Cold comfort: is chilled coffee here to stay?

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Younger generations are driving a shift from hot to chilled coffee beverages. GCR explores how the industry is responding and whether it’s a passing trend or here to stay.

Cold is the new hot in the coffee world. While the history of the caffeinated beverage is steeped in brewing tradition, in which ground beans are mixed with boiling water in a variety of methods and then enjoyed while still warm, the tide is turning on how coffee is being consumed.

Over the past five years, the global cold coffee market has grown exponentially. According to a 2024 report by The Brainy Insights, the cold brew coffee market is expected to grow from US$604.57 million in 2023 to US$4,595.53 million in 2033. The United States (US) was identified as the largest chilled coffee market globally, with a 49.17 per cent market revenue share in 2023, although other countries such as Japan, India, and China have also seen rapid growth with more projected.

What’s more, this shift isn’t only occurring in hot climates. The United Kingdom, where the average annual temperature is around 10 degrees Celsius, reported the highest iced coffee sales in Europe in 2024 and has seen 22 per cent compound annual growth rate in the past five years, according to Innova Market Insights.

Generation chill

While there is huge diversity in the burgeoning chilled coffee market, the industry is unified on the two segments it believes are driving this shift in drinking habits: Gen Z and social media.

Elizabeth Lang, Senior Director of Product Marketing at Peet’s Coffee in the US, believes the COVID-19 pandemic was a major accelerator of chilled coffee’s rise.

“Consumer coffee preferences are constantly changing: it’s all about espresso tonics one month and then espresso martinis the next. However, thanks to Gen Z, it seems the latest trending preference is chilled coffee – no matter the season,” she says.

“This shift is, in part, thanks to social media and the fact that iced coffee appears to be more ‘Instagrammable’ than hot. Following the pandemic, consumers continued to ride the wave of trends like TikTok’s whipped coffee [water, sugar, and instant coffee whipped into a cloud-like foam and poured over milk].”

As well as being more photogenic and shareable, Lang says chilled drinks have more potential to personalise.

“Another driving force for Gen Z appears to be how refreshing and adaptable iced coffee is. The generation loves to mix and match brews and syrups until they find a drink that fits their taste preference,” she says.

“On top of generating popularity for iced coffee, Gen Z and social media are also the driving force behind the increased amount of customised coffee orders. This generation values personalisation and wants to ensure their coffee experience perfectly fits their unique taste and dietary preference. And, once Gen Z finds that perfect drink, they then share it on social media where it can spread like wildfire and encourage others to either order the customised drink in store or create their own at home.”

The team at Peet’s Coffee also noticed that, since the pandemic, younger consumers have been creating more coffee beverages at home, instead of visiting coffee shops. Noticing a gap in the market for a ready-to-use product to craft chilled drinks without an espresso machine or other brewing paraphernalia, the company launched its Ultra Coffee Concentrate in September 2024.

“Consumers are choosing to skip coffee bar lines and master their favourite barista-style drinks right from their kitchens. However, despite this shift, many consumers still felt like they lacked the necessary skills to do this. Ultra Coffee Concentrate was our answer to this struggle,” says Lang.

“Offering no clean-up or hassle, consumers could finally channel their inner barista and whip up café-quality beverages from the comfort of their own home and with no equipment needed. No matter if it’s hot, iced, or even sparkling, Ultra brings Peet’s boldest, most versatile blend straight to any kitchen.”

Iced focus

Cold coffee is a focus for many companies in the industry right now. Nescafé Vice-President Global Category Lead Don Howat says it’s one of the fastest growing segments in the coffee category and is therefore a strategic priority for the international coffee brand.

“In 2023, 32 per cent of the coffee consumed out of home was cold – the equivalent of one in every three cups,” he says.

“Younger generations, in particular, have embraced the trend of drinking their coffee cold. The rise of specialty coffee shops that offer a wide range of cold coffee options has also contributed to making these options accessible and appealing to consumers. We want to bring the out-of-home trends to in-home as we see that consumers expect the same level of quality, simplicity and customisation – whenever, wherever.”

Howat says younger generations are experiencing their first cup of coffee cold and that some consumers will now only ever drink chilled coffee.

“This is a significant change from a couple of years ago. We now say cold is the new hot, and we’ve recently launched a number of chilled coffee products, including a new Nescafé Espresso Concentrate designed to capture the out-of-home cold coffee experience and bring it in-home,” he says.

“Coffee drinkers can simply add a small shot of Espresso Concentrate to milk to have a creamy iced latte, to water for a robust americano, or even mix it with lemonade or juice for a refreshing twist.”

Like the team at Peet’s Coffee, Nescafé’s product developers ensured the ability to tailor drinks and add custom flavours was at the heart of their new product.

“Customisation is very important, especially for young coffee drinkers. They like to hack their coffee, be creative, and experiment with new forms of preparing coffee and new ingredients to go with it,” Howat says.

“We have received very positive feedback in consumer research, particularly among younger consumers.”

Café cool

It’s not just the retail and home markets that are embracing chilled coffee. Cafés and hospitality venues around the world are adapting their menus to include iced lattes, cold brew, and other chilled coffee refreshments.

In October 2024, Peace Coffee, an organic and Fair Trade roaster based in Minneapolis, US, launched a Premium Coffee Concentrate exclusively for its wholesale partners. Marc Hubble, Vice President Business Development, says the new product was developed in response to rising consumer demand for cold coffee beverages.

“The popularity of chilled coffee has definitely increased. When consumers go into a venue now, they expect cold brew and iced beverage options,” he says.

He believes big coffee shop chains such as Starbucks have influenced consumer interest in the US and around the world. As well as catering to the demand of customers, he says Peace Coffee’s new shelf-stable, ready-to-use product was developed to help foodservice operators and their busy staff to easily execute cold or iced beverages at an affordable price and without buying additional coffee brewing equipment.

“When I joined Peace Coffee in 2023, one of my tasks was to reconfigure our product portfolio to be a better fit for foodservice. One area I felt we were lacking in was convenience products that produce high-quality drinks,” he says.

“Our Premium Coffee Concentrate was developed to give our customers the opportunity to produce high-quality cold brew and hot coffee, while making their operations a little easier.

“Our product can create an iced coffee in less than five minutes, versus the 12 to 18 hours of steeping required if prepared traditionally.”

The new concentrate is also designed for hospitality venues that want to serve specialty coffee but don’t want to invest in tens of thousands of pounds of equipment.

“It gives restaurants and venues that might offer brunch a couple mornings a week the opportunity to expand their coffee menus without spending $20,000 on an espresso machine,” Hubble says.

“The product has been well received by both our existing customers and some new ones. We’re able to go out to a lot of customers that we couldn’t previously work with as they didn’t fit the comprehensive coffee program in which we supply all equipment, training, and marketing alongside the coffee. It gives us the opportunity to offer a no-touch option.”

Hubble, Howat, and Lang believe the chilled coffee trends shows no sign of slowing, and Peace Coffee, Nescafé, and Peet’s Coffee all have plans for more cold products in the future.

“While we can’t share specifics just yet,” says Lang, “we’re always looking for innovative ways to meet our customers’ cravings, especially as the demand for refreshing, cold options continues to grow.” 

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