Project Iced UK 2018, Allegra World Coffee Portal’s definitive report on the UK’s out-of-home iced beverages market, forecasts iced beverage sales to exceed £421m in 2018, representing year-on-year growth of 14%. Sustained growth in the iced beverage segment is expected over the next five years, with the total sector expected to value £660m by 2022.
 

Seasonality will continue to drive iced beverage sales in the near-term

Iced beverage consumption remains heavily dependent on weather conditions, with the summer months, typically June to August, by far the most lucrative period for coffee shop iced beverage sales. A successful iced offer is heavily dependent on operators’ ability to respond to the UK’s mercurial weather. 

Indicating long-term potential for UK consumption to emulate popularity in the US, 60% of industry leaders believe iced beverages are becoming increasingly popular year-round. Most, however, expect the UK’s seasonality trend to continue in the near-term.
 

Cool customers – young set to drive future growth

Millennials and Generation Z will drive future segment sales growth, with iced beverages representing significant opportunities to introduce younger consumers to the coffee shop market.

Instagrammable products, such freak shakes, iced coffee martinis and the Guinness-like cascade effect of nitro cold brew all appeal to a younger, more adventurous demographic.

With their low sugar and calorie content, cold brew and nitro also represent significant opportunities for younger, health-conscious consumer spend. More than two-thirds of under 30s surveyed by Allegra said healthier options would encourage them to increase iced beverage consumption.

Allegra research also shows those under 30 are more likely to view iced beverages as good value for money and consume them year-round compared to older consumers. These factors make younger consumers a key demographic for coffee shops expanding their iced offerings.
 

The nation’s favourite iced beverage

Starbucks is the UK’s favourite coffee shop chain for iced beverages, with 29% of consumers indicating it offers the best blended and handmade iced beverages. Costa (26%) came second among consumers, with Caffé Nero (7%) third, ahead of ahead of McDonald’s and Pret.#

Independent cafés (12%) are also popular locations for iced beverages and noted by consumers for their strong handmade iced beverage offer.

As the most commonly visited locations for iced beverages, high street coffee-focused branded chains will continue to lead product innovation and raise consumer expectations. Allegra observes the opportunity for these retailers to capitalise on a wider range of iced beverages as many food-focused operators have yet to include iced drinks on their menus.
 

The UK ice forecast

The future of iced beverage sales is positive, with Allegra research revealing more than half of industry leaders believe consumers are more likely to purchase iced beverages out-of-home than 12 months ago.

While more than half of industry leaders (52%) expect cold brew to become a coffee shop staple within the next 3 years, just 12% believe nitro will enter the mainstream. Industry sources state more consumer education is needed on the latter product, with a high price point still deterring many consumers.

In the longer-term, operators remain optimistic for the potential of the UK iced beverage market to mirror the US, where iced beverage consumption remains strong year-round.

Commenting on the report findings, Bradley Journeaux, Research Manager at Allegra World Coffee Portal, said:
 

“Iced beverages represent a major opportunity for coffee shops, with younger consumers in-particular engaged with the wide selection of highly customisable and visually appealing drinks on offer.

"Innovation in brewing methods has forged entirely new product lines such as cold brew and nitrogen infused coffee, which are starting to build market share.

"The potential is there for iced beverages to overcome the traditional British weather barrier and really become established as an all-year round mainstay.”
 

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Project Iced UK 2018, the definitive report on the out-of-home iced beverage market, is now available from Allegra World Coffee Portal, featuring 2,000 consumer surveys, industry insight, latest trends and future growth projections.