UK coffee shop market growth shows no signs of slowing

A new report from Allegra World Coffee Portal, ProjectCafé2018 UK has shown that the UK coffee shop market grew by 7.3% in turnover during 2017 to £9.6bn, continuing as one of the UK’s most robust business sectors. The report has also highlighted that the total UK coffee shop market added 1,215 stores over the last 12 months to reach a total of 24,061, amounting to a 5.3% growth.

The industry mood remained confident in 2017, with 71% of coffee sector executives interviewed by the website about the trading environment.

However, there still remains deep concerns over key Brexit issues, such as trade and jobs

A lack of clarity over the UK’s future relationship with the EU is a headwind for the industry, but while the fall in sterling has led to higher equipment and import costs, increased tourism and the popularity of ‘staycations’ has boosted sales for some businesses.

Costa Coffee, Starbucks Coffee Company and Caffè Nero continue to dominate the UK coffee shop market, with 2,326, 956 and 675 outlets respectively. Together, the UK’s top three coffee chains comprise 52.9% share of the total branded chain market.

The report strengthened the reputation of Costa Coffee, the largest branded chain in the UK, that they have been voted the ‘Nation’s Favourite’ coffee shop for the eighth year in a row by Allegra’s independent panel of consumers.

Jason Cotta, MD for Costa UK & I commented: “We’re absolutely delighted to be recognised as the UK’s favourite coffee shop for the eighth consecutive year. This fantastic achievement wouldn’t have been possible without the support and dedication we receive from our partners and baristas, and it means a great deal having been voted for by our customers and industry peers. We look forward to inspiring even more customers to be as passionate about coffee and making coffee accessible and interesting for everyone.”

The artisan scene that developed in the mid-2000s has become widespread in the UK.  The market is now entering a new era of exceptional professionalism and paves the way for European coffee shop development. Dubbed the ‘5th Wave, The Business of Coffee’, this era sees high-quality chains adopting more advanced business practices to deliver boutique concepts at scale.

Specialised artisanal chains such as Gail’s, Grind and Joe & The Juice gained momentum in 2017, all embracing the ‘5th Wave’ trend to cater to more discerning and less brand-loyal millennials with premium-quality coffee and service.

Allegra expects the total UK coffee shop market will exceed 31,400 outlets, with a turnover of £13bn by 2022.

Allegra Group CEO, Jeffrey Young, commented: “The UK coffee shop market continues to be robust despite current challenges, laying down modest growth in 2017 amid severe concern over the Brexit impact on jobs and investment…

“As the market matures, and we enter the ‘5th Wave’, we’re seeing a new era of leading brands competing on excellence. Key players are sharpening their focus on customer experience to stay ahead of rivals. If leading coffee shops can do this successfully, the market will remain strong – it’s time for the industry to dig deep and capitalise on the opportunities ahead.”