Bottled iced coffee comes in from the cold

It is a quick fix for the coffee purist. High-end US coffee boutiques are rushing to market with bottled cold drinks that satisfy connoisseurs' cravings for caffeine.

As Americans drink more iced coffee and become more interested in premium beans, shops like Silicon Valley's Blue Bottle Coffee and Portland, Oregon's Stumptown are breaking into a market pioneered by Starbucks' bottled Frappuccino, which dominates 80 per cent of bottled coffee sales.

Nearly a quarter of coffee at US restaurants and coffee shops was ordered on ice last year, according to Mintel, up from 19 per cent in 2009.

"Interest in iced and frozen coffee is not only accelerating, but is now transcending a summer-only appeal," the consumer research firm said.

It has also powered sales of bottled coffee at grocers and convenience stores, up 69 per cent over the past five years to $1.8bn in 2013, according to Euromonitor International. While that is just 2 per cent of the non-alcoholic drinks market, bottled coffee is growing faster than anything else in the category, including energy drinks and tea.

Enter the so-called "third wave" of independent coffee houses, which have taken the taste for better coffee popularised by Starbucks and turned it into the quest for the perfect cup. They pay exacting attention to origin, roasting style and brewing to bring out the subtleties of different beans.

Thirty-four per cent of Americans told the National Coffee Association this year that they drink gourmet coffee every day, up 10 percentage points from 2010.

Along the way, shops like Stumptown, Blue Bottle, Philadelphia's La Colombe and Brooklyn's Gorilla Coffee have helped promote cold-brewed iced coffee. Ground beans are mixed with cool water and left to soak for as long as 24 hours before being strained; the resulting concentrate is diluted with water and ice. The result is a potent drink that is less acidic and more caffeinated than traditional iced coffee, typically a regular drip coffee chilled and served over ice.

"Cold brew is part of this general trend that's focused on coffee as an artisanal product," said Dana LaMendola, beverage industry analyst at Euromonitor. "There is an appreciation for coffee flavours more akin to wine, and the cold brew really brings it out."

Now cold brew is moving from coffee shops to grocery store shelves. Blue Bottle, backed by Google Ventures, Morgan Stanley and Instagram's Kevin Systrom, is selling its cold brew, flavoured with chicory, milk and sugar, in school-style milk cartons. The drinks are planned to be available at Whole Foods and its 13 shops in San Francisco and New York. Stumptown, Gorilla and La Colombe are also offering bottled versions.

"Ready-to-drink coffee is becoming an important channel for many of these third wave coffee shops to expand their consumer base outside of their local sphere," said Ms LaMendola. "The wider distribution opportunities available in the ready-to-drink coffee market will help to increase exposure of other, smaller craft coffee players."

Chris Campbell of Chameleon Cold Brew in Austin, Texas, said: "There is momentum in the market for this right now. Cold brew is super smoking hot."

His company was one of the first to sell a bottled cold brew concentrate, which must be diluted with water. In March it launched ready-to-drink bottled coffee, funded by a seven-figure investment from Houston-based Fortitude Capital.

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"It's all about convenience and on-the-go. We were getting so much feedback from our customers: we love your concentrate, when are we going to get the [ready to drink]?" Mr Campbell said. The new drink will be initially available in Texas with distribution expanding to the east and west coasts in the coming months.

The popularity of cold brew in cafes has boosted Chameleon's business, Mr Campbell said, as coffee patrons become "educated" about the premium market.

And, he added, "customers are getting conditioned to pay $3 or $4" for a drink, which allows him to command premium prices: $3.99 for a 10-ounce bottle. "We don't have plans at this time to go toe to toe with Starbucks on a $1.49 beverage."

Even the Seattle-based coffee giant has shaken up its offerings, reformulating its line of ready-made iced coffees last year. The four varieties are less sugary than its bottled Frappuccinos, pointing to evolving tastes.

"The flavour profile of ready-to-drink coffee is changing from sweet and mild, to strong and artisanal," Ms LaMendola said.

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