Estimated at 21,198 outlets, the European branded coffee shop market (25 countries) saw a growth of 6.4%, vs. 9% a year earlier, adding 1,268 outlets in 2016.
The Project Café2017 Europe report from Allegra World Coffee Portal (WCP) reveals the United Kingdom, Turkey, and Greece are the fastest growing markets in terms of outlet expansion in the last 12 months.
21 of the 25 countries analysed in the report saw expansion, yet the rate of growth has slowed compared to 2015.
As the most developed market in the Europe, the United Kingdom remains the model for the branded coffee shop industry.
Continued investment by leading chains saw the top three brands maintain a 32% market share of the total European coffee chain market in 2016. Market leader Costa Coffee operates 2,512 outlets across 12 European countries.
McCafé and Starbucks trade from 2,199 outlets across 17 countries and 2,154 across 24 countries respectively.
Starbucks was the fastest growing chain in 2016, opening 194 European stores. With its planned entry to Italy next year, it will be present in all major European markets.
Market evolution and the emergence of The 5th Wave
The influential artisan coffee scene continues to grow across Europe. The report identifies strong sustained growth in markets with an established artisan wave presence e.g. UK, Russia, Nordics, Netherlands.
Successful branded chains are adapting to this influence with new in-store design, origin coffee and fresh hand-prepared food.
Allegra WCP predicts The ‘5th Wave, The Business of Coffee’ presents an important new era for the global coffee industry.
The 5th Wave encompasses a compelling combination of all four previous waves – Tradition, Branded Chains, Artisan, and The Science of Coffee – where high quality boutique chains will be a major feature of the market going forward.
These highly targeted operators will adopt a more advanced set of business practices to deliver authentic, artisan concepts at scale.
According to Allegra WCP, brands who don’t adapt will risk losing business.
The report observes traditional branded chains across Europe such as Coffee House, Kahve Dukkani, Ozsut and Coffea have already suffered multiple outlet closures in 2016.
“We are entering an exciting, yet challenging era for the European coffee industry within a global context. One that will ultimately see the leading brands compete on excellence in an environment where winning is everything” says Allegra Group CEO Jeffrey Young.
Consumer trends
In a period of political uncertainty, coffee consumer confidence is relatively stable in most markets.
The specialty coffee trend continues to grow throughout Europe, and is particularly embedded in the daily lives of consumers in key markets such as UK, The Netherlands, The Nordics, and Greece.
Socialising out of home remains important and has contributed to the rapid adoption of higher quality coffee in the most developed markets.
The future marketplace
The Business of Coffee – 5th Wave concepts – will be a major force on the European coffee industry over the next decade, where unashamedly business focussed brands with genuine and principled concepts will prosper.
We will see a greater investment in new technologies from operators to fully engage with savvy millennials and increase consumer satisfaction.
“Success will be defined by brands that develop and retain highly motivated and passionate staff.
The industry will put more emphasis on hyper-professionalism and invest in people development programmes to support long term career paths for ‘hospitality professionals.” says Young.
