Here's why Americans are obsessed with iced coffee

Cold coffee is booming in the U.S.

In 2023, Americans spent about $17.7 billion on out-of-home cold coffee including iced coffee, cold brew and frozen coffee drinks. That is more than double the $8.5 billion consumers spent in 2016, according to food service research firm Technomic.

Giants like Starbucks have played a major role in iced drinks taking share from more traditional hot coffee.

"The way it usually works in the U.S. is that coffee trends start at the coffee shop and above all, at the big chains like Starbucks," said Matthew Barry, insight manager for food and beverages at Euromonitor International.

Cold drinks accounted for about 75% of Starbucks' beverage sales in its fiscal 2024 third quarter, up from 37% in 2013.

Younger coffee drinkers are fueling the growth. 45% of coffee drinkers ages 18 to 24 said they had a cold coffee in the past day according to a survey conducted in July 2024 by the National Coffee Association.

"There is less cravings for variety with those older generations ... I think it's kind of hard to break that mindset with a generation that, for so much of their lifetime, it has just been that hot beverage," said Kelsey Olsen, Mintel's U.S. food and drink analyst.

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Olsen said that iced coffee and cold brew are accessible entry points for young consumers.

Cold coffee drinks are highly customizable, with syrups, toppings and cold foam incorporated into many of the popular offerings at major coffeehouse chains. These add-ins can largely alter the natural, bitter taste of coffee. A large frozen mocha coffee from Dunkin' and Dutch Bros , for example, both have more than 100 grams of sugar.

Both chains told CNBC that a majority of their beverages sales come from cold drinks.

Ready-to-drink coffee, which is almost always drank cold in the U.S., has also become more popular. Consumption rose 43% between 2019 and 2023, according to Euromonitor International.

"If you look at something like, the Starbucks Double Shot or Java Monster, is that an energy drink? Is that ready to drink coffee? I don't know, the consumer doesn't really seem to care," said Barry, "The cold consumer is much more of a casual coffee drinker ... who's okay with the fact that their coffee drink may have very little actual coffee in it."

While the lines of what constitutes a coffee are increasingly blurred, young consumers have responded favorably to the new innovations and flavor profiles that are emerging.

"One of the reasons we're so bullish on cold coffee and cold brew and all of these things is that's now becoming ingrained in the consumer and in what they expect and what they look for. And as these cohorts continue to grow and age and come into middle age, et cetera, that a lot of that preference is going to stick similar to how we saw that with the older consumers," said David Henkes, senior principal at Technomic.