December 9, 2025 – Despite having similar origins, consumers see hot and iced coffee as different products. Most brands try to include both in their offerings. Additionally, iced coffee appeals to younger consumers, an important group for future growth that may be drifting away from traditional coffee. However, both hot and iced coffee face serious challenges, mainly due to rising costs. In the short term, tariffs from coffee-producing countries create immediate pressure. Over the long term, increasing temperatures and their effects on the growth cycle present even bigger risks. Innova Market Insights looks into coffee and iced coffee trends in Canada.
Climate Change Puts Strain on Coffee
As climate change makes coffee harder to grow and more expensive, there’s a risk it could become a luxury instead of an everyday product. One solution is to look into resilient species like Liberica. These species bring much-needed genetic diversity and adjust better to changing conditions. Liberica is still a minor player in the global coffee market, partly due to confusion about its classification, even though it is already grown in several countries. At the same time, consumers in the US and Canada are increasingly interested in the sustainability of their coffee. Coffee trends in Canada indicate that about 20% want to learn more about how their food is grown, processed, and sold, hoping to make ethical choices with their purchases.
Tariffs Puts Pressure on Coffee Consumption
Brazil’s dominance in coffee production means US tariffs on Brazilian coffee raise global coffee prices. American consumers face higher tariffs and costs, and these impacts extend to Canada as well. Canadians will likely see pricier coffee and need to adjust spending, while retailers may struggle to stay competitive as wholesale costs climb.
Canada Can Learn from US
Flavor innovation and iced coffee are both big opportunities for Canadian coffee. As both are more represented in the US, brands can look southward for examples on what has worked and what hasn’t. Limited time offerings remain a great way to introduce flavors, and iced coffee offers consumers an option across a wide range of occasions.
Canadian Claims Are a Smart Move for Coffee Brands
Canadian coffee brands cannot fully source beans locally but emphasize ‘locally made’ claims through roasting and Canadian flavors like maple. For example, recently launched President’s Choice maple-flavored pods. Canadian sourcing and branding are increasingly important due to Trump’s tariffs, driving Canadian consumers to buy more local.
Gen Z Moving Away from Coffee
Other caffeine categories present a real challenge. Many younger consumers, especially Gen Z, do not like the taste of coffee. Instead, they are drawn to alternative energy-boosting drinks. If brands do not improve flavor and taste, these other categories will keep taking market share. Having a diverse portfolio that includes non-coffee beverages can help counter this competition.
Espresso is the Key to Gen Z
While Generation Z may be mixed about coffee and brands in general, they have a strong preference for espresso compared to other age groups. This might be due to the influence of Starbucks, as they grew up used to espresso drinks, or it could be linked to the popularity of the espresso martini. However, making good espresso at home can be challenging due to the high cost of equipment, unlike regular coffee, suggesting an opportunity to target Gen Z with solutions to make at-home espresso easier.
Price Matters for Iced Coffee
Coffee trends show that 43% of Canadian consumers say that cost affects their iced coffee purchasing decisions. As coffee prices keep increasing, brands encounter a difficult challenge. If prices rise too much, consumers will reduce their spending to save money. To protect their profits, brands need to keep a varied product lineup and find ways to lower coffee costs. Some are already investing in coffee crops that can withstand higher temperatures or using production methods that cut expenses.
Opportunity for Brands to Win Over Habitual Canadian Coffee Consumers
For most coffee drinkers, consumption happens at least once a day, and about a quarter come back for more. Building a loyal brand offers many benefits, but only 34% of Canadian consumers prefer a specific brand, making loyalty difficult to achieve. To be successful, brands need to do well in several areas: price, quality, and overall experience. A successful strategy should redefine the daily coffee ritual as more than just a caffeine boost; it should help consumers prepare for a great day or a refreshing afternoon. With 88% of Canadians drinking coffee, there are many opportunities to create meaningful connections.
Changing Drinking Occasions Offers More Opportunities
Many people see coffee as a morning drink. However, about half of Canadians enjoy it at different times during the day. To address this, brands should provide a variety of flavors, formats, and packaging that fit various occasions. Taking breaks and enjoying personal time often go hand in hand. Brands can promote coffee as a way to practice self-care and recharge. Making iced coffee a regular choice, similar to hot coffee, can help increase sales. However, competing directly with hot coffee might hurt sales, so it’s essential to choose the right times of day to focus on. Iced coffee usually suits moments that feel like a treat or a relaxing break, even when the emphasis is on enjoying time alone rather than health benefits.
Stack Coffee Claims for Bigger Reach
Coffee trends in Canada reveal that taste is essential, but adding other claims can widen coffee’s appeal. Canadian consumers choose coffee for different reasons. Combining messages like energy and happiness often works better than sticking to just one. Although fewer than half of consumers link iced coffee to most claims, brands should focus on highlighting happiness, energy, or convenience.
Variety Drives Coffee Consumption
One of the reasons why personalization grew so fast in coffee is that even with a top format like coffee and milk, there are seemingly an infinite number of ways to prepare it. For brands, consider how this might look in packaging, such as labels that indicate sweetness, or instructions for recreating coffeehouse recipes so Canadian consumers can make the beverage themselves.
Iced Coffee Preferences Lean Toward Fun Flavors
Iced coffee has a better taste appeal than hot coffee and is seen as a treat. Rich flavors fit well with these taste associations, along with special limited-time offerings and marketing that highlights flavor. Brands can take advantage of seasonal themes to attract consumers, while also emphasizing energy and focus, no matter the time of day.
What’s Next in Coffee & Iced Coffee Market Trends in Canada?
In the Canadian coffee and iced coffee market, brands will likely expand their product lines by adding non-coffee options to meet changing consumer preferences. Iced coffee keeps gaining popularity and fits a wider range of occasions. By creating fun and unique flavors, brands can help consumers recreate coffee shop experiences at home. However, rising prices are testing brand loyalty, pushing companies to find new ways to build trust. The industry may also see new coffee varieties and growing methods as a response to climate change. With health concerns and cost issues playing a bigger role, consumer choices are likely to shift more, leading to more changes in the coffee and iced coffee categories in Canada.
This article is based on Innova’s Coffee & Iced Coffee in Canada report. This report is available to purchase or with an Innova Reports subscription. Reach out to find out more