Iced coffee lovers can get a cheaper caffeine fix at home this summer

People are buying more and more iced coffee, often where it is more expensive.

Call it a convenience bonus, but in a year when coffee prices have hit record highs, getting a fresh caffeine fix on the go this summer could hurt your wallet more than usual. Today, many consumers are finding better deals at grocery stores and by brewing their own coffee at home.

At cafes and restaurants, 35% of coffee orders are cold, up 7 percentage points from 2017, said Darren Seifer, a food and beverage analyst at research firm Circana. But as coffee lovers have long known, cold orders tend to be more expensive.

In the first quarter, U.S. consumers paid an average of $3.08 for a regular cup of coffee, $5.14 for a cold brew and $5.46 for a latte, according to digital payments processor Toast. Typically pricier cold drinks, such as iced espressos and matcha tea lattes, helped Starbucks offset a drop in traffic in the second quarter.

“If you want the cheapest option, go ahead and buy it from a retailer,” Seifer said, adding that convenience stores “may also be able to offer slightly lower prices than fast-food restaurants.”

Some consumers are already turning away from coffee counters.

Between March 2023 and March 2024, 60% of iced coffee spending was on drinks purchased away from home, down from 68% four years ago. At the same time, drought conditions in major producing regions have pushed up global coffee prices, even as coffee sold in U.S. grocery stores is getting slightly cheaper. Prices were 1.6% lower in June than a year earlier, federal data show.

Fortunately, coffee lovers have more and more options to enjoy a fresh cup of coffee in their own kitchen.

In April, instant coffee maker Nescafe unveiled its “first-ever instant cold brew,” which makes dozens of cups from bottles that sell for a suggested price of $7.39 each, a few dollars more than a single 16-ounce iced coffee at select Starbucks locations after tax. The company said it has seen “a growing demand for espresso and cold brew beverages, as well as a growing interest in making these café-quality beverages at home.”

Later this year, Keurig will launch a “K-Brew+Chill” machine for at-home iced coffee lovers. The device, which the company says will cost about $200, promises to brew hot coffee and then chill it to a temperature “as cold as store-bought coffee” in three minutes or less.

“The next evolution is really going to be being able to bring coffee shop-style beverages home and to the counter,” Josh Hulett, senior vice president of product management, said in a recent promotional video.

Some of this shift has been years in the making. During the pandemic, many Americans have shifted from grabbing coffee on the way to work to brewing their own on the way to the couch. While supermarket brands like Nestlé and Keurig are looking to bolster that habit, coffee shop operators are trying to build loyalty among cold brew drinkers. And brands that sell in both settings are trying to do both.

Dunkin’, for example, is looking to attract consumers to its line of iced coffees and “refreshers” this summer, promoting them under the banner “Big Dunkin’ Iced Energy.” The company also recently relaunched its take-home and take-home iced coffee bottles on store shelves.

Small operators are also trying to appeal to customers who wouldn’t want to pay a barista $5 or more to serve them cold brew coffee in a carafe.

Dave Ward, co-founder of Buddy Brew Coffee in the Tampa, Florida, area, said the home-brewing classes he has offered for years are now “full.” The two-hour sessions, held at his original coffee shop, include a $69 class on the science of brewing coffee and a $175 class on creating latte art.

Buddy Brew raised its menu prices by about 20% in 2021 and 2022 to offset rising costs for labor, real estate, and shipping, as well as the coffee beans themselves. And like large corporate chains, the company has also found that its customers have become a bit more frugal lately. Average order value is down about 3% from last year, even as foot traffic is up slightly.

The chain’s only advantage is the line of coffee products that Buddy Brew sells at supermarkets like Whole Foods and Publix. The chain’s 12-ounce bags, which make about 24 cups, including its “Cold Brew Roast,” start at $18 on its website, or about 75 cents a cup. That compares to $4.75 at its Hyde Park, Tampa, location for a 20-ounce cold brew ordered online for pickup or a 12-ounce canned option.

Although Buddy Brew has slightly increased prices on its grocery items, Ward said those sales “have continued to perform wonderfully.”