Dunkin' Doughnuts has a new weapon in the coffee wars against Starbucks

Dunkin’ Doughnuts is launching cold brew iced coffee — a craft coffee beverage that stands out on the chain’s menu of traditional and sugary iced drinks.

The coffee chain is launching cold brew in Los Angeles and the Metro New York area on Monday, June 27, the doughnut-and-coffee chain told Business Insider. The chain plans to roll out the iced beverage across the US in the coming weeks.

It’s a launch that Chris Fuqua, Dunkin’s senior vice president of brand marketing, global consumer insights and product innovation, believes to be the most important in the last decade, if not longer.

“We’re the leader of iced coffee around the world,” Fuqua told Business Insider. “We sell more iced coffee than anybody, but we also realise that we need to keep up with trends. Cold brew is one of those trends that doesn’t appear to be going away.”

Dunkin’s cold brew is naturally sweeter and smoother than the typical cup of iced coffee, prepared by steeping a specially-brewed blend overnight in cold water.

Cold brew coffeeBusiness InsiderCold brew coffee’s rise has been driven by independent coffee shops around the US.

The launch of the new beverage comes one year after Starbucks’ national launch of cold brew, in summer 2015. Cold brew more generally has grown explosively in recent years, with sales of cold brew in the US growing 339% from 2010 to 2015, according to Mintel data.

However, while Starbucks has made its name launching coffee snob-approved drinks like Nitro Cold Brew alongside sugary-sweet Frappuccinos, Dunkin’ generally has a more man-of-the-people image. With less expensive prices, the motto “America Runs On Dunkin’,” and a complete lack of Italian-inspired lingo for sizes, does cold brew — a craft beverage just now going mainstream — fit in on a Dunkin’ Doughnuts menu?

According to Fuqua, yes.

“The really neat thing about Dunkin’ Doughnuts is you can see a Fortune 500 CEO, a student, a construction worker, and a teacher in line all at the same time,” he says. “As coffee evolves, we definitely play a role in bringing great, fairly-priced coffee beverages to the core consumer in America.”

Dunkin Doughnuts Butter PecanDunkin DoughnutsIn addition to cold brew, Dunkin’ is serving up iced coffee flavours such as Butter Pecan this summer.

That means Dunkin’ is now expected to meet customer’s needs in an increasing number of variations on coffee, from flavored iced coffees to craft beverages. Consumers were already demanding cold brew, especially in cities such as New York, forcing Dunkin’ to take action.

Adding cold brew to the menu is part of a wider move by the chain to cash in on the growing craft coffee culture.

Dunkin’ launched dark roast coffee in September 2014, a bolder brew than Dunkin’s signature blend. Last September, the chain debuted the Macchiato, an espresso-based beverage that Fuqua says soon became a hit with customers.

Dunkin MacchiatoDunkin DoughnutsFuqua says that the Macchiato may have originally seemed ‘a little bit too sophisticated on the surface.’

“Coffee culture in the country is getting a little bit more sophisticated by the day,” says Fuqua. “Customers really understand what craft coffee beverages are, and understand the cold brew is something that they should expect from a coffee place.”

Craft coffee is especially important amongst millennial consumers, who Dunkin’ Doughnuts hopes to attract with the launch of the new beverage. Tests of cold brew at Dunkin’ Doughnut locations around the US revealed that the new beverage did not cannibalise sales of existing iced drinks, but instead brought in a new, younger consumer.

The growing appeal of craft coffee means Dunkin’ will likely continue to debut more trendy menu items that draw inspiration from independent coffee shops. It’s a strategy Starbucks knows well, and has been aggressively executing for years.

“Starbucks is a great competitor,” says Fuqua, saying the chain has helped educate consumers about cold brew. “They have done a world of good in getting people to talk about coffee, and we think there is certainly room for more than one player in this business.”

Starbucks Nitro Cold BrewKate TaylorStarbucks Nitro Cold Brew is poured chilled, directly from the tap.

The company plans to continue to explore variations on cold brew, according to Fuqua. Earlier in June, Dunkin’ Brands CEO Nigel Travis told Business Insider that the company was intrigued by the possibility of new beverages including nitro cold brew, a drink brewed on tap that Starbucks launched at 500 locations this summer.

While cold brew is aimed at slightly more adventurous millennial coffee lovers, its launch doesn’t mean that Dunkin’ is turning away from its core audience of dedicated coffee drinker picking up their daily cup of Dunkin’ original blend. Instead, it represents Dunkin’s attempt to gives customers of all ages something new to order on the menu.

“With the rise of cold brew and the rise of craft coffee around the country, I think that younger consumer is more interested in this type of a product,” says Fuqua. “But, I think we will surprise people — this is a great, great cup of iced coffee, and I think it’s going to be attractive to all demographics.”

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