This newsletter comes out every other Thursday and hopefully provides you with thought-provoking content about the mundane, wacky, and weird. I will be writing until the 75th edition. If you know someone who may enjoy the newsletter, you can share it here.
Those who know me well, know I love coffee. I enjoy a steamy cup in the morning with my breakfast and love walking to my local coffee shop in the afternoon. Back in 2014, with my friends Dan and Alex, we toyed with the idea of creating a review site for coffee called "Bloom Book Coffee". All that to say, when coffee makes the news, my ears perk up. I was shocked to find Starbucks saying that 74% of their total revenue in April, May, and June of 2021 came from cold beverages. A 10% growth from the previous year.
What's behind the cold coffee craze? That is what we will dig into in this edition. Below are a few of the cold coffee options. This does not cover all coffee drinks but hits on many of the most popular varieties.
Part of what is driving the growth is Gen Z's fondness for iced coffee. Gen Z (aged 9-24) are entering the coffee market and are mad for iced coffee.
There is a Tik Toker named Anna Sitar who has made a living by (among other things) ordering crazy iced Starbucks drinks and sharing her experience. She has 10 million followers and a combined 1 billion likes (?!?) on her videos. Charli Damelio is another Instagram and Tik Tok influencer who now owns her own iced coffee company. Here is one of her posts from earlier in the year.
It can’t be a coincidence that in 2019, the year of the big TikTok boom, a report showed iced coffee sales soaring in the UK, with out-of-home cold coffee sales up 53.4%, while the hot coffee market was stagnating, growing only by 0.1% that year.
Younger consumers say they view cold coffee as a healthier alternative to energy drinks and soda.
When coffee is hot you tend to get more acidity and experience a lot of the flavor by smelling it. Iced coffee, on the other hand, is often less acidic and can taste smoother and sweeter. Coffee is a bitter drink and is an acquired taste which is why there is often a gateway drink to coffee. In many instances, it is some form of sweetened iced coffee. For other ridiculously good-looking people, it is an orange mocha frappuccino.
Social media has played a role in making iced coffee the hot new beverage. Canned coffee also called "ready to drink" is another trend that has driven sales of iced coffee and it looks like it is here to stay.
"The global Ready to Drink (RTD) Coffee market size was valued at USD 22 billion in 2019 and is projected to reach USD 42 billion by 2027".
Ready-to-drink coffee is often better for the coffee brand and the consumer. For many coffee brands, it is a great way for them to spread their brand name and sell in new markets. They can also often more closely control the variables of the taste. For example, Blue Bottle Coffee has a famous New Orleans style iced coffee, a milky cold brew flavored with chicory.
Here is a Venn diagram I made in Figma that sums up the preferences between consumers and coffee brands.
In 2015, Blue Bottle Coffee stopped selling wholesale beans to restaurants and hotels because they couldn't guarantee the coffee would meet their high standards. One day, Blue Bottle Coffee's founder James Freeman tasted their coffee at a fancy restaurant and realized how terrible it was.
The server in the back had poured in the wrong ratio and had the water too hot which led to an overly bitter coffee. From that experience, he realized that Blue Bottle Coffee wasn't able to control all the variables. Blue Bottle can roast the perfect beans, but if the restaurant messed up the recipe, patrons would have a bad experience of a cup of coffee from Blue Bottle. This experience led him to the bold decision to pull all wholesale and double down on ready-to-drink beverages and cafes. While that story is unique to Blue Bottle, it is indicative of the path that many coffee brands take.
I gotta hand it to Blue Bottle, that iced coffee looks delicious.
From the consumer side, ready-to-drink coffee is based on convenience. It is easy to grab one for the road, there is no prep and the quality is usually pretty good.
Lastly, the variety of iced coffee beverages will ensure it remains popular for years. There is something for everyone. There are classic cold brew drinks for the tried and true coffee drinkers who want something refreshing on a hot day. There are even coffee drinks infused with nitrogen that are mellow, slightly bubbly, with a creamy head like a good stout. Finally, there are myriad varieties of sweet coffee beverages like Frappuccinos and iced caramel macchiatos.
Combining young people's preferences, the ease of ready-to-drink coffee, and the wide variety of options, I anticipate cold coffee to be a mainstay for years.
Email Urgency Bias
Email urgency bias was highlighted in a recent study published in the journal, Organizational Behavior and Human Decision Processess. The study, “found people assume they need to respond 36% faster to an email than senders expect”. I definitely feel this when I look at my inbox every morning. Learning about this bias has eased my anxiety about getting back to people quickly.
What I'm Jamming To
T-Pain was known for heavy use of auto-tune in the early 2000's. Turns out, he has a beautiful voice. This is a mashup he does of his own songs with a piano and violin backdrop. The top Youtube comment sums it up well "This ain't t-pain, that's t-pleasure".
Pic of the Week
It was great getting up to Marin and biking with Tim, Jordan, and Sam. The weather was perfect and the views were stunning. I feel grateful to live within biking distance of such gorgeous nature.