leading to waste.
• Opportunities:
  • Expansion into emerging markets with increasing coffee consumption.
  • Collaboration with health and wellness brands to promote cold brew as a healthy alternative.
  • Innovation in packaging and distribution channels to enhance accessibility.
• Threats:
  • Intense competition from both established coffee brands and new entrants.
  • Fluctuations in coffee bean prices impacting production costs.
  • Changing consumer preferences towards other beverage options, such as energy drinks.

Cold-brewed coffee is a growing trend, with an expanding number of products and significant market share. However, obstacles to growth include production costs and a lack of awareness in some regions. Competition and price volatility remain constant threats. Strategic focus on innovation and marketing will be critical to exploit the market’s potential.