The latest annual report by management consultants Allegra Strategies, which includes a national survey of 25,000 consumers, reveals that the total UK coffee shop market grew by 7.5% in 2012 to reach £5.8bn in turnover.
The market which includes branded coffee chains, independent coffee shops and non-specialist operators, grew to 15,723 outlets. The total number of coffee shop outlets grew by 4% over the past year alone.
In particular, branded coffee chains such as Costa Coffee, Starbucks Coffee Company, Caffè Nero, Pret A Manger and Eat, have shown strong resilience in the face of a very challenging UK economy.
The UK branded coffee chain segment now stands at 5,225 outlets. Sales were very robust in 2012, growing by 10% to an estimated turnover of £2.3bn. The market has doubled in the past six years and is now 10 times the size it was 15 years ago, at a time many thought it was already saturated.
The three leading chains in the UK are Costa Coffee (1,552 outlets), Starbucks Coffee Company (757) and Caffè Nero (530). These three now command a 54% combined share of the branded coffee chain market.
With limited price increases by major chains, industry like-for-like sales growth of 3.5% has been achieved by new consumers enjoying coffee houses, better operating standards and menu innovation.
UK consumers are clearly embracing the growing coffee culture trend and demonstrating their love of coffee, enabling the sector to substantially outperform the wider retail market, which in contrast, has grown at a sluggish pace of 1-2% over the past 4-5 years.
This year Allegra’s research with more than 25,000 consumers shows British coffee shop visitors refuse to give up on their regular coffee out of home, with 49% stating they are maintaining their coffee shop visits compared with last year. 1 in 5 consumers surveyed now visit coffee shops daily compared with 1 in 9 in 2009.
Coffee shop visitors drink on average three cups of coffee per week in coffee shops. This is still far less than the quantity drunk at home (10 cups per week) or at work (six cups per week) and far less than tea overall, but it indicates significant room for further growth as coffee becomes one of the nation’s favourite beverages.
The branded coffee chain market is expected to grow at 6% compound annual growth and reach 7,000 outlets by 2017 with sales forecast to grow by 10% CAGR and reach £3.7 billion by 2017.
Allegra estimates that the UK has the potential to host well over 8,000 branded coffee shops and potentially beyond 10,000 ultimately.
Source: Allegra Strategies
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