Soup-To-Nuts Podcast: Hot and cold coffee trends from upcycling to cold brew to energy drinks

According to the National Coffee Association​, specialty coffee consumption in the US hit a five-year high in 2021 with 43% of coffee drinkers choosing specialty options the day before the survey – up 20% between January 2021 and January 2022.

At the same time cold brew and iced coffee and ready-to-drink options all gained traction with consumers who were turning to the beverages for a variety of reasons ranging from function, desire for a different type of drinking experience, convenience and many more.

To better understand how these shifts are creating opportunities and challenges for stakeholders in the coffee segment, Westrock Coffee’s executive vice president of global insights and innovation Kyle Newkirk joined us in this episode of FoodNavigator-USA’s Soup-To-Nuts podcast​ from IFT’s annual FIRST conference in Chicago earlier this summer.

As one of the largest providers of coffee, tea, flavors, extracts and increasingly ingredients, Westrock Coffee​ is in a unique position to spot emerging opportunities for industry players ranging from CPGs sold in grocery and convenience stores to foodservice and restaurants. Among the trends that Newkirk says he is most excited about is a rising demand for better-for-you options, including zero-sugar energy drinks, new formats such as cold coffee, prepackaged options and opportunities to use more of the coffee plant to produce novel upcycled options.

[Editor’s note: Never miss an episode of FoodNavigator-USA’s Soup-To-Nuts podcast – subscribe​ today.] ​

From an exporter out of Rwanda to providing 20 million cups of coffee daily​

When Westrock Coffee first launched in Rwanda in 2009 it was with a belief that “growth is an inevitable byproduct of investment in infrastructure, farmer development, product and supply chain innovation and technological advancement,"​ a premise that has held true over the past 10+ years and especially the past few years as it has dramatically expanded its operations and beverage capabilities through mergers and the construction of new facilities.

Newkirk explained that by expanding its extraction facility in North Carolina, its operations and beverage capabilities with a new facility in Conway, Ark., and establishing new operations in Malaysia, Westrock Coffee is now better able to support innovators in both foodservice and the CPG spaces as they grapple with the unique challenges posed first by the pandemic and fractured supply chains and now increasingly the economic uncertainty.

“We really started off as an exporter out of Rwanda,”​ but have grown and evolved to include innovative capabilities around product development, packaging, traceable sourcing and more, Newkirk said.

He added the fastest growing piece of Westrock Coffee is its ingredient and extracts business as more CPG players look to include functional ingredients, including from coffee, tea and botanicals into their products.

In addition, he said, as the company builds out new capabilities to become more vertically integrated it is able to create products more sustainably since ingredients and components do not need to be shipped back and forth between different players and locations.

Products positioned as better-for-you and the planet boom​

These developments are allowing Westrock Coffee to help partners pursue two of the most promising areas of development that Newkirk sees for coffee and tea – better-for-you beverages that are also better for the planet.

“We’re seeing a lot of folks coming to us on the better-for-you beverage space … ranging from things like nootropics, and how do you blend those into coffee platforms … to the proliferation of plant-based,​” as well as the natural functional benefits from coffee related to lower incidence of heart and liver disease, Newkirk said.

While some of the developments are “pretty far out,”​ some are more logical, including healthier, natural energy drinks that incorporate coffee and tea extracts for flavorful, functional and lower-sugar options.

As for products that are better for the planet, Newkirk said Westrock Coffee is innovating ways to use by-product from the coffee plant to make new beverages and ingredients. For example, drying and milling the leaves from coffee trees for a “fantastic tea”​ that has a unique flavor and about a third of caffeine of regular coffee, Newkirk said.

The company also has upcycled coffee and cacao extracts from the cocoa bean shell, which Newkirk is beautiful in a cold brew.

Pre-packaged beverages hold steady after pandemic boom​

Specialty beverages, including cold brew and ready-to-drink packaged options also are gaining traction across both retail and foodservice, said Newkirk.

“The growth of cold coffee just is not stopping,”​ with a five-year compound annual growth rate of 15%, he said, noting most activity is focused in the single serve ready-to-drink space which took off during the pandemic when people favored packaged options from the cold case when dispensed options were limited, Newkirk said.

“That trend is here to stay. We saw somewhere between 10% to 15% of usage occasions transition from out of dispensed and into the cold case,”​ which is “pretty significant,”​ he said.

He explained during the pandemic many people stocked up on packaged specialty coffees and cold brews to drink in the safety of the home as they tried to replicate the out of home experience. Now these items are convenient not just for consumers but also food service as they look to balance limited labor and cater to take away and delivery orders.

Overcoming lingering pandemic problems​

Because Westrock Coffee is vertically integrated and is significantly expanding its production capabilities, Newkirk notes that it is well positioned not just to help innovators seize new opportunities, but it can also help CPG and foodservice overcome some of the challenges accelerated by the pandemic, including around supply chain and labor, and now inflation.

“During COVID we saw a lot of menu simplification”​ to balance shifting demand and limited labor, but as employee recruitment and retainment remains challenging foodservice providers are now looking for less labor intensive options, Newkirk said.

For example, instead of brewing fresh tea or making cold brew in the back of the house, foodservice providers are looking for concentrates that they can quickly pump or pour over ice and just add water as ordered, he said.

In addition, he said, Westrock Coffee is innovating around concentrates to help reduce transportation costs in the face of inflation. It also is exploring alternative blends and ingredients that can be swapped for more expensive options.

And finally, he notes, Westrock Coffee is working to ensure it can offer contingency plans so that it can provide a stable supply and meet demand despite challenges across the chain.

Demand for turnkey solutions rises​

Westrock Coffee’s diverse portfolio of services and ingredients illustrates another trend that Newkirk predicts will continue to grow in the coming years – the need for turnkey solutions.

And to ensure that Westrock Coffee can provide the best level of service and solutions, he explained that the company recently announced its intention to go public through a $1.1bn special purpose acquisition company (SPAC) merger with Riverview Acquisition Corp.