In 2015, U.S. consumers spent $143 million on refrigerated ready-to-drink coffees and teas--nearly 300 percent more than two years prior, according to the Specialty Food Association, a nonprofit trade group. Demand for these prepackaged cold drinks has been largely driven by such innovations as the use of probiotics for digestive health and the infusion of nitrogen in lieu of sweeteners.

Why it's hot: Consumers are turning away from frozen juices and beverages, drink mixes, and concentrates, all of which saw a downturn in sales in 2015, in favor of on-the-go coffee and tea. This has driven interest in acquisitions and joint ventures by big beverage companies like Starbucks, which acquired Atlanta-based tea retailer Teavana in 2012, and Hain Celestial, which says it plans to complete multiple acquisitions of ready-to-drink beverage brands valued at $5 million to $20 million.

What's required: New entrants need experience in the beverage industry, including familiarity with ingredients, bottling facilities, and distribution and supply chains.

Barriers to entry: Depending on how large you plan to scale the business, the industry presents significant logistical challenges. These can include everything from the need for extensive testing of recipes to shipping and retail distribution.

The downside: This is an industry that requires a lot of moving parts. Without connections in ingredient sourcing, bottling, shipping, and retail, it could be daunting for new entrants.

Competition: Competitors include large chains such as Starbucks, Costa Coffee, and Argo Tea. Major beverage makers including Coca-Cola, Unilever, and Dr Pepper Snapple own brands in the category. Newer players include Austin, Texas-based coffee maker Chameleon Cold Brew, which doubled its 2015 revenue in 2016 to $18 million, and Brooklyn, New York-based Runa, which makes energy drinks brewed from a caffeinated tree leaf called guayusa.

Growth: By 2024, Grand View Research predicts, the global ready-to-drink coffee and tea industry, including refrigerated and shelf-stable products, will reach sales of $116 billion, up from $71 billion in 2015.

Published on: Mar 1, 2017