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Booming UK coffee shop market outperforms UK retail sector

Booming UK coffee shop market outperforms UK retail sector

Estimated at 20,728 outlets, the total UK coffee shop market shows significant sales growth of 10% on last year and a total turnover in 2015 of £7.9 billion.

According to the latest report from Allegra World Coffee Portal: Project Café2016 UK, the branded coffee chain segment recorded £3.3 billion turnover across 6495 outlets, following impressive outlet growth of 12%, adding 714 stores during 2015 and delivering sales growth of 15%. 

After 17 years of considerable growth, the coffee shop sector continues to be one of the most successful in the UK economy. Costa Coffee (1992 outlets), Starbucks Coffee Company (849) and Caffè Nero (620) remain the UK’s leading brands with 53% share of the branded chain market. Physical expansion by leading chains is a strong driver of growth, particularly market leader Costa, which added 171 UK outlets and had sales growth of 14% in calendar year 2015.

Coffee quality is now expected and is being constantly improved across the sector due to the influence both from artisan chains and independents. In Allegra’s survey of over 16,000 consumers, artisan chain Harris + Hoole was ranked number one for coffee quality. Increasing competition provides consumers with better choice of quality coffee at home, at work and from non-specialists, with consumer choice now based on far more criteria than ever before.

A greater commitment to coffee credentials by the non-specialist sector, such as pubs, fast food outlets, supermarkets and retail stores, has also generated wider consumer interest while adding to competitive pressures. This sector has experienced outlet growth of 10.5%, reaching 7976 establishments with a strong coffee offering (excluding branded chain partnerships). Supermarkets also fuelled growth, adding a further 322 outlets, driven mainly by Morrison’s commitment to a competitive coffee experience, adding a further 270 cafés to reach 398, second to Tesco with 481 coffee shops and cafés.

The non-specialist sector took a further 2% share of the market and now represents 39% of the total coffee shop market, compared to the branded chains with 31% share and the independents with 30% share.

Market trends

The UK coffee shop market is dynamic and rapidly growing and the report shows that the UK is becoming a nation of coffee connoisseurs. Compared with last year, daily visits to coffee shops have increased and 16% of coffee shop visitors frequented a coffee shop at least once a day in 2015 compared with 14% in 2014.  With coffee widely available out of home, coffee shop visitors drink an estimated 2.2 billion cups of coffee per year in coffee shops. 

Market growth

Allegra predicts the total UK coffee shop market will comfortably exceed 30,000 outlets and £15 billion turnover by 2025, driven by branded coffee chain expansion and non-specialist operator growth. The branded coffee shop segment is forecast to exceed £5.7 billion with more than 8500 outlets by 2020, with outlets predicted to grow at 6% compound and revenue at 12% compound over the next 5 years. 


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