“The UK has become a nation of coffee drinkers, with coffee shop visitors purchasing an estimated 2.3 billion cups of coffee per year in stores. Consumers are more knowledgeable and empowered with choice than ever before, and the rise of artisan coffee has driven the desire for premium quality coffee” (World Coffee Portal, 2016).
The Allegra Strategies ‘Project Cafe 2017‘ highlights some of the key trends for the UK coffee shop market:
- the coffee shop chain sector is making a significant contribution to overall growth;
- the coffee shop chains experienced sales growth of 11.2% in 2016;
- the coffee shop market remains one of the most successful retail sectors in the economy (and this has now been the case for several years) with forecasts suggest that by 2020 the market could be gnerating revenue of $6 billion (with over 9,400 outlets);
- coffee shops are set to outnumber pubs by 2030, making them the new ‘local’ (as I discussed in a recent blog post);
- unsurprisingly the leaders are still Costa Coffee, Starbucks and Caffe Nero which collectively represent 53% of the market. Given their dominance in the high street it could be questioned if these chains are reaching a saturation point?
- While these three chains continue to grow and dominate the coffee shop landscape, there are other chains which are beginning to experience signficant growth including Coffee #1, Joe&the Juice and Taylor St Baristas.
- Some market convergence is taking place, for example Caffe Nero have bought Harris+Hoole, previously owned by Tesco.
- There is a mention of a new 5th wave of coffee: The Business of Coffee signalled as ‘an important era for the global coffee industry’. This is a move further on from previous waves which have been ‘tradition’, ‘chains’, ‘artisan’ and ‘science’ where future growth is likely to be dominated by specialty coffee and boutique chains as the market becomes saturated with more mainstream cofee shops.
“There has been a powerful change in industry dynamics over the last year. As boutique chains continue to expand and drive sales of premium quality coffee, we observe a shift in the competitive market set’ Jeffrey Young (World Coffee Portal, 2016)