Why beer brands should think twice before entering the coffee sector 

  • An increasing number of beer brands are entering the specialty coffee market based on perceived synergies 
  • The global RTD coffee industry has a projected 6.32% between 2023-2030, making it an appealing segment to tap into for producers of bottled or canned beer 
  • However, the two products have very different value chains, making beer’s entry into specialty coffee challenging – though not impossible  

THERE HAS been a recent wave of beer brands entering the coffee market, and it is turning heads. Many of the larger breweries are looking at specialty coffee’s increasing popularity with mainstream consumers, and wondering whether they can capitalise on it. Whether hopping from one industry to another is as easy as it seems, though, remains to be seen.

The combination of coffee and alcohol is far from new. Coffee brands often team up with a brewery or distillery for a collaboration: often a coffee beer, spirit, or liqueur. 

The cocktail and fine beverage scene has returned the favour, with global competitions such as the Coffee in Good Spirits (CiGS) inspiring a range of new coffee-based cocktails and venues with specialty coffee cocktails. 

Today, an increasing number of beer companies are venturing into producing and selling coffee. Rather than combining beer and coffee – a daunting prospect – they are launching roasted coffee products alongside their usual offerings.

On the face of it, it may seem like a good idea. Craft beer and specialty coffee consumers have enough overlap to maintain a coherent brand identity. They both share similar demographics for their customer base, specialty crafted products, and a focus on unique tasting notes. 

“Both industries share (perceived) similar demographics of customers. So as a business looking to expand their product offering, opening up to a different industry without having to modify your brand position makes a lot of sense,” says Danny Wilson, Head Roaster of ONA Coffee and three-time Australian Coffee in Good Spirits Champion. 

However, differences between the industries remain that beer brands could find challenging. The leap from beer to coffee could lead to problems with brand coherence, running the risk of confusing or even losing existing customers. 

Beer and coffee are like apples and oranges

Beer and roasted coffee brands are both beverage manufacturers that attract consumers interested in artisanal, specialty products – but the comparison just about ends there. 

Coffee sourcing involves a complex global supply chain, and beer brands seeking to enter the coffee market might encounter more challenges than they bargained for. The path from hops to beer requires noticeably fewer steps than that from green to brewed coffee.

Hops grow in almost any country in the world and are often sourced locally by beer brands. In contrast, coffee requires specific climates, altitudes, and growing conditions.

“Green sourcing is one of the most important and highly skilled roles in a coffee business and is integral to the success of any roasting business,” says Danny.

According to him, a good understanding of coffee production and processing, coffee seasonality across growing regions, international shipping logistics, and current customer demands and trends is a prerequisite for the job. Without this, breweries could be setting themselves up for failure.

In many ways, beer actually has many advantages over specialty coffee. 

“Specialty coffee is inherently a much more volatile product,” says Danny. “For example, take the seasonality and consistency of green coffee, variability in roasting and training requirements of baristas.”

“In contrast, beer brands have strong brand identities attached to the consistent flavour profiles of their beer offering and product lines.”

Product distribution strategies and consumer behaviour are also important to acknowledge. Demand for coffee and beer are inherently different: consumers might drink ten beers on a night out, but in contrast, only 50% of average US consumers, for example, drink more than three cups per day

RTD coffee offers synergies but should be approached with caution 

The global RTD coffee industry continues to explode, and with an expected annual growth rate of 6.32% between 2023-2030, breweries are looking into possible synergies with canned or bottled beer. The beer and RTD segments represent an interesting new avenue for innovating coffee distribution.

“For years now, the coffee sector has looked to the wine industry for inspiration on new practices that can be applied to production,” says Danny. “While this has led to some great developments, the coffee crowd has been slow to look to other industries (like beer) to professionalise how we share coffee with increasingly larger markets.”

Specialty coffee is still a very young industry in comparison to beer, and definitions of quality are still being defined. 

“This leaves opportunities for new entries to continue shaping what quality in specialty coffee is, especially if drawing on their own expertise from other industries,” he says. 

However, RTD coffee and beer production differ considerably. Cold brewed coffee is more susceptible to contamination and requires stringent processes to ensure its safe production and consumption. While the beer industry has its fair share of potential contaminants and safety concerns, they follow different processes.

Alcoholic beverages also tend to have better return on investment for brands. Coffee can be sold successfully, but it’s a challenging conversion that requires a good understanding of the market – something that beer brands new to the coffee game may not necessarily have. 

For big beer companies, specialty coffee may look enticing at first – but it’s a harder challenge than it seems. Despite the synergies with RTD, the effort may not be worth the reward.

If beer companies are to truly leverage opportunities in coffee, their best bet is probably a collaboration with roasters. It’s arguably the best way for them to dip a toe in the market and associate their brand with specialty coffee, while retaining a focus on their beer products’ more profitable revenues.

Coffee Intelligence

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