15 Aug 2023 US: Climbing on the cold coffee-wagon

At 131 years old, Maxwell House is no spring chicken, and most of its loyal drinkers aren’t either. But Kraft Heinz is looking to revive the coffee brand by appealing to younger consumers with its new iced latte with foam, its first product launch in nearly a decade.

Once the country’s top coffee brand, Maxwell House has fallen out of favour with consumers who have grown more sophisticated in their coffee habits and adopted espresso machines, French presses and cold brew makers at home.

Even within the instant coffee segment, Maxwell House ranks third, trailing Nestle’s Nescafe and JM Smuckers’ Folgers in US market share, according to Euromonitor International data.

Maxwell House also faces competition from the likes of Starbucks and Dunkin’, both of which offer more convenience and variety at a higher price tag than home-brewed coffee.

According to a recent press release from The Kraft Heinz Company, while 31% of coffee shop beverages are served cold, only 7% of coffee consumed at home is iced due to difficulty in recreating a café-style iced latte.

Maxwell House hopes to bridge that gap and win over new customers with its new Iced Latte with Foam that Kraft Heinz touts a first-of-its-kind instant drink, requiring just one packet, a cup of cold water and a spoon.

The iced latte with foam is available nationwide at major retailers and on Amazon and comes in three flavours: vanilla, hazelnut and caramel. Each $6.99 package contains six packets, giving each individual iced latte a price of just $1.17.

Energising sales

Parent company Kraft Heinz mulled selling its coffee unit back in 2019, when the food giant was looking to overhaul its ailing business. Instead, it held on to the coffee brands, but they weren’t a focal point of its turnaround strategy, which centered on other iconic brands like Oscar Mayer.

However, Kraft Heinz now seems to have a revived interest in coffee sales.

“When I came on about a year and a half ago, there was a kind of turning point in interest in rejuvenating the Kraft Heinz coffee business,” said Tiffin Groff, head of Kraft Heinz’s North American coffee business.

Last year marked the first that Maxwell House gained market share since 2016, Groff said. She joined Kraft Heinz from Peet’s Coffee, where she spent 12 years growing its packaged-coffee business.

Under Groff’s leadership, Kraft Heinz launched IHOP-branded coffee in retailers in April. That new line is already attracting younger consumers than the loyal Maxwell House drinker, she said.

Next year, Kraft Heinz will launch iced lattes with foam under the IHOP name.

The new product line follows the consumer trend of drinking more cold coffee beverages. For example, Starbucks says more than half of its total U.S. drink sales are cold beverages. Millennials and Gen Z are the biggest consumers of cold coffee drinks.

For Maxwell House, the hope is that the new product line will drive more growth for the mature brand. Next year, the brand will get a facelift, with updated packaging and a new tagline: “Live Life to the Last Drop.

Keurig introduces K-Iced

Also coming to the iced coffee party is Keurig While Nestle’s Nespresso machines have carved out a small bit of market share, the reality is that Keurig remains the king of single-serve coffee in the US. That’s an empire that Keurig Dr Pepper has failed to extend.

The company attempted to move into sodas and other cold beverages in partnership with Coca-Cola, called Keurig Kold. However, it never became popular and was discontinued after a little more than a year.

A second product extension. the Keurig Drinkworks, which made alcoholic beverages from pods, achieved a cult following but was also killed when the company could not build up a big enough base of users to bring costs down.

Now, Keurig has a new, more logical, extension to its lineup. The company has launched Keurig K-Iced, a series of single-cup brewers designed to make iced coffee as well as hot. That’s probably because the iced experience is not all that easy to duplicate at home.

Hot coffee does not easily become iced coffee. If you put hot coffee over ice, the melting ice dilutes the coffee. Realistically, the best method to cool coffee has always been to let it happen in the refrigerator, and that takes time.

Now, Keurig has introduced a new “family” of single-serve coffee brewers, Keurig K-Iced. The three-machine line is also matched by the release of five new Iced K-Cup pods. 

“The new K-Iced brewers hit the spot for consumers seeking the option to brew either a refreshing and delicious iced coffee or a rich, full-flavoured hot coffee from one coffee maker at-home,” the company shared in a press release.

“The brewers feature a Brew Over Ice option that automatically adjusts the brew temperature, starting hotter to extract the full flavour of the ground coffee then cooling down to minimize ice melt.”

Source: CNBC, TheStreet.com