Whitbread’s Costa has become the new market leader within the £5bn UK coffee shop market, according to an authoritative new report.
Allegra Strategies’ annual Project Café10 UK survey states that with 1,175 outlets and £462m in annual revenue, Costa is now the UK’s favourite coffee shop within the 14,000-plus strong sector.
In fact, the branded coffee market has shown “remarkable buoyancy” during the downturn, according to Allegra, outstripping the retail section by a considerable margin.
Sales have grown by 12.9% during the last 12 months within the branded coffee shop segment (e.g. Costa, Starbucks, Caffè Nero and Pret), to exceed £1.94bn in revenue.
Jeffrey Young, managing director of Allegra Strategies, said: “After more than a decade of analysing this market, I have never seen such exciting developments in the UK coffee shop market.
“This year the market grew by more than 12% compared to 2.5% for the UK retail sector, adding more than 800 outlets in 2010 in challenging economic times.
“With increasing quality of coffee, better environments from both chains and independents and greater consumer appreciation of coffee and coffee houses, the market is poised for significant further growth over the next 3-5 years.”
Young added that further branded coffee shop segment share growth was guaranteed.
However, the established coffee chain operators face increasing pressure on quality and price from high quality artisanal independents and value-driven non-specialists such as McDonald’s and JD Wetherspoon.
It is these non-specialist operators, together with department store cafés and motorway and forecourt operators that are the primary driver of total outlet growth according to Allegra, adding 468 sites in the last 12 months and accounting for 54% of overall outlet growth this year.
Allegra’s research with 16,458 consumers also shows that visitor frequency increased in 2010, with 68% of consumers interviewed visiting coffee shops at least once a week compared to 64% in 2009. Consumer confidence is returning as well, and 39% state they visit coffee shops more often than 12 months ago.
