The total UK coffee shop market is estimated at 18,832 outlets and continues to outperform the UK retail sector with significant sales growth of 10.7% on last year with £7.2 billion total turnover, according to Allegra World Coffee Portal’s definitive report, Project Café2015 UK.
The branded coffee chain segment recorded £2.9 billion turnover across 5,781 outlets, delivering sales growth of 11.9% and outlet growth of 4.9%, adding 271 stores during 2014.
After 16 years of considerable growth, the coffee shop sector continues to be one of the most successful in the UK economy. Costa Coffee (1,821 outlets), Starbucks Coffee Company (824) and Caffè Nero (590) remain the UK’s leading brands with a combined share of 56% of the branded chain market by outlet numbers.
Market leader Costa added 151 UK outlets and achieved 15% sales growth in calendar 2014. The non-specialist sector, including pubs, fast food operators, supermarkets and retail stores, has outpaced branded chains with outlet growth of 14.5% to reach 7,017 establishments with a strong coffee offer (excluding branded chain partnerships).
Pub groups are responding to the threat coffee shops pose to their role as the traditional community hub. Pub groups have added a further 648 establishments representing growth of 19%, the main contributor of growth in this sector.
In addition, retail and department stores (including garden centres, bookshops, homeware and supermarkets) added a total 189 stores, representing growth of 10%.
The non-specialist sector took a further 2% share of market to represent 37% of the total coffee shop market compared with branded chains with 31% outlet share and independents with 32% market share.
A spokesman for Allegra Group said: “The third wave/artisan coffee has profoundly influenced operator and consumer expectations about coffee quality and store design.
The artisan independent segment is becoming far more regionalised than ever before, with cities such as Bath, Edinburgh, Manchester and York boasting strong artisan independents.
The gradual decline of instant coffee consumption at home and subsequent premiumisation of the at-home segment further increases the availability of specialty coffee and intensifies competition.”
While outside of the report scope, Allegra notes that gourmet vending is outpacing the UK coffee shop market, growing at 27% in 2014 to reach 5,237 units and is worth an estimated £230 million.
Allegra predicts the total UK coffee shop market will exceed 27,000 outlets and £16.5 billion turnover by 2020, driven by branded coffee chain expansion and non-specialist operator growth.
The branded coffee shop segment is forecast to exceed £5 billion across 7,870 outlets by 2020 with outlets predicted to grow at 5.3% compound and revenue at 10% compound over the next five years. It is estimated that the UK has the long-term potential to comfortably host more than 9,500 branded coffee shops.
Allegra Group managing director Jeffrey Young said: “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.”
