13 February 2018

Major US chains target afternoon spend with cold brew and iced coffee

Dunkin’ Donuts and Starbucks seek greater share of afternoon spend, announcing new products and offers to target post-morning sales in the US
 
Dunkin’ Brands announced at its investor and analyst day that it will focus on ‘quality convenience and speed’ to maximise afternoon spend, in addition to introducing new promotions for the daypart. The US chain said that product innovation would be a key plank of this strategy, with a focus on cold brew, iced coffee and premium iced tea to woo US consumers after the busy morning period.

Currently, sales before 11am account more than 60 percent of Dunkin Donuts’ trade in the US. The convenience food and coffee chain will also roll out new value offers, including a medium hot or iced latte for $2 between 2-6pm.

“Cold brew has done really well, [and] we continue to have great flavours for our iced coffee. I think our products will be different in the morning; we'll do things like change the menu boards after 11am to make the afternoon experience different,” said Dunkin' Brands chairman and CEO Nigel Travis.

Meanwhile, Starbucks has also recently said it will target afternoon spend with its own range of iced beverages. “We have a big opportunity to leverage our core beverage platforms, particularly in iced coffee, tea, cold brew and draft beverages, all of which skew toward the afternoon,” Starbucks Chief Executive, Kevin Johnson, told reporters.

The world’s biggest coffee chain said that it would be accelerating the roll out of its Nitro Cold Brew from 1,300 to 2,300 of its US outlets by the end of 2018 in response to growing demand.

Chilled coffee has increased in popularity among US consumers in recent years, especially among younger consumers. According to Allegra’s analysis of the US coffeeshop market, 28% of under-35s purchased iced coffee during their last visit. The report also found the lowest average coffeeshop spend was $4.85 between 2-5pm, compared to $5.04 before 10am and $5.35 10am-midday.

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