Chameleon Cold Brew CEO: 'We are growing quickly, but smartly'

By Elaine Watson contact

- Last updated on GMT

'Will any of the later entrants to the market be able to gain some traction, or is it only the horses that are already in the race that have a realistic chance of making it?'
'Will any of the later entrants to the market be able to gain some traction, or is it only the horses that are already in the race that have a realistic chance of making it?'

Related tags: Cold brew, Coffee

A product only aficionados – and hipsters - had heard of a couple of years ago, cold-brew coffee is rapidly becoming an established part of any forward-thinking retailer’s beverage set. But the market has grown so explosively that a shakeout seems inevitable, predicts one of the key players. 

“The question I have is will any of the later entrants to the market be able to gain some traction and get going, or is it only the horses that are already in the race that have a realistic chance of making it?​” Chameleon Cold Brew co-founder and CEO Chris Campbell told FoodNavigator-USA.  

“Then again, it all depends on who they​ [the new entrants] are,”  ​he observed, noting that all eyes are currently on Starbucks to see if it brings out a ready-to-drink cold brew coffee for the grocery channel after rolling out ‘small batch’ cold-brew to store menus across the US and Canada this summer.

I think everyone is waiting to see what they do,” ​said Campbell, a former PwC executive who founded Chameleon with coffee-shop owner Steve Williams in Austin, Texas, in 2010 and now sells Chameleon’s 'exceptionally smooth' USDA organic and Fairtrade certified products in several thousand stores across the US from Whole Foods to Target, H.E.B., Kroger and Meijer.

“Obviously if Starbucks plays in the sandbox then that’s going to be game-changing, whereas if it’s just regional coffee players from this point forward then they have a steep hill to climb.”

Chameleon Cold-Brew Coffee concentrated landscape
Chameleon sold a minority stake in its business to Houston-based investment firm Fortitude Capital in 2013 and has recently raised some more money from private equity sources, says co-founder Chris Campbell

If Starbucks plays in the sandbox then that’s going to be game-changing

Starbucks’ possible RTD entry notwithstanding, where does he see the market for cold brew – coffee that is roasted, ground, and then steeped in cold water for several hours, producing a smoother, less bitter coffee - going from here?

“I think the future focus for the category is a little bit unknown,” ​said Campbell, “as there are so many different cold brew formats and options flowing into a lot of different channels all at the same time, which is a little bit unusual as a category develops, so it’s not following any set pattern. All we can say is that there is a lot of room for growth.

“From our perspective, the ultimate win is in the refrigerated case where there is a higher degree of quality.”

As for whether the future lies in single serve ready-to-drink products, or multi-serve concentrates [where consumers add their own water, milk, nut milks, alcohol, or anything else], there are opportunities for both, he added.

“We play in both spaces, as they span different usage occasions. RTD is great if you’re on the go, or for at home, but for an office environment, as well as at home on some occasions, the concentrates provide a much greater degree of flexibility, so we think there is big potential for both.”

Format-wise (cans/bottles/TetraPak/packaged coffee grounds for home-brewing), meanwhile, Chameleon is fairly agnostic, he said.

“We’ll have to see where the consumer goes. We like glass as we’re positioned in a premium space, so glass is aligned with that. That said, there are obviously a lot of opportunities in other formats and if we can get the quality experience right, we are not opposed to any type of packaging.”

As for new products, he said: "We have some really cool stuff coming out next year that I can't talk about, but they should be ready for Expo West ​[March 2016]."

Chameleon RTD range
In the burgeoning ready-to-drink cold brew market - where brands from Stumptown and Califia Farms to High Brew, Hiball Energy, Kohana, and Kill Cliff are now playing – Chameleon Cold Brew now has six SKUS (Black, Mocha, Vanilla, Espresso, Chicory, Mexican) but has so far not added dairy or nut milks to its formulations, says co-founder Chris Campbell. Each 10oz bottle retails at Whole Foods at $3.69

The development of the category is not following any set pattern

In the burgeoning ready-to-drink cold brew market - where brands from Stumptown and Califia Farms to High Brew, Hiball Energy, Kohana, and Kill Cliff are now playing – Chameleon now has six SKUS (Black, Mocha, Vanilla, Espresso, Chicory, Mexican) but has so far not added dairy or nut milks to its formulations, said Campbell.

“We’ve stuck with black coffee so far, and we stick to organic cane sugar rather than using sweeteners, whether they are ‘natural’ or ‘artificial’, but we still keep the calorie content down because we pay special attention to the coffee we use.”

Everything about the water matters

But to what extent can you control bitterness and acidity during the cold brew process, and are there big differences between the major brands?

chameleon
Chameleon co-founders Steve Williams (left) and Chris Campbell (right)

Absolutely, said Campbell, who says changing the length of the steeping, the temperature of the water and other processing variables can make a difference, although none of these things will make much difference if you don’t get the fundamentals right: the coffee beans and the water you steep them in.

“In the end it’s about sourcing the right coffee, which you need to source with the right flavor process in mind. The water is also critical. Everything about the water matters, just like when you travel away from home and taste the water out of the tap and it tastes different wherever you go. At the end of the day, the product is more water than anything else, so it really matters.”

'There are companies out there that are operating under the assumption that consumers will perceive that longer is better when it comes to cold-brewing coffee, but it’s not always true. There’s a window and if you go beyond it, you can over-brew coffee...'

There are companies operating under the assumption that consumers will perceive that longer is better, but it’s not always true

As for the length of the steeping process, while you might assume from the marketing of some cold brew products that the longer you steep the coffee grounds, the better, this is not necessarily the case, said Campbell.

“There are companies out there that are operating under the assumption that consumers will perceive that longer is better, but it’s not always true. There’s a window and if you go beyond it, you can over-brew coffee, and will just taste stale.

“We’re around 16 hours, but the colder the water the longer the steeping time needs to be, so it all depends on your process.”

As for the process for making concentrated vs ready to drink cold brew coffee, Chameleon is very particular in that it doesn’t simply water down the concentrate to get its RTD coffee, but produces them separately, brewing the RTD versions in the same way that it makes the concentrate, but adding more water at the start of the process, he said.

Starbucks_Cold_Brew_Mason_Jar2
All eyes are currently on Starbucks to see if it brings out a ready-to-drink cold brew coffee for the grocery channel after rolling out ‘small batch’ cold-brew to store menus across the US and Canada this summer.

“We change the ratio of coffee to water on the brew, and in also some cases we use a different type of coffee for the ready to drink, so they are really different products.”

Drinking from the fire hydrant… and saying NO

The challenge for Chameleon – like any small company growing rapidly – has been simply keeping up, knowing when to say no, when you want to say yes to everything, and keeping multiple plates spinning at once and trying to retain your sanity, said Campbell.

As to the go-to-market strategy, he said, “We got into Whole Foods early on, and then it was kind of distributor-driven as to what channels of business we were getting into. But over time that changed to a drinking from the fire hydrant scenario when everyone was calling.

“Then it’s a case of we can’t say yes to everyone, so it’s about the willingness and desire of a retailer to really partner with us and of course whether we can service them properly, can we monitor the business and take care of it, and if not, we have to pass.”

Money (or the lack thereof) is not holding Chameleon back, said Campbell, who is currently raising a second round of capital. 

“It’s a well-run company in a fast-growing category so the money will come, but it’s more a case of is the consumer ready? We don’t want to be a flash in the pan, it’s about sustainable growth. Coffee is a ritual experience, it’s part of someone’s life, and it takes time to become part of that ritual, so we are growing quickly, but smartly.”

Related topics: Tea and Coffee, Markets

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