Vice President of Coffee Operations Matt Swenson talks current coffee trends with Coffee Intelligence

This year, coffee concentrates have become prevalent in coffee shops and on social media, featuring in recipes ranging from cold brew to espresso tonics and martinis. Meanwhile, soluble coffee remains a solid market value, accounting for25% of global retail coffee consumed in 2022. 

Coffee concentrates seem to have the edge - offering convenience, quality consistency, versatility, and a competitive price point. Can soluble coffee, the longstanding pillar of convenient coffee, compete in the long run? 

"Having a bottle of brewed coffee available for quick dilution or quick drinking has been on the rise, at least in the US market, for the past 10 to 15 years," says Matt Swenson, Vice President of coffee operations at Farmer Brothers Coffee. 

Coffee concentrates were no overnight sensation - it was a slow ascent. Cold brew created the momentum for concentrates in the 1960s, with the launch of the Toddy brewer. But cold brew popularity didn't explode until around 2010, when the bigger specialty brands started releasing ready-to-drink (RTD) coffee products. 

Over the last decade, consumer interest in cold brew has risen quickly and grocery stores have allocated entire refrigerated sections for cold brew and RTD coffee.

"The cold coffee sector's expanded manufacturing capabilities have allowed cold brew production to soar, and bring with it innovations like concentrates," says Matt.

The number of retailers stocking coffee concentrates has exploded in the last three years, with brands like Stumptown, La Colombe, Blue Bottle, Chameleon, and High Brew part of this trend. In 2023, shelf-ready cold espresso and iced coffee dispensers allowed the mainstreaming at scale of RTD coffee and cold brew concentrates in coffee shops.

"Less than 10 years ago, there were just a handful of people that could produce liquid coffee at a commercial scale," says Matt. "Now it's difficult to keep track, it's become so ubiquitous."  

Convenience is important - but now it must be healthy and premium to boot
In a 2023 survey, about 65% of Millennials and 48% of Gen Z respondents said they were more likely to purchase coffee concentrates over the next year because of its convenience and versatility. In fact, coffee concentrates online sales surged by nearly 20% in 2023.

"While convenience initially drove the RTD coffee trend, millennial and Gen Z consumers are prompted to explore different brands and brewing styles by social media, especially in the cold coffee category," says Matt. 

They also have higher incomes than previous generationsand a different consumption behavior that make higher-quality coffee more of a priority for them. And ever since home preparation of coffee surged during the COVID-19 pandemic, many consumers retain their home barista skills and preferences for coffee quality and sustainability. 

Specialty coffee culture has entered mainstream consumption in the last few years, and Gen Z is the first generation to grow up with specialty coffee accessible at scale. This means that there is now a consumer expectation on minimum quality standards.

Soluble coffee has long reigned over the convenient coffee segment - but it doesn't quite meet consumer expectations on quality.It was never intended for high-quality beverages, since the drying process inherently degrades the volatile flavor compounds. Despite this, its affordability and convenience has kept it in demand for decades. 

But with arguably less intense flavor and mouthfeel than concentrate-based coffee drinks, it will have a hard time keeping up in terms of demands on quality.  

"While soluble coffee retains some of the healthy compounds in brewed coffee, it lacks the nuanced flavors found in specialty coffee," says Krzysztof Barabosz, Head of Coffee at Hard Beansand Co-Founder of Hardtank.

In contrast, cold brew boasts lower acidity, smoother taste, and higher caffeine concentrations compared to traditionally-brewed coffee.  

"Cold brew coffee concentrates and RTD cold brew beverages are rapidly gaining ground on the soluble coffee market, driven by the increasing demand for specialty coffee options," says Krzysztof.

Did specialty soluble ever really "make it"?
With conventional soluble coffee meeting demand for convenience but missing the quality mark, the past couple of years have seen specialty coffee brands invest in specialty grade soluble coffee ranges.

Brands like Verve, Proud Mary, and Blue Bottle have introduced premium soluble coffee lines, and Intelligentsia even went one step further, opening a coffee shop in California that exclusively uses soluble espresso. 

However, the specialty soluble market still has economic inefficiencies that raise the question of whether it is a viable one to invest in. 

"The mature concentrated coffee sector can efficiently manufacture smaller-scale specialty lines, whereas the massive soluble coffee sector's volume focus is a limiting factor for specialty lines," says Matt.

According to Krzysztof, freeze- or spray-drying soluble coffee requires more processing and packaging than concentrates. 

"This simplified production process of concentrates can result in lower manufacturing costs, including reduced energy usage and fewer additives needed to preserve the coffee," he says. 

Plus, the potential return on investment is higher for coffee concentrates. 

"Coffee concentrates often command a premium in the market because of their perceived quality and versatility, allowing roasters and manufacturers to potentially achieve higher profit margins compared to standard instant coffee products," says Krzysztof. 

"The explosive growth and innovation observed in the RTD coffee sector suggest huge potential for expansion and market penetration in the foreseeable future."

That said, it's not all doom and gloom for the specialty soluble segment. According to Matt, consumers are changing their outlook on instant coffee, viewing it in a more positive way. This makes it an exciting time for both concentrated and soluble coffee.

"Specialty instant coffee is still having its moment," says Matt. "It's gained a lot of traction, but it hasn't reached maturity to fully conclude anything on where it's gone and where it has been."

"The old school soluble market and the consumer-facing coffee concentrates are ultimately going after two radically different consumer bases and generational users. The liquid coffee space - concentrates and espresso concentrates - are heavily focused on the younger consumer - 40 year old millennials and below." 

There is still room for both markets to continue growing, as demand and marketing has been somewhat bifurcated between soluble and concentrated coffee. Rather than a question of what will replace what, it looks like more of a matter of market demographic positioning. 

With cold brew and RTD exploding and leading the way with Gen Z, coffee concentrates will do very well. But there is still space for specialty soluble to grow, targeting a different audience.  

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