R.-T.-D. coffee making inroads in private label

by Donna Berry
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Java Ridge RTD coffee milk
Classis Café sells R.-T.-D. coffee-milk beverages under the Java Ridge brand.

ROSEMONT, ILL. – Morning, noon or night, consumers enjoy coffee. Often it’s for the boost of energy from the inherent caffeine. Other times it is simply for refreshment or even socialization. And increasingly, the form of coffee being enjoyed is in the ready-to-drink (R.-T.-D.) format, a bottle, a can or even a chilled, sealed cup. 

During the five-year period from 2010 through 2014, U.S. volume sales of R.-T.-D. coffee sold through all channels increased 48.1%, from 50.6 million gallons in 2010 to 89.7 million gallons at the end of 2014, according to Beverage Marketing Corp., New York.

Chicago-based Mintel explained that although the R.-T.-D. coffee segment remains small in comparison to roasted and single-cup segments — about 15% of retail sales in 2015 – its popularity with coffee drinkers is growing. Nutritionally enhanced products, as well as those sold at a discount as private-label brands, will contribute to this growth. 

At the Private Label Manufacturers Association’s annual trade show, held Nov. 15-17 in Rosemont, Strategy & Execution Inc., Walled Lake, Mich., introduced Classis Café, a nutritionally enhanced R.-T.-D. coffee-milk beverage that comes in four varieties: hazelnut, mocha, salted caramel and vanilla. Each 13.7-fl oz single-serve glass bottle delivers 11 grams of protein and is a good source of vitamins A, C and E.

The company currently produces a similar product for Kum & Go, West Des Moines, Iowa, a family-owned convenience-store chain with more than 430 stores spread out over 11 states. Sold under the Java Ridge brand, the same brand of its hot-brewed coffee, the private-label beverage commands more than 45% of sales of the R.-T.-D. coffee-milk beverage segment at its chains, providing the business greater profit than the margin from similar products sporting a national brand.

The U.S. R.-T.-D. coffee category is worth more than $3 billion and is growing at 20-plus percent annually, said Tom Morse, chief executive officer of Strategy & Execution. Value-added products will help the category continue this growth rate.

“Growth is expected to continue through 2020, with the chance for additional gains as consumers increase their R.-T.-D. coffee volume consumption,” said Elizabeth Sisel, beverage analyst at Mintel in the recently published “U.S. coffee 2015” report. “The majority of consumers are coffee drinkers and they drink a wide variety of formats. The category has great opportunity for growth as consumer interest in the beverage stays strong, as long as the category continues to evolve to meet drinker preferences and needs.”

The report states that premium and artisanal brews, indulgent flavors and better-for-you formulations all have the ability to positively impact growth.

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