The total UK coffee shop market is estimated at 16,501 outlets and continues to show strong sales growth of 6.4% on last year with £6.2 billion total turnover.
According to Allegra Strategies definitive report, Project Café13 UK, the branded coffee chain segment recorded £2.6 billion turnover across 5,531 outlets, delivering impressive sales growth of 9.3% and outlet growth of 5.9%, adding 306 stores 2013.
After 15 years of considerable growth, the coffee shop sector continues to be one of the most successful in the UK economy. Costa Coffee (1,670 outlets), Starbucks Coffee Company (790) and Caffè Nero (560) remain the UK’s leading brands with 54% branded chain market outlet share. Physical expansion by leading chains remains the core driver of market growth. In particular, Costa added 118 UK outlets and 18% sales growth in calendar 2013.
The UK coffee shop market is robust with established and predictable coffee consumption patterns. The report shows that the UK is now a nation of great coffee drinkers. 1 in 5 coffee shop visitors visit coffee shops every day compared with 1 in 9 in 2009, drinking an estimated 1.7 billion cups of coffee per year in coffee shops.
Coffee venues increasingly play an important social and community hub function as well as being a large contributor to UK employment and economy. The report reveals how successful branded chains constantly refresh their image while retaining brand values in order to engage increasingly progressive consumers.
A greater commitment to coffee credentials by the non-specialist sector, such as pubs, fast food and supermarkets has generated wider consumer participation while adding to competitive pressures. Furthermore, third wave/artisan coffee has profoundly influenced operator and consumer expectations about coffee quality and store design.
The significant growth of new, corporate backed chains such as Harris + Hoole (Tesco) signals a new era of competition. The premiumisation of the at-home segment and the expansion of the premium vending segments are further increasing the availability of specialty coffee.
Allegra forecasts the total UK coffee shop market will exceed 20,500 outlets and turnover of £8.7 billion by 2018, with 4.5% annual outlet growth over the 5-year period.
The branded coffee shop segment is forecast to exceed £4.1 billion across 7,000 outlets by 2018, with outlets predicted to grow at 5.2% compound and revenue at 10.0% compound over the next 5 years. It is estimated that the UK has the long-term potential to comfortably host more than 9,500 branded coffee shops.
The future marketplace
The future coffee shop marketplace will be shaped by further increasing consumer participation and more savvy consumers, with the desire for premium quality coffee anywhere and anytime, driving improved coffee offers across a broader set of channels.
Allegra Strategies’ Managing Director, Jeffrey Young commented, “The UK coffee shop industry is showing consistent strong growth in both sales and outlets. Britain is now a nation of great coffee drinkers. The UK consumer increasingly appreciates a quality cup of coffee and operators must continue to deliver innovation, fantastic quality while genuinely engaging with customers in order to stay ahead of the curve.
“UK Consumers will become even more knowledgeable on the subtleties of coffee preparation and delivery from bean to cup, in particular origin, roast, as well as the importance of milk foaming and water quality. We expect to see growing consumer interest evolving beyond simple commoditisation of coffee as a drink, with artisan cafés and branded chains increasingly educating them about the craft of coffee.”
The Project Café13 UK Report is now available to purchase from Allegra Strategies Limited and its new division Allegra World Coffee Portal Limited.
Allegra Strategies is a London-based strategic research consultancy recognised as a global leader in the foodservice and coffee shop sector. Allegra is best known for its definitive reports on the European and UK coffee markets. Allegra has accurately predicted trends in the UK branded coffee shop market since 1999. The report is considered by the industry as ‘the bible’ of the coffee sector.
World Coffee Portal
The Allegra World Coffee Portal is destined to become the premier global information platform for senior decision makers across the coffee and related retail and foodservice sectors. Building upon the unparalleled coffee expertise of Allegra Strategies, the World Coffee Portal is in advance stages of development and will be available to clients early in 2014. The portal will deliver real-time data, coffee trend information, brand profiles and strategic analysis on some of the most important coffee markets across the world including more than 20 European Markets, USA, Australia and several Asian markets.
Jeffrey Young, Managing Director, Allegra Strategies Ltd
+44 (0)20 7691 8830
Guy Simpson, Coffee Sector Analyst, Allegra Strategies Ltd
+44 (0)20 7691 8844