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Branded coffee shop sector defies economic downturn to post 10% growth

19th Dec 2011 - 00:00
The UK branded coffee chain market, including chains such as Costa Coffee, Starbucks Coffee Company, Caffè Nero, Pret A Manger and EAT, has shown incredible resilience, growing sales by 10% to an estimated turnover of £2.1 billion with the market doubling since 2005.
Consumers are embracing the growing coffee culture trend and demonstrating their love of coffee, enabling the sector to substantially outperform the wider retail market. Jeffrey Young, Managing Director, Allegra Strategies said: "The UK coffee shop market continues to exceed expectations by growing significantly in value, but also in outlet numbers. More than 600 new coffee outlets opened in the UK during 2011. "As consumers gain more opportunity to consume coffee through more outlets, they are making it part of their lifestyle. "High quality independent coffee shops are fuelling consumer demand and driving the branded coffee shop sector to increase focus on unique interiors and improved brewing methods within a wider, more artisanal coffee offer. "This focus on quality in all areas can only continue to drive a thriving industry." In the largest ever research study of its kind, Allegra surveyed more than 36,000 consumers. This research has shown continued growth in visitor frequency, with one in 10 UK adults now visiting coffee shops daily. Consumers refuse to give up on their regular coffee out of home, with 39% stating they visit coffee shops more often than 12 months ago. However, Allegra's report does highlight some concerns. Weaker mid-sized chains and low quality independents are suffering as the major brands expand. Consumers have also started to spend slightly less per visit from £3.50 in 2009 to £3.18 in 2011, reducing their food purchases from coffee shops. 69% of consumers interviewed purchase food in coffee shops regularly compared with 71% in 2010. The branded coffee shop market is led by Costa Coffee, expanding with 167 new UK outlets to a total of 1,342. Starbucks opened 12 new stores and posted revenue growth in 2011 from its 743 strong store estate. The three largest chains account for 52% share of branded market sales. The UK coffee shop sector will continue to out-perform retail sales growth and this will attract further non-specialist interest. Allegra predicts like-for-like sales growth to continue, with leading brands to average high single digit growth over the next five years. The branded coffee chain market will be the main growth driver of the overall market. Expected to grow at 6.0% compound annual growth and exceed 6,000 outlets by 2015, sales are predicted to grow by 10.7% CAGR (compound annualised growth rate) and reach £3.2 billion by 2015. For more details visit:
Written by
PSC Team