No matter how much you love hot coffee, there comes a point in the summer where it becomes simply masochistic to reach for a 200° afternoon Americano.
The solution is cold brew, an alternative slow brewing method that creates a mellower, lower acidity cup with higher caffeine content. There's many different methods, but the most popular involves soaking beans in water for lengthy periods of time. Think of it as the coffee equivalent of smoking a brisket rather than grilling a steak.
Whether it's due to the climate or the city's spirit of innovation, Austin was an early adopter of the cold brew trend. Kohana and Chameleon both launched in 2010, back when most people's idea of cold brew meant hot coffee poured over ice (a cardinal sin for coffee geeks). Next came Cuvée in 2012 launching their Black & Blue, with High Brew joining the highly caffeinated party in 2014.
The concentration of companies led to an industry reputation for Austin as the cold brew capital of the world, but it might not stay that way. According to a 2016 report from industry data analysts Mintel, the cold brew segment of the coffee industry grew 580% from 2011 to 2016. Last summer Starbucks released their own ready-to-drink cold brew, this year Coca-Cola and Dunkin' Donuts both plan to enter the marketplace, and there's countless other brands popping up that aim to profit on the trend.
So to take the pulse of the rapidly growing cold brew market, we spoke to the pioneering Austin companies that helped launch the trend.
Hawaiian coffee has always had a mysterious allure to consumers. Excluding a recent experimental movement of California-grown coffee beans, the Hawaiian islands have traditionally been the only domestic areas suitable for coffee farming. Kohana CEO and founder Victoria Lynden was introduced to the exotic beans on an island vacation.
"I was in Hawaii and literally ran into someone that had a graduate degree from UT and he was a coffee roaster out there. He helped me understand the idea of small batch and slow roasting, what we think of barbecue today," says Lynden.
That led to a crash course in roasting and the start of a traditional coffee business in 2008, importing beans from Hawaii as well as the rest of the coffee-growing world. The shift to cold brew took place in 2010, when a scorching 110° day made it impractical to serve hot coffee at a Whole Foods demo. They concocted a trial batch in their South First Street warehouse and began to sell it at farmers' markets and educate consumers. Nowadays cold brew represents 97% of their business, with the concentrate accounting for an impressive 90% of sales.
One thing that sets Kohana apart from the other companies is that a patented process allows their concentrate to be shelf-stable. There's no heat applied at any point, making it a true cold brew rather than a flash-brewed hybrid. They also take pride in roasting their own beans, some in Austin, but most in a 30,000-square-foot facility in the Bay Area, a choice made for efficiency since most coffee is imported through the West Coast.
Although the majority of Kohana's sales are of concentrate, they've recently entered the ready-to-drink (RTD) market with a line of canned coffees that feature single-origin Honduran beans and exotic sweeteners like monk fruit, chosen for health reasons.
"The ready-to-drinks are a disruptor in the energy market, as well as with carbonated sodas. We asked what can we do to create a RTD that has more organic and natural ingredients," says Lynden. Monk fruit won out because it's a more efficient sweetener than sugar calorie-wise, and keeps the overall profile lighter.
In terms of market share, Kohana's a major player and cracked Inc.'s top 10 fastest-growing food companies, have at least doubled sales in every year since their founding, and grown their team to over 50 people. They don't see more companies in the market hurting their business.
"A lot of people still don't really understand what cold brew coffee is. With Starbucks and Dunkin, it helps educate the consumers and expand the category, but consumers tend to want something local," says Lynden.
In the world of food labels, certain words have very specific meanings. Things like "100% coffee" should be an immediate red flag to consumers (what else would it be!), and while the USDA organic seal is a gold star for any producer, the realities of coffee production means that smaller farms often can't afford certification despite a lack of artificial fertilizers. Scoring an organic distinction isn't easy, but Chameleon's made it a requisite for all their ingredients.
"We're in the process of taking ownership of our supply chain. We're 100 percent organic, everything we produce and buy is all USDA organic coffee. That's a key differentiator for us; it dictates where we can buy from," says founder and CEO Chris Campbell.
Beans come by way of Central and South America and are chosen for notes of chocolate and toffee, a traditional profile for cold brew since many drinkers look to avoid the acidity associated with fruitier-tasting coffees. Like Kohana, the bulk of the business is concentrate, but unlike their story of Hawaiian inspiration, Chameleon's genesis came at an Austin coffee shop.
"Steve Williams, who owns Bennu Coffee, was selling cold brew by the glass. It was selling well, we saw an opportunity, so we just got some home brew equipment and opted to get out there and make a go of it," says Campbell.
One distinction for Chameleon is that despite several flavored options (mocha, vanilla, Mexican, espresso), no sugar is added and all the flavors are natural. "We love to get the question of how much sugar we put in, but we don't put any," says Campbell.
Although the company has experienced triple-digit growth every year, the bestseller on day one is still the most popular product today. One selling point to the concentrate is that it lets consumers customize their own beverage, offering what they refer to as a barista in a bottle.
From Chameleon's point of view, bigger companies entering the marketplace isn't an issue; the problem is smaller upstarts that are focused on a quick buck rather than a quality product.
"If the consumer picks up an XYZ cold brew and it's not a good experience, it becomes very hard to connect with that person in the future. They've already decided that cold brew coffee isn't for them. Then there are people who are basically making it in their bathtub and not paying attention to food safety," says Campbell.
Chameleon's far beyond bathtub scale at this point, and the realities of production mean that the drink is no longer produced within Austin city limits, but the company still maintains a headquarters here, to the surprise of many customers.
"It's surprising how many times we run into people that know the brand and we'll say that we're just down the street," says Campbell. "And they're like, 'Really?'"
Austin's a city built on innovation, and while we didn't necessarily invent cold coffee, the city can claim to have birthed one of the biggest trends in today's coffee industry: nitrogenated cold brew.
"As far as I know, we were the first person to offer nitro cold brew in kegs. And 100 percent we were the first people to offer it in cans, that's an indisputable fact. That was such a big deal that the Ball Corporation put out a billboard in Times Square," says Cuvée founder Mike McKim.
For those uninitiated to the nitro phenomenon, the process basically supercharges a conventional cold brew with gas to create a thicker body and frothy head. It's similar to the process used for beers like Left Hand milk stout, which was actually the inspiration for the idea.
"I'd bought a four-pack of Left Hand Nitro and I was reading the bottle and there's these specific instructions about popping the cap and turning it 180 degrees to pour. As I watched the nitro effect cascade, the product looked like coffee," says McKim.
The result is Cuvée's Black & Blue, which has become a staple on taps across town at coffee shops and restaurants, but the innovation they're most proud of is a canned version that includes a nitro widget to re-create that same frothy experience that you get from a keg. In terms of mouthfeel and texture, the product is far different from its Austin contemporaries, closer to a hearty beer than an iced tea.
Another thing that sets Cuvée apart from the city's other cold brew purveyors is that they're a roaster first and foremost. As one of Austin's third-wave coffee pioneers, they've built long-lasting relationships with farmers they've met on monthly coffee-hunting trips across the globe. But that experience in the specialty coffee industry can sometimes skew perception of consumer tastes.
"When you're in the specialty coffee industry, you seem to think that everyone loves acidity. But that's the last thing people are looking for when they gravitate toward cold brew," says McKim.
Dialing back the fruit-forward and acid notes that characterize so many specialty coffees was important to help reach a broader audience. Today Black & Blue is distributed throughout Texas via H-E-B and across seven states via Whole Foods. The demand has led them to invest in a new production facility that's dedicated to only cold brew and should increase output by a multiple of five. It's still a fraction of their hot coffee business, but they see the growth of cold brew as exponentially different.
When it comes to the growth of the coffee industry, it's easy to spot parallels to the trajectory of the craft brewers and micro distillers. Consumer tastes woke up to a superior crafted product, a rush of companies jumped into the playing field, and then industry titans bought in. The difference with coffee is that unlike beer or spirits, the barrier of entry is much lower.
"When we started, we were doing 5-gallon buckets, which is what a lot of people do. The challenge comes when you want to scale that product, because the equipment is really capital-intensive," says McKim.
Although craft brewers are currently bracing against an industry bubble-burst, the cold brew coffee market is so young that producers aren't scared of bigger players entering the field, they welcome it.
"It's going to make the product more mainstream to consumers, which gives all the craft producers the opportunity to grow," says McKim.
Not everyone's familiar with cold brew, but iced tea is a different story, and one of the most ubiquitous brands on the market is Sweet Leaf. A true Austin success story, the brand was sold to Nestlé in 2011, which left founder David Smith with some time on his hands.
"I didn't know what would be my next gig, so I took some time off in 2012 and fulfilled a 20-year goal. My family went on a six-month sailing trip in the Caribbean. It was just the four of us, so there was quite a bit of work involved," says Smith.
Life at sea often required an afternoon pick-me-up, but all the questionable ingredients in energy drinks gave Smith the jitters, and hot coffee wasn't practical considering the hot climate. Cold brew was the answer, and once he returned from his sailing trip, he knew he wanted to share it with the masses.
And share it they did! High Brew's tall cans of creamy, sugary, highly caffeinated cold brew have become a staple at events around town, giving out free product everywhere from First Thursdays at South Congress Hotel to the Austin City Limits Festival.
"We try to pay attention to who our core consumers are, where do they work and play, how do you introduce them to the brand in those fun environments where they're already at," says Smith.
Of all the Austin cold brews, High Brew stands out as the most focused on targeting the on-the-go consumer, functioning more as an energy drink than a purist coffee experience. They do offer a dairy-free black version ("Black & Bold"), but the focus is more on flavors like Mexican vanilla, salted caramel, dark chocolate mocha, and a new creamy cappuccino flavor that includes 12 grams of protein and 3 grams of fiber. They don't shy away from using sugar, but aren't trying to be a dessert in a bottle. Everything's under 90 calories.
Partly thanks to the team's experience building the Sweat Leaf brand, High Brew's growth has been tremendous. In two and a half years since the company was founded, they've accomplished what the previous brand did in 10. The team now includes 75 full-time employees, and they shipped 1 million cases last year. This year they'll do 2 million.
Whereas other local cold brew companies see the major beverage players' entrance into the marketplace as a way to help raise awareness about the category, High Brew has benefited more directly. In 2016 they secured a deal with Dr Pepper Snapple Group to distribute the product nationally, so you won't just see it on the shelves of specialty grocery stores, but also in gas stations across the country where they'll be jockeying for positions against Starbucks and, soon, Coca-Cola. But while their competition may have the advantage of a global backing, High Brew hopes customers will still opt for a coffee created in the cold brew capital of the world.
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