Is hard coffee making a comeback?

  • In 2019, hard coffee products saw a remarkable 11,000% increase in sales
  • Some believe hard coffee is destined to remain niche
  • But Dunkin’ has just announced its “Spiked” range – so is there a promising future for hard coffee?

HARD COFFEES have had a tumultuous time over the past few years.

They burst onto the scene in 2019. Beer and spirit brands like Pabst Blue Ribbon led a surge in RTD options, which became hugely popular because they were convenient and easy to drink. This helped them to stand out from most other alcoholic coffee beverages (predominantly coffee cocktails such as the espresso martini).

As such, in 2019 alone, sales shot up by 11,000%, and hard coffee was estimated to be worth around $19 million not long after entering the market. Major brands like Kahlúa, Jameson, Jägermeister, and Guinness, as well as smaller players like Rebel Hard Coffee, Bomani, and La Colombe all arrived on the scene.

But hard coffee’s meteoric rise was matched by an equally swift decline. Pabst Blue Ribbon saw a 40% drop in sales in 2022 and discontinued its hard coffee product. Across the segment, sales were down 33% after just three years.

Initial enthusiasm had faded, and the category seemed destined to remain niche. This could be attributed to sheer novelty, but others also argued that the coffees used were categorically low in quality. They were also approximately 450% more expensive than canned hard teas.

PBR led the way in RTD hard coffee

What will happen next?

All the evidence only points to one conclusion – hard coffee is going to remain a niche market for the foreseeable future. But is that right?

Some believe there is still potential. “We need to keep in mind that hard coffees are still not popular in Europe,” says Krzysztof Barabosz, head of coffee with Hard Beans Coffee Roasters. “As a matter of fact, the cold brew RTD market is just starting to boom here.”

However, while hard coffees could become more artisanal, Krzysztof says that this doesn’t mean growth. 

“Being specialty-focused is essential to exist on the market, but it will be hard to expand on a global scale,” he says. “It can help hard coffee brands stand out in a crowded market, offering unique flavours and premium ingredients.

“However, it’s important to note that while a specialty and niche approach holds promise, it also comes with challenges. This includes limited consumer reach, higher production costs, and the need for effective marketing.”

Nonetheless, the future for the segment seems set to be challenging at least in the short term, as more established players (like PBR) are exiting the market.

But while PBR may have bailed; other, more established brands from the coffee sector are taking an interest.

Dunkin' have released their own hard coffee range

Is this where we will see the next wave of acquisitions?

Dunkin’ is releasing the Dunkin’ Spiked Iced Coffees and Teas range in various flavours. The Iced Coffees will be available from the beginning of September, and the Iced Teas were made available at the end of this month. The malt-based beverages will be 6% and 5% ABV respectively.

Hard coffees are theoretically an easy product to develop for multinationals like Dunkin’. They are relatively straightforward to produce, their alcohol content is not too high, they avoid intense pasteurisation methods, and co-packers have relatively low minimum order quantities.

In addition, this marks the first time that a major coffee brand has entered the market – rather than companies known for their alcoholic beverages.

So, given the recent trend of acquisitions across cold coffee, is it reasonable to suggest that smaller hard coffee brands will be next on the list?

“Predicting the exact direction of acquisitions in the coffee industry is challenging,” says Krzysztof. “Cold brew coffee has indeed seen significant attention and acquisitions in the United States due to its growing popularity, so there is potential for innovative products like ‘hard coffees’ to capture attention by big players.”

It could also be argued that the recent wave of acquisitions in the cold coffee sector has set the stage for larger coffee companies like Dunkin’ to diversify and try to win market share in other segments.

“Drawing parallels with the beer industry, we’ve witnessed a similar pattern where prominent breweries acquired craft-focused brands to tap into the craft beer movement,” says Krzysztof. “This approach not only allows larger companies to diversify their product portfolios but also extends their reach into segments that resonate with younger, trend-savvy audiences.

“In the coffee industry, acquiring niche and innovative coffee brands might pave the way for these big players to seamlessly introduce hard coffees under their established ‘cool’ specialty coffee umbrellas.”

So, after a meteoric rise and fall, what can we learn from Dunkin’s new product launch?

Firstly, the future for the hard coffee market could be promising. While it may now be niche, it could be the next battleground after cold brew in the years ahead. Dunkin’ has made the first move – who will be next?

Coffee Intelligence

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