Gen Z driving rising demand for cold coffee in Australia

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IF PUBLIC online consumer conversations are a reliable indicator, lattes are the most popular coffee order in Australia.

Brandwatch, a social-listening platform, analysed conversations in Australia around coffee between 1 January 2019 and 31 December 2023.

It found that lattes accounted for almost half of online mentions about coffee, followed by flat whites (15%), cappuccinos (14%), and cold brews (12%).

While latte’s top spot looks assured indefinitely, cold brews are set to climb to second place in the not-too-distant future — especially if the experience in the United States is any guide.

Cold coffee sales are booming in the US, where there’s been “a strong tendency towards cold beverages over time”, says Peter Giuliano, the executive director of The Coffee Science Foundation.

“Tea is a great example — a century ago hot tea was much more popular than cold tea. Now, iced tea is much more popular than hot tea,” he told the World Coffee Portal late last year.

Peter attributes cold coffee’s growing popularity partly to the rise of ready-to-drink coffee, virtually all of which is cold.

“As this segment continues to develop people become more and more familiar with cold coffee,” Peter says.

Ask a barista for an iced coffee and they’ll typically serve an iced latte, with two shots of espresso over ice, along with milk or water.

Nearly a quarter (24%) of US consumers surveyed by World Coffee Portal in 2023 consumed iced coffee on a daily basis — up 7% on 2022.

And in the third quarter of 2023, 75% of market leader Starbucks’ beverage sales were cold.

Peter believes his previous estimate that 50% of all coffee sold in the US will be cold by 2030 is now “conservative”.

While iced coffee is more popular in the US than it is in Australia, our ingrained habit of drinking espresso-based, hot coffee is expected to soften as cold coffee becomes more widely available.

Moreover, a warming climate is likely to “[drive] a close race between flat whites and ice-cold brewed coffee”, Daniel Yee, director of café Artificer, told the Sydney Morning Herald.

Demand for cold coffee in Australia is being driven by Generation Z’s apparent obsession with it.

It helps explain why Starbucks in Australia recently a made modest profit for the first time in its history.

While older-generation coffee drinkers have generally snubbed Starbucks’ cold brews, iced coffees, frappuccinos and the like, Gen Z (born 1997–2012) are lapping them up.

That said, outside of Starbucks and progressive independent outlets, the cold-coffee segment in Australia has a way to go.

‘The benefits of serving cold coffee include high gross profit, low costs and — in the case ready-made coffee from a tap — fast service’

“Many customers don’t realise cold coffee options exist because not all cafes are serving them,” Campos Coffee founder Will Young told Bean Scene magazine.

“And some of those that are selling cold brew don’t really promote it.

“For cold coffee to take off, the public needs to know it’s an option and that it’s good.”

The benefits of serving cold coffee include high gross profit, low costs and — in the case ready-made coffee from a tap — fast service, he says.

Sampling, he adds, is a great way to change consumer behaviour.

Ask for an iced coffee at an independent café and the barista will typically serve an iced latte, with two shots of espresso over ice, along with milk or water.

Another, less common, approach is to use sweeter, less acidic cold drip coffee or cold brew coffee as the base of the iced coffee.

Find out more about cold drip coffee, including what it is, how to make it, its benefits, and how it differs from cold brew coffee.

Read our Guide