Coffee is America’s favorite hot beverage, and it’s getting hotter, with new consumers starting to drink it at a younger age and restaurants upgrading their coffee offerings.
Coffee by the numbers
According to a study conducted last year by menu research firm Datassential for supplier S&D Coffee & Tea, coffee drinkers 18 to 24 years old started their habit at an average age of 14.7 years. By contrast, people 25 to 34 years old started drinking coffee at an average 17.1 years of age, and those 35 to 44 years old began at an average age of 19.1 years.
Coffee is also getting colder. Iced coffee was offered at 32 percent more restaurants in 2014 than it was in 2005, according to Datassential. Between 2013 and 2014, it jumped by 38 percent in fine dining and 19 percent in fast casual — the segments in which iced coffee offerings spiked the most. However, its presence declined 3 percent in casual dining.
Iced coffee acts as a gateway beverage to other coffee drinks, according to Datassential, especially among young people. Thirty-six percent of 18- to 24-year-old drinkers said they mostly chose iced or frozen coffee beverages when they started drinking coffee, compared with 22 percent of 25- to 34-year-olds and 11 percent of 35- to 44-year-olds.
But young drinkers’ tastes also reached “maturity” — defined as a major shift in coffee drink preferences, often away from sweeter drinks and toward those with more intense coffee flavor — more quickly, the study for S&D found. Members of the youngest age group settled into their preferred coffee taste in an average 3.1 years from the time they started drinking coffee, compared with 4.7 years for 25- to 34-year-olds and 7.6 years for 35- to 44-year-olds. The most popular reasons for the shift were a change in preference for stronger coffee, drinking more coffee at home (where automatic drip coffee still rules), and a change in taste to drinks that were less sweet.
Flavored coffees are also on the decline, according to Dan Cox, president and owner of Coffee Analysts, a testing lab based in Burlington, Vt. About 42 percent of consumers drank flavored coffee five years ago, he said, and that figure is now around 33 percent.
Specialty coffee — whether espresso-based or premium-brewed coffee — is on the rise, just as iced coffee is. Among 18- to 24-year-olds, 45 percent said the coffee they drank most often when they started was regular brewed coffee, compared with 58 percent of 35- to 44-year-olds and 73 percent of 35- to 44-year-olds.
Catching the ‘Third Wave’
“Third Wave” coffee is on the rise.
First Wave coffee is the pre-ground stuff sold mostly in cans in supermarkets. The Second Wave came with Starbucks and the notion that coffee could be more than fuel.
The Third Wave represents a new sensibility in which coffee shops team with small roasters and source premium, typically small-production beans that they carefully brew at the right temperature, using techniques that allow the beans to best express themselves.
“In recent years the third wave coffee movement has grown dramatically,” Datassential reported.
“As more independent coffee shops are dedicated to the artisanal production of coffee, expect more restaurant operators to expand their coffee programs and a greater number of consumers to be able to distinguish between a dark roast Brazilian coffee and a selectively roasted Yellow Catuai from the Minas Gerais region of Brazil,” it said in a report on the Third Wave movement.
Although Datassential found that only 3 percent of foodservice operators currently offer coffee they consider Third Wave (mostly specialists such as Blue Bottle Coffee and Stumptown Coffee Roasters), nearly a third, or 32 percent, see it as a long-term trend, and 7 percent said they’re very likely to add it.
Consumers are more bullish: 30 percent say they’ve heard of Third Wave coffee, and of those, 42 percent said they are likely to try it. Those numbers jump to 50 percent and 58 percent, respectively, among people ages 30 and under.
Restaurants respond
Although few mainstream restaurants have the handlebar mustachioed, sleeve-garter wearing baristas of Third Wave coffee shops, many are upping their game as they see the importance, especially during breakfast, of a good cup of java, not to mention its profitability.
“The most offensive thing is to see someone roll into your restaurant with Starbucks in their hand,” S&D vice president of marketing John Buckner said.
McDonald’s, which continues to dominate at breakfast, despite a continuing slump in same-store sales over the past year, got the ball rolling in 2009, with the introduction of its McCafé line of premium coffees, including lattés, frozen drinks and smoothies. Burger King at the time had a BK Joe line, which it discontinued in 2010, but it introduced a line of Smooth Roast coffee and latte drinks in 2013. Chick-fil-A upped the ante last August with the introduction of its Farmer-Direct coffee.
The Atlanta-based chicken chain teamed up with Thrive Farmers Coffee, which sources directly from farmers, to offer the only specialty-grade coffee in quick service, defined by its high score with regard to its taste, aroma, body, balance and other factors.
“We reflected on feedback from our customers who expressed that they wanted a better cup of coffee, and we found a partner who brought the added expertise we needed,” David Farmer, Chick-fil-A’s vice president of product strategy and development, wrote in an email.
With its coffee drinkers interested in where their brew comes from, Chick-fil-A set up a website, coffeewithastory.com. The chain also gave away free coffee for a month during “Free Coffee February” — long enough for customers to make it a habit, Buckner observed. The rest of the time, it is priced at $1.59 for 12 ounces of hot coffee and $2.29 for 16 ounces of original or vanilla cold-brewed iced coffee.
Cold brewing, in which coffee is made by soaking ground beans in cold water for many hours, is a Third Wave technique that proponents say extracts flavors that are richer and less bitter than conventional coffee. Starbucks introduced it at 2,800 locations in the Northeast, Mid Atlantic and Midwest, as well as select Canadian units in Toronto, Vancouver and Calgary, at the end of March. Starbucks’ Cold Brew takes 20 hours to make.
Dunkin’ Donuts, meanwhile, has not been taking it easy. Last year, the Canton, Mass.-based quick-service chain introduced its first dark roast coffee, complete with certification from an organization looking to safeguard the environment.
“Our new Rainforest Alliance Certified Dark Roast Coffee was in the works with our coffee excellence team for several years prior to the launch and has long been a part of our strategy to reinforce coffee leadership and support national expansion,” Chuck Kantner, director of brand marketing for parent company Dunkin’ Brands Group Inc., wrote in an email.
Dunkin’ Donuts has been expanding on the West Coast, where consumers generally prefer darker roasts than in the chain’s Northeast stronghold.
“Dunkin’ Donuts is part of a very competitive market, with many QSR brands emphasizing beverages and coffee in particular,” Kantner said.
“Our RAC Dark Roast has been especially appreciated since it offers [our fans] the unique combination of a bold, dark roast taste with a smooth finish so characteristic of Dunkin’s coffee — never bitter,” he added.
Dunkin’ Donuts also added almond milk as a non-dairy alternative, while Starbucks began offering coconut milk.
Additionally, Dunkin’ Donuts has expanded its frozen beverage line with the Coolatta Lite, which has 80 percent fewer calories than its regular Coolatta, and with the Frozen Dunkaccino, which is a frozen, blended coffee-and-chocolate drink.
Starbucks, meanwhile, added a new espresso drink, the Flat White, with more milk than a macchiato and less than a cappuccino. Based on the Australian style of cappuccino, it has two ristretto shots topped with a thin layer of “microfoam,” made by aerating milk for three to five seconds — less than for cappuccinos or lattes.
Taco Bell, which has moved aggressively into breakfast over the past year, extended its partnership with Cinnabon, whose Cinnabon Delight miniature rolls it already sells, to introduce Cinnabon Delight Coffee.
Catching the seasonal bug
Starbucks transformed the world of seasonal coffee with its introduction in 2003 of the Pumpkin Spice Latte. The Seattle-based company said it sold more than 200 million servings before the 2013 season began. Pumpkin Spice Lattes are now a holiday tradition at many coffee chains.
Dunkin’ Donuts has also worked to offer seasonal coffees to go with seasonal food, such as a Halloween Pumpkin Donut to go with its Pumpkin Spice Latte.
Last holiday season, Starbucks introduced a new seasonal drink, a Chestnut Praline Latte, while Dunkin’ Donuts introduced a Snickerdoodle Latte and a Sugar Cookie Latte.
Meanwhile, Krispy Kreme introduced a Peppermint Mocha, Caribou Coffee offered a Gingersnap Cookie Mocha for a limited time, and The Coffee Bean & Tea Leaf had Toffee Nut Latte and peppermint Mocha limited-time offers that were preceded by a Butter Pecan Latte in the fall.
Coffee Bean offers seasonal drinks throughout the year, such as the vanilla and hazelnut varieties it offered over the summer, but other chains carry seasonal limited-time offers, too. Bruegger’s offered sea salt and caramel coffee in late spring.
“The seasons and holidays play a big role in how we approach our innovation process and have resulted in some of our most popular products,” Kantner of Dunkin’ Brands said. “For guests, each season evokes a different feeling of nostalgia … memories of when they first enjoyed the taste of pumpkin pie, fall spices or a rich cup of hot cocoa after an afternoon of playing in the snow, which is why our seasonal beverages and bakery items are so popular among our guests.”
The next frontier
Hot and iced coffee, lattes and flavored coffee beverages are all well and good, but Sam Penix, principal of New York City-based Third Wave coffee shop Everyman Espresso, sees new coffee drinks on the horizon, such as his line of drinks that mimic cocktails, but use coffee instead of alcohol.
“We wanted to start thinking about coffee as an ingredient that can be paired with other things to create a complete beverage that’s balanced and interesting and delicious and complex,” he said.
For example, he makes an Espresso Old Fashioned with a shot of espresso, usually a single-origin variety, bitters, simple syrup and a citrus twist.
The exact type of bitters and citrus vary depending on the espresso he starts with, he said. Currently he’s using a Ramira from Rwanda, which Penix describes as “a sweet and slightly spicy balanced coffee.” He augments the spice with pimiento bitters and finishes it with a lime twist.
Also currently on the menu is an East Village Special, $5, named for a local coffee soda called Manhattan Special. For that he uses a sun-dried espresso with cherry-chocolate notes, tiki bitters that taste of clove and other warm spices, a dropper-full of orange cream citrate, which contains citric acid, and seltzer.
The Second Wind, $5, uses Ramira espresso, lime juice and simple syrup, shaken and served up in a coupe.
“So that’s basically a daiquiri, with the Ramira instead of rum,” he said.
This story has been revised to reflect the following update:
Update: April 6, 2015 An earlier version of this story did not include the size of Chick-fil-A's $1.59 hot coffee. It is a 12-ounce serving.
Contact Bret Thorn at [email protected].
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