Speciality coffee roasting is a rapidly developing market, driven by strong wholesale demand from independent cafés and a growing consumer appetite for café roastery experiences, research from Allegra reveals.
Despite an incredibly competitive retail landscape, rising demand for high-quality roasted coffee has sustained growth across the UK roaster segment, particularly as the coffee shop market continues to expand.
More than half of roasters surveyed (65%) regard current trading conditions as positive, the Roasters Report UK 2019 finds.
The first dedicated analysis of UK roasters indicates a market poised for a new phase of development, with 50% of roasters surveyed planning operational expansion.
Nearly half (44%) are operating at below 50% capacity, with just 5% currently at maximum capacity.
A growing consumer trend for locally roasted coffee has contributed to a broad regional distribution of roasters in the UK, which are now present in virtually every major town and city.
This dynamic supports a symbiotic relationship between independent coffee shops and proximate roasters, with 44% of industry leaders anticipating the biggest growth channel for wholesale distribution to be independent cafés, followed by workplaces and contract catering.
The report also details the emergence of café roastery concepts, which capitalise on a growing appetite among consumers for coffee experiences and contact with the roasting process.
A buoyant UK roasting segment continues to attract new market entrants and competition, with nearly half (49%) perceiving an oversupply of roasters compared to consumer demand.
This dynamic has also driven M&A and investment activity within the UK roaster segment, such as Ozone Coffee Roaster’s acquisition of fellow specialty roaster, Has Bean, and roastery expansion at London-based Caravan Coffee Roasters and Grind.
The cost of property was the second most cited concern among UK roasters surveyed, indicating the segment could still be susceptible to tough high street trading.
UK roasters indicate coffee from emerging origins will be a core focus over the next 12 months, with less familiar varieties from Rwanda, Myanmar and China growing in popularity.
Strong wholesale demand from independent cafés, which often specialise in small-batch single origin coffee, reinforces this trend, as does heightened consumer consideration of coffee provenance.
An increase in sustainability initiatives also polled highly among roasters surveyed, followed by direct trade, with 62% currently operating an ethical or direct trade policy.
However, while 88% of roasters indicate willingness to pay more for ethically sourced coffee, only 60% believe consumers are prepared to pay the same premium. This indicates more work is needed to educate UK customers on the social value of ethically sourced coffee.