Progressive Grocer

DEC 2016

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December 2016 | progressivegrocer.com | 45 consumers' desire for new beverages with fewer and more natural ingredients, lower-calorie profiles, and added health benefits. Cold-brew Coffee, Kombucha on Fire e RTD single-serve tea and coffee segments are punching above their weight class, according to Lazar- ski. While they comprise only 7 percent of category sales, SPINS data show that the segments experienced 15 percent growth this year over last year. Cold-brew coffee is quickly becoming a category star. Starbucks and PepsiCo debuted a cold-brew beverage in the grocery channel last June, and Dunkin' Brands Group and Coca-Cola will launch a cold-brew line in 2017, making the segment's ap- peal even more mainstream. Cold-brew coffee, made by steeping coffee grounds in room-temperature or cold water for an ex- tended period, has lower acidity but a higher coffee- to-water ratio than conventional coffee, meaning that it has a smooth taste, but its concentrated nature gives it a higher caffeine content per serving. Since it has a wider appeal than traditional energy drinks, it could create competition for that category, which is viewed as having a less healthful profile and appeals to a more narrow demographic. "Ready-to-drink coffee as a category is growing at a 20 percent average year to year, and the cold-brew subcategory is exploding with triple-digit growth," asserts Jared Smith, VP of sales and marketing at Los Angeles-based Bowery Coffee Co., which re- cently launched at Ralphs and Aldi. Despite a higher price point, Smith says that consumers are "spending more, buying more often and buying in multiples. ey're not scared of higher price points." "Millennial consumers are used to customization and high quality in coffee, and they want that level of quality in a cold ready-to-drink product," says Greg Stelten- pohl, founder and CEO of Califia Farms, also based in Los Angeles. Califia recently launched three new flavors of bottled cold-brew, and a new dairy- free nitrogen-infused Nitro Cold Brew latté with almond milk, packaged in an aluminum bottle. Cold-brew coffees are also emerging in shelf-stable multipacks. St. Louis- based Madrinas Coffee is now rolling out its brand nationwide. e company has placed high-impact cut-case displays of its 6-packs of canned coffee in Jewel- Osco, Roundy's and Schnucks. In addition to refrigerated single- serves and multipacks in center store, manufacturers are testing tapped coffee. Rory Mulcahy, director of sales, eastern division at Austin, Texas-based Chame- leon Cold-Brew, sees potential for tapped cold-brew coffee in conventional markets. "ere's still growth for our bottled line, but we'd like to take our kegs national," he observes. "Wegmans would be on our hot list." SPINS' Lazarski says that the coffee category could even move into cultured and fermented ter- ritory, which has been a big factor in teas such as kombucha. Still one of the hottest trends in health beverages, kombucha, along with other fermented drinks, topped $318 million in sales, with nearly 30 percent growth in the past year, according to SPINS data for the 52 weeks ending Sept. 4. "A recent survey found that more than 70 percent of respondents would prefer to consume probiotics in a food or beverage product rather than in a supplement, and 40 percent to 54 percent were willing to pay more for products with probi- otics in them," says Bryan Crowley, chief strategy officer at Oxnard, Calif.-based KeVita, a maker of handcrafted fermented drinks. e fizzy, low-calorie probiotic drink category to which KeVita belongs continues to show upside. "It's a huge category," says Lazarski. "We're seeing not just the three big brands showing growth, but growth among regional brands that are heavily marketing in their place of origin." KeVita recently launched a Master Brew Kombu- cha in three flavors — dragonfruit, lemongrass and mango habanero — and a CitrusCleansing Probiotic Tonic line of sparkling drinking vinegars in three flavors: Meyer lemon, ginseng Mandarin and elderberry. Next Wave for Teas e next generation of kombuchas may be drinking vinegars and switchel, which is made from apple cider vinegar, fresh ginger and maple syrup, and then cut with water. In addition to KeVita's recent launch, Cide Road, based in Mendham, N.J., has ex- panded distribution of its switchel, launched in 2014, to 3,500 stores nationwide, includ- ing ShopRite stores in New Jersey. Austin-based Live Beverages, mean- while, recently launched drinking vinegars with soft-drink flavor profiles like lemon- lime and root beer that are being sold in operators such as H-E-B, Safeway, Ahold USA and Kroger. "e gateway was kombucha," says Live Beverages CEO Trevor Ross. "Consumers are becoming more adventurous, and they are willing to explore more sour flavor profiles." "There's still growth for our bottled line, but we'd like to take our kegs national. Wegmans would be on our hot list." —Rory Mulcahy, Chameleon Cold-Brew

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