Cold-brew coffee catching on as soda continues to fizzle out

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For a while it was always Coca-Cola. We've done the Dew, and now many Canadians are quenching their thirst on other options.

Sugary sodas have been in decline for more than a decade, and further drops are forecasted. Despite the efforts of brands including Coca-Cola Co. and PepsiCo to encourage sales, either by dropping soft drink prices or diversifying into other products such as bottled water, sports drinks and energy drinks – beverage makers are still seeing a fall in sales industry-wide.

In fact, the amount of pop purchased by Canadians is dropping 4 per cent a year, even if prices are marked down, according to the most recent figures released by IBISWorld, a market research firm. Those figures, reports research firm Euromonitor, translate to a 3-per-cent decrease in both retail volume and value in Canada in 2014.

Changing tastes

Consumers are choosing beverages that contain calories with content – a.k.a. functional beverages that deliver nutrients made responsibly or that have traceable origins – over soft drinks, says Jonny Forsyth, a global drinks analyst at Mintel, a market research agency in the United States. This widening gap between what big-brand producers are making and what millennials and postmillennials are drinking is an attractive business opportunity for alternative beverage producers. These substitutes include everything from en vogue kombucha (a fermented drink made with tea, sugar, bacteria and yeast) and cold-pressed juices to natural stimulants such as tea and coffee.

"I see the milk-lobbying billboards saying 'you can't dip cookies in your juice,'" said Anthony Green, co-owner and acting CEO of Greenhouse Juice Co. "So, clearly, if the milk industry has caught on that juice might be the new milk, and maybe it does your body better, I think that speaks to it itself."

The case for cold-brew coffee

It's chocolatey, creamy-smooth, thirst-quenching and charged with caffeine. It's also a beverage that Mintel has shown is preferred 67 per cent of the time over engineered energy drinks. Steve Ballantyne and Mitchell Stern are behind Station Cold Brew, the first company in Toronto dedicated to cold-brew coffee, which has been steadily making its way into cafés, restaurants via tap dispensing brew kegs and grab-and-go stubbies in retail stores. Google's Toronto office has stocked it since last July.

They, like Diana Olsen, president and founder of Balzac's Coffee Roasters in Ontario, felt that cold brew offered an all-natural, quality-driven beverage that catered to the changing demands of a sophisticated consumer base.

Unlike iced coffee – which is quick heat-extracted coffee poured over ice, cold brew steeps coffee grounds in small batches of cold-filtered water for up to 18 hours. The result is a naturally sweet-tasting beverage that's free of bitterness, and 70 per cent less acidic than hot-water infusions.

Despite the labour-intensive process and increased storage space required for production, even Starbucks has started to offer cold brew in more than 2,800 of its North American outlets.

Since introducing cold brew at her cafés last year, Olsen says that 50 per cent of the chilled coffee sales are now strictly cold brew. It's a growing trend, so much so that Balzac's has phased out selling heat-extracted iced coffee in favour of the higher-quality product (cold brew commands a 10-per-cent premium, but customers are willing to pay the difference).

Besides increased awareness and demand Sebastian Sztabzyb, of Calgary coffee roasters, Phil & Sebastian, credits the rising sales – an estimated 20 per cent since his company started to produce cold brew two years ago – to the take-away packaging.

"It's really hard to take a latte home," Sztabzyb said, "but to take a two-litre bottle of a drink that can stay in your fridge for a week – that can be enjoyed every morning or shared with friends – is a new market that wasn't previously possible."

All three coffee companies modelled their products after craft-beer culture: from valuing local production to designing a sleek, vintage-inspired brand. Phil & Sebastian's cold coffee is sold in beer bottle stubbies and available as six-packs. Meanwhile, Station has a brewmaster, Mike Roy, who uses a proprietary blend of direct-trade coffee beans and chicory, and runs the liquid through a VST refractometer so it reaches its sweetest potential. Balzac's teamed up with Toronto-based Mill Street Brewery to offer customers nitro cold brew – a draft beverage that pours like a stout, with a thick foamy head and rich, creamy body.

Cold brew may have a shorter shelf life than soft drinks, but Ballantyne doesn't see that as a problem. "I have a belief that people would rather drink a healthier, local, responsibly sourced option over something that's not."