Why iced drinks continue to lead coffee shop sales
Sarah Charles
October 24, 2025
matcha calendar
Caffè Nero reported record Q1 revenues up 9% YOY as iced-drink sales surged 49%
Starbucks says 75% of its global beverage sales now come from iced drinks
The UK had the highest iced coffee sales in Europe in 2024 and has seen a 22% compound annual growth in the past 5 years
CAFFE Nero has reported record first-quarter revenues of £166 million, up 9% year on year, fuelled by a 49% surge in iced-beverage sales. The company sold 1.3 million iced matcha drinks in that period alone. What began as a summer novelty has become a defining driver of growth.
Black Sheep Coffee, another UK operator, has seen a similar surge. Known for its robusta-based espresso, the chain attributes its summer success to iced coffee and matcha offerings. In the United States, Starbucks reported that iced drinks accounted for 75% of its total beverage sales in 2024. Blank Street draws its current popularity from its brightly coloured iced drinks and matcha cocktails.
Across the industry, the humble iced latte seems to have dethroned the flat white as the emblem of café culture’s next generation.
“Iced drinks seem to be taking up permanent residency on a lot of coffee shop menus year-round,” reads one LinkedIn post. “What stood out to me is how much of [coffee chains’] growth comes from iced drinks and matcha – a clear sign of how quickly consumer tastes are shifting,” reads another. Even David Beckham reportedly has a Nespresso iced latte all year round.
“I think iced beverages are accessible, instantly,” says Levi Holland, Co-founder of Post Coffee Company. “You don’t have to wait for anything to cool down, it’s immediately available.”
“I would tread lightly on a permanent culture shift, but as those consuming coffee products and coffee adjacent products continue to become those infusing money into our economies, the more accessibility and adaptability matters.”
The National Coffee Association’s latest US survey found that more than 32% of Americans had cold coffee in the past week. Their Spring report found that 49% of Gen Z drank their coffee cold, iced, or frozen in the past day.
For operators, that preference is worth billions: from Caffè Nero’s iced matchas to Dunkin’s cold brews, chilled drinks are now the engine of café profitability.
Tough climate, profitable pivots
The iced boom comes amid one of the most challenging periods coffee chains have faced in decades.
Green-bean prices have reached record highs – around US $4.40 per lb in February 2025 and close to that currently – while inflation and sluggish growth have squeezed consumer spending. Coca-Cola, owner of Costa Coffee, reported disappointing UK sales and is said to have “lost the matcha generation.” Clive Black, vice chairman of independent investment group Shore Capital, told the BBC that Costa is not the only brand struggling with the changing UK coffee market, as the rise of smaller chains and artisanal independent stores have also “eaten into the share” of the major chains.
Starbucks’ global same-store sales growth slowed to its weakest pace in years, while Krispy Kreme reported disappointing second quarter earnings in its most recent earnings report.
In such a climate, cold beverages are a welcome stabiliser. Their economics make sense: a cold brew or iced latte can command a premium price with relatively low incremental cost. Brands can focus on customisation instead of volume for upsells and margins, and can charge a premium for perceived value.
An Innova Market Insights report finds that the UK had the highest iced coffee sales in Europe in 2024 and has seen a 22 per cent compound annual growth in the past five years.
For many chains, cold drinks have become not just a seasonal bump but a hedge against volatile coffee prices and uncertain economic conditions. But will demand for them last?
“I think ready-to-drink beverages are in demand now, and as such, will fade,” says Levi.
“What business owners will need to do is continue evolving and adapting to that which the consumer is demanding. There will always be space for the novelty of specialty coffee, or the cafe culture, but to what extent depends on the owner and market.”
iced coffee
“Hot coffee is for old people”: the Gen Z effect
The cold-drink boom is also generational. For younger consumers, iced coffee isn’t an alternative – it’s the default.
The NCA Spring report found that Gen Z consumers in the US now drink roughly as much iced coffee as hot coffee. Meanwhile, 35% of millennials drink iced coffee, with a steep drop to just 16% for Americans older than that.
On TikTok, hashtags like #IcedCoffeeAddict have accumulated 30K posts and billions of views, showcasing pastel-coloured matchas and caramel cold brews as lifestyle accessories.
“Hot coffee is for old people,” says Darleen Scherer in a recent LinkedIn post on current weird trends in specialty coffee. The beverage’s visual flair – transparent cups, layered textures, swirling milk – plays perfectly into social media’s aesthetic economy.
Not all are in agreement with this characterisation of GenZ.
“I think that generalisations are dangerous,” says Levi. “Gen Z and Alpha consumers adapt like water, so who’s to say the next big thing for them isn’t hot beverages? However, to a millennial and older mindset, it’s about routine and ritual – yes, I’m aware of the generalisation here – and if hot coffee is it, who are we to argue?”
The appeal of iced coffee runs deep. Chilled drinks align with a generation raised on personalisation and health-conscious indulgence. Customisation – plant-based milks, sugar-free syrups, caffeine-free matcha – fits seamlessly with how Gen Z approaches consumption: self-expressive but controlled. Iced beverages also dovetail with the “anywhere, anytime” habits of a mobile population less inclined to linger in cafés. For many, the ritual of nursing a hot cappuccino at a café table feels outdated.
Coffee has become an accessory to identity, not a communal anchor. Chains that once thrived on the “third place” model – Starbucks chief among them – must now adapt to a young generation with new priorities and desires, as well as a challenging economy that is reshaping consumer preferences across ages.
There are rational reasons iced drinks dominate the balance sheet as well as consumer culture.
Cold beverages allow for higher margins through upcharges – extra shots, flavoured syrups, non-dairy milks – while also diversifying the supply chain. They are less sensitive to fluctuations in bean quality because dilution, milk, and flavouring soften the profile. For roasters and retailers facing record bean prices, that flexibility can be a blessing.
Chains are responding with speed. Caffè Nero and Bank Street’s continue to invest in iced beverages and iced matcha. Black Sheep Coffee plans to expand its iced portfolio ahead of its next funding round.
The question is whether the iced era is a symptom of survival or a new equilibrium. In the short term, the answer is both: iced drinks keep tills ringing in a tough market. In the long term, they may redefine coffee culture itself. The beverage that once symbolised warmth, conversation, and reflection now stands for mobility, choice, and self-expression.
For cafés navigating high costs and shifting tastes, the message is clear. The future of coffee may not be hot – and for the next generation, that’s exactly the point.
Coffee Intelligence