Coffee Drinks Remain Hot

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Coffee Drinks Remain Hot

NEW YORK -- Everyone wants to be involved in a "hot" consumer trend -- even if the idea has a slightly warmed-over feel, like the cold coffee that's about to appear ready-to-drink in supermarkets across the nation.

Prepackaged coffee drinks from pioneer Starbucks started migrating to store shelves in 1996. Despite an uneven track record, food and beverage companies are now rushing to appeal to the tastebuds and lifestyles of the twenty-something coffee-bar set with pop-top, sweetened, iced cappuccino-like drinks. "The ready-to-drink market is taking off," said Suzanne Brown, a marketing consultant at Hope-Beckham Inc. in Atlanta, who has been following the ready-to-drink niche market for years. "It's so convenient."

Iced coffee is consumed mostly by 18- to 24-year-olds, more than twice any other age group, according to the National Coffee Association's 2001 National Coffee Drinking Trends survey. Of 107 million daily coffee drinkers, NCA found there were 2 million daily drinkers of iced/cold coffee beverages, an additional 6 million weekly drinkers, plus another 41 million occasional drinkers, all of whom are just as likely to quaff the beverage in the afternoon or evening as in the morning.

Statistics like these have attracted a number of big consumer product companies to this market -- PepsiCo Inc., Procter & Gamble Co., Dean Foods and Coca-Cola Co., among others. The U.S. market was not kind to early entry Nestle SA, whose Nescafe canned product flopped in the United States several years ago, though it is doing well in European markets. Ready-to-drink coffee has long been a booming beverage market in Japan, where sales outstrip soft drinks, and coffee can be conveniently purchased from vending machines.

"Coffee drinks are not going to be the next bottled water or sports drinks. They are part of the bloom in non-carbonated beverages that we are seeing. They are going to be good niche products," Jeffrey Kanter, a beverage analyst with Prudential Securities told Reuters.

Sales of shelf-stable -- not refrigerated or frozen -- iced-coffee products in supermarkets, drugstores and mass merchandisers were up 6.3 percent over the last year, or $103.5 million, according to Information Resources Inc. The IRI data excludes sales from Starbucks.

"We're at or near a double-digit rate of growth the first years but coming from a low base. We are a $350-million to $400-million retail category, with bottled Frappuccino making up 90 percent of the ready-to-drink category," Keith Reimer of the North American Coffee Partnership said, referring to Starbucks' trademark bottled drink. The partnership, a joint venture between Starbucks and PepsiCo, recently rolled out the DoubleShot canned espresso beverage, meant to be served over ice or chilled.