The manufacturer of a ready-to-drink coffee beverage line looks to snag some market share from category-leading Starbucks with a cold brewed line that’s more about the flavor of coffee than masking it with milk and sweeteners.
“RTD coffee is a $1.4 bn category that’s 80% Starbucks,” High Brew Coffee cofounder David Smith told FoodNavigator-USA during Expo West, where Austin, TX-based High Brew debuted four RTD cold brew coffee flavors sweetened with a blend of stevia and cane sugar. The brand will roll out nationally at Whole Foods on March 24.
"I don’t understand how the RTD coffee category is so driven by milk," Smith said. "I love coffee; I don’t want sugar and milk, but that’s what most of those drinks are,” he said. We’re the antithesis of that. We developed High Brew to make strong coffee with a touch of cream and sugar.”
Coffee beverages should be about the coffee, not the add-ons
Unlike traditional iced coffee, which is brewed hot and poured over ice, cold brew coffee is made by steeping coffee grounds with room temperature water for 12 to 24 hours before pressing and filtering the coffee. Because heat extracts the majority of bitterness and astringency that’s characteristic of hot-brewed coffee, cold brew is significantly less acerbic.
“The end result is 67% less acidic product that’s also richer in caffeine and antioxidants because they haven’t been degraded as they would be when heated,” Smith said. Indeed, an 8-ounce serving of traditional coffee has 75 mg caffeine, while High Brew’s 8-ounce beverages contain 138 mg (except for the double espresso variety, which contains 150 mg caffeine).
High Brew’s beverages are made up of 80% coffee (100% Arabica beans sustainably sourced from three Latin American countries) and water, with the remaining 20% comprising cream, sweetener and subtle flavors to complement the coffee, including Mexican vanilla, salted caramel and dark chocolate mocha.
“The best part about cold brew is you can actually taste the coffee, which is what a coffee beverage should be about anyway,” Smith said.
Most exciting coffee market growth happening in the afternoon daypart
Smith is no stranger to the world of beverage startups, having cofounded Sweet Leaf Tea in 1997 with childhood Clayton Christopher, which they sold to Nestle in 2011. He noted that the decision to sell was actually an easy one.
“I had been doing it for 13 years and I was ready for a change,” he said. In the months following, he chartered a boat around the Caribbean for a long trip with his family, but inspiration for a new venture struck sooner than expected.
“You need a lot of energy when you’re sailing a boat yourself, particularly when there are kids onboard. Coffee fueled us throughout the day during our trip, but hot coffee in the afternoon when you’re in a tropical place doesn’t make a lot of sense,” he said.
So Smith began experimenting with cold brew coffee on the boat, mixing it with flavors like mocha and cinnamon. That fall he attended the 2012 Expo East show, where he saw a “proliferation” of high-end cold brew concentrates from the likes of Stumptown, Grady’s and Chameleon. Still, digging deeper into the coffee market, he found it was largely dominated by just a few big players, like Starbucks and Folgers.
“But more importantly, the growth fueling the segment was coming from people starting to realize a new use for coffee, in the afternoon,” he said. “I told myself I’d never get back into nonalcoholic beverages, but the opportunity was so right, I decided to hit the reset button and start over.”
In October 2013, he began working on formulation, packaging, branding, logo and coming up with a name. High Brew completed its first production run in late February and will debut at Whole Foods next to the RTD coffee and tea.
“We submitted samples to Whole Foods last November, and eight regions accepted it. If Whole Foods says ‘we need more coffee,’ that’s a testament to how fast the category is growing,” Smith noted.
If Whole Foods says ‘we need more coffee,’ that’s a testament to the category’s growth
The brand’s core target is educated consumers in the 25- to 45-year-old range—a segment that grew up with Starbuck’s on every corner and that demands good coffee. Thus, taste is the brand’s biggest selling point, so the key is to get the product into as many hands as possible, Smith said.
“That means a lot of demos at retail, and other places where we can reach our target, like coffee shops, boutiques, and concerts or other events here in Austin and elsewhere. Looking back at what helped Sweet Leaf, marketing opportunities generated so many trials for the brand.”
Cold brew coffee is still a somewhat niche trend—“the majority of consumers don’t know what it means,” Smithsaid—which is why the brand is initially targeting the natural specialty channel. But he expects the brand will pull coffee enthusiasts from the existing RTD coffee segment, along with health-conscious and energy drink consumers, given High Brew’s platform as an all-natural, higher-caffeinated beverage option—but he wants to make sure the brand doesn’t grow too fast.
“Ultimately, I want to make High Brew a household brand name across the country, but I want to do it strategically. That means adjusting the brand for success and taking the time to go after each channel. There’s a proper order for that.”
Entrepreneurship: the sequel
For Smith, starting a beverage company from the ground up with one successful startup under his belt totally revolutionized his approach to the process.
“From production to financing, formulation, branding and marketing, this time the process has accelerated significantly, just through my relationships with people in the industry and knowing what to do and what not to do. With Sweet Leaf, we were feeling our way through the dark,” he said. “There are so many things we used to think were really important that are actually a time drain: going after the wrong channels, not saying no, or wanting to be everything to everybody and saying yes to every opportunity. Probably 75% of those yeses were said at the wrong time. And just as many hours were spent chasing opportunities that never materialized.”