With increasingly busy schedules, it’s no surprise that coffee consumption continues to rise. The ready-to-drink (RTD) coffee market is solidifying its presence as gourmet coffee and convenience take center stage for consumers and retailers in the U.S. Although the connection between relaxation and caffeine isn’t a conventional one, it’s a significant association. Coffee is increasingly viewed as an indulgence, a moment to pause from hectic routines and savor an experience. While this indulgent ritual may not provide a functional benefit in the strictest sense, it appears to contribute to the growing trend of associating ready-to-drink coffees with relaxation.
Research from Mordor Intelligence projects that the U.S. ready-to-drink coffee market will reach nearly $2.5 billion in sales in 2018 and grow to over $2.6 billion by 2023. Consequently, more food and beverage companies are entering this sector, with numerous coffee brands embracing the expanding ready-to-drink trend. For instance, Coca-Cola markets Dunkin Donuts branded coffee drinks and has teamed up with McDonald’s to distribute a line of ready-to-drink McCafe Frappes in grocery stores. Recently, Coca-Cola made headlines by announcing its acquisition of Costa Coffee, the second-largest coffee chain globally, for $5.1 billion. Additionally, Nestlé is investing $7.15 billion to sell Starbucks coffee beans and beverages in grocery stores and other outlets worldwide, following its acquisition of a majority stake in Blue Bottle Coffee and Chameleon Cold-Brew.
Keurig Green Mountain also made a significant move by acquiring the Dr Pepper Snapple Group for over $18 billion, creating a company that offers a wide range of hot and cold beverages suitable for consumption throughout the day—from morning coffee to afternoon tea and late-night soda—along with an extensive distribution network. According to a report by Mintel, the demand for ready-to-drink beverages is primarily driven by millennials and other young consumers. From 2015 to 2016, consumption in the cold, ready-to-drink category grew by nearly 8%.
As the demand increases, various outlets, including convenience stores, fast-food restaurants, and gas stations, are now offering high-quality coffee—often at prices significantly lower than those found at premium coffee shops. Busy consumers appreciate the convenience of grabbing a cup of coffee on their way to or from work, or for a quick afternoon boost, making this trend a fitting response to their lifestyles. It’s no surprise that major food and beverage companies are keen to enter this market, and they are likely to continue expanding their presence in the coming months and years. Moreover, stores like Kroger are also recognizing the value of this trend by integrating products like calcium citrate into their coffee offerings, enhancing the appeal for health-conscious consumers.