For a few years now, ready-to-drink (RTD) coffee has been one of the fastest-growing market segments in the coffee sector.
Its growth has been fuelled by wider cold coffee trends, convenience, and a focus on health and wellbeing in some cases. Research by Mintel says that in 2020, 46% of surveyed Generation Z consumers said they drink RTD coffee.
Thanks to this explosive growth and continued success, new and slightly more niche categories are emerging within the RTD market segment. One of these is “hard coffee”: RTD coffee beverages made with alcohol.
RTD hard coffee is an incredibly young product class, and has grown quickly in some key consumer markets over the last year or two.
To learn more, I spoke with three manufacturers working in this sector. Read on to find out what they said.
You might also like our article on canned lattes and how the segment is changing.
RTD hard coffee: A history and overview
First and foremost, there are clear parallels to draw between hard coffee and hard seltzers.
Hard seltzers, which have been around for a little under ten years, first emerged in the early 2010s as a low-calorie alternative to mixed drinks made with colas, sugary sodas, or fruit juices.
Hard seltzers are made by mixing alcohol with sparkling water (known as seltzer water in the US) and some kind of fruit flavouring. WhiteClaw, the beverage credited with coining the term, formally entered the market in 2016.
RTD hard coffee followed a few years later, trading on several similarities. Unlike most classic milky beverages and coffee liqueurs, it is often a lower calorie option, as well as being easy enough to grab and drink on the go.
Michael Sargent is a Senior Brand Manager at Rebel Hard Coffee. He tells me more about why he thinks the beverages are popular with consumers.
“RTD coffee beverages made with alcohol [allow] consumers to participate in new experiences, while still remaining familiar with the classic coffee flavors they know and love,” he says. “It also allows them to find great tasting beverages in formats that fit their busy [modern] lifestyles.”
However, while this explains why consumers like RTD hard coffee, it still doesn’t address why the product has become so popular in the last few months.
Sam Madani is the CEO at BOMANI Cold Buzz. He explains that there are three factors at play when it comes to the explosive growth of this category: effect, taste, and how well the two flavours complement one another.
“I believe people simply love the effect that a beverage with both alcohol and caffeine provides,” Sam adds. “It’s the antithesis to the bloated feeling you might get when sipping on a heavier drink or a drink that’s carbonated.
“Additionally, you have to consider that people just love coffee. The variety of offerings in the hard coffee category already proves that a wide range of consumers are enjoying these beverages.”
Sam also notes that BOMANI products contain no sugar and no carbohydrates, reflecting on the health and wellness trends that have popularised other similar beverage categories.
For Michael, however, there’s another answer: the Covid-19 pandemic. The novel coronavirus outbreak changed consumer patterns and purchasing behaviour around the world, putting a greater focus on convenience and at-home consumption.
“With the pandemic, we’ve seen that consumers are enjoying these beverages, [but] consuming them in a different way, said Michael. “They are enjoying beverages at home and in small groups compared to out at restaurants or in retail environments.”
What has the response been?
As a reasonably novel and incredibly fast-growing category, the consumer response to RTD hard coffee has ultimately been mixed.
Phillip Rooney is the CEO of Newground Hard Dutch Lattes. He says that introducing the product category has ultimately not been without its challenges.
“Communicating a new category to consumers without a major global brand and a US $100 million plus annual marketing budget behind us is incredibly difficult,” he says. “The three-tier system in the US alcoholic beverage industry also makes it an uphill battle to do business as a smaller company.”
Sam also notes that communicating what the product was and educating customers about the category was a challenge BOMANI shared – people just didn’t know what “hard coffee” was.
“Once we got to market, we learned that our opportunity was specifically educating customers on when and how to drink our beverage,” Sam explains.
However, while communicating a new category can be difficult, all three of our interviewees agree that the benefits of the RTD hard coffee space far outweigh the challenges.
Phillip says that initial consumer testing for Newground yielded a number of positive comments, including people asking why the beverage wasn’t available where they lived. It was then, he says, that they knew they had to bring the product to market.
“Consumer response has been amazing,” Michael adds. “The feedback truly reflects the hard work and dedication that goes into crafting these unique hard coffee beverages.”
Finally, Sam says: “Consumer support is the number one reason for our success to date. We have a community of people who are genuine super fans!”
What flavours are popular? And what coffees are used?
While historically coffee liqueurs have been renowned for being sugary, for many hard coffee brands there is more of a focus on letting the innate quality of the beans shine through. Of course, the type of coffee used naturally varies from brand to brand.
“We use cold brew rather than any other brewing format,” Sam says. “Cold brew is 67% less acidic than hot coffee, largely because the cold brew process preserves the natural oils on the coffee beans.
“As far as the specific blend, we use 100% ethically sourced arabica beans from Mexico, Peru, and Nicaragua.”
Phillip says: “Our goal was real flavour, and no chemical or artificial flavours which seem to be present in many of the mass market RTD coffees. [At Newground], we use an extract of highly concentrated espresso from a proprietary European supplier.
“This creates a profile of pure espresso, rich Dutch cream, and a balanced sweetness.”
As a young market, there seems to be little consistency in what consumers are looking for and no clear winner as yet. However, to meet the sheer variety in customer preferences, Michael notes that some brands, Rebel included, are offering a huge range of different flavours.
“From our traditional Vanilla and Mocha Lattes to our sweet and savory Bourbon Caramel Latte, we have something for everyone to enjoy,” he says.
The future looks bright
As this category continues to gain traction, innovation and further expansion seems almost inevitable.
Michael says that for Rebel, the immediate future will focus on varying their product line and adding as many new offerings as they can.
“We are always looking for ways to break the mold and deliver what our consumers really want,” he says. He notes in particular that the brand has already started to do so by offering seasonal variations on the standard Rebel product.
Michael adds: “We recently launched our new Berry Crisp Latte as a summer seasonal with red, white, and blue packaging, perfect for any Fourth of July backyard BBQ.
“For the fall and winter months last year, our innovation team crafted the Pumpkin Spice and Peppermint Mocha Lattes which will be on regular rotation every season.”
As more consumers discover this new product space, it’s clear that these products show no signs of slowing down.
“A vast, vast majority of the population doesn’t even know the entire category exists,” Sam concludes. “We’re only really a year in – and the majority of growth in hard coffee has existed in an era suffocated by the pandemic.
“As the world opens back up, you can certainly expect to see hard coffee boom!”
Enjoyed this? Then try our article on RTD cold brew.
Photo credits: Rebel Hard Coffee, Sam Madani, BOMANI Cold Buzz, Karolina Grabowska, Newground Hard Dutch Latte
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