Branded coffee shop operators which do not adapt and provide more authentic, artisan concepts at scale risk losing ground, Allegra World Coffee Portal has warned.
Allegra Strategies, a leading authority on global coffee trends, has identified the emergence of the 5th Wave, which encompasses tradition, branded chains, artisan, and the science of coffee, and will see high quality boutique chains become a major feature of the market.
These highly targeted operators will adopt a more advanced set of business practices to deliver authentic, artisan concepts at scale, The Project Café2017 Europe report finds.
Brands which fail to adapt will risk losing business, with European chains such as Coffee House, Kahve Dukkani, Ozsut and Coffea suffering multiple outlet closures in 2016, according to Allegra WCP.
Jeffrey Young, Allegra Group chief executive, said: “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.”
The influential artisan coffee scene continues to grow across Europe, with the report identifying strong sustained growth in markets with an established artisan wave presence, such as the UK, Russia, the Nordics and Netherlands.
Successful branded chains are adapting to this influence with new in-store design, origin coffee and fresh hand-prepared food.
The report predicts unashamedly business focussed brands with genuine and principled concepts will prosper, with greater investment in new technologies from operators to fully engage with savvy millennials and increase consumer satisfaction.
Young added: “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.”
The report finds the European coffee shop market is poised for cautious growth, adding 1,268 outlets in 2016 at a growth of 6.4%, compared to 9% a year earlier.
The UK, Turkey, and Greece are identified as the fastest growing markets in terms of outlet expansion in the last 12 months.
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.
The Project Café2017 Europe Report is available to purchase via Allegra World Coffee Portal.
