‘New nation of coffee drinkers’ will help coffee shops turn over more than £8bn by 2017

The company’s annual coffee report reveals that while Brits love their tea, ‘a new nation of coffee drinkers’ have helped fuel further growth of the coffee shop market over the last year with turnover rising 7.5 per cent to £5.8bn.

In all, the market, which includes branded coffee chains, independent coffee shops and non-specialist operators, grew to 15,723 outlets in 2012 and is expected to get bigger over the next few years.

"The UK coffee shop market continues to astound even the most optimistic of forecasters, by growing significantly in value, in outlet numbers and also in the social psyche of the nation," said Jeffrey Young, managing director of Allegra Strategies.

“As consumers gain more opportunity to consume quality coffee through more outlets, they are making it part of their lifestyle. Britain has become a ‘new nation of coffee drinkers'. Long live the cup of tea, but more and more consumers seek and enjoy quality coffee."

Branded vs artisan​

Allegra Strategies’ report, which includes a survey of 25,000 consumers, found that the branded coffee shops Costa, Starbucks and Caffe Nero were the biggest winners, collectively taking 54 per cent of the market.

However, independent artisan coffee outlets were also popular with consumers, who drink, on average three cups of coffee per week, as they become more knowledgeable and discerning about the type of coffee they drink.   

Young said: "High quality ‘artisan' independent coffee shops are also fuelling consumer demand and driving the branded coffee shop sector to increase focus on authentic interiors, barista technique and to introduce a wider range of crafted coffees such as flat white and cortado.

"This focus on quality in all areas can only continue to drive a thriving industry over the next three to five years and beyond.”

The shift to quality also means that restaurants, hotels and pubs offering high quality coffee from well-trained staff could benefit from increasing consumer interest in coffee. 

Competition​

Allegra found that, along with high street restaurant chains​, finding suitable sites for expansion was a challenge for coffee shop owners. However, there was hope that rents could be lowered over the next three years with the decline of the retail sector.

It said competition was expected to be fierce next year with current brands looking to expand while new-comers such as Tesco’s Harris & Hoole, Greggs Moment and SA Brains’ Coffee#1 would also be looking for a slice of the market.

“The entry of Tesco into the market this year with its Harris + Hoole joint venture signals a new era of competition is about to emerge, with quite possibly further M&A activity,” said Young.