Table of Contents
Overview
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- What you need to know
- Covered in this Report
Executive Summary
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- The market
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- Figure 1: UK coffee shop market, value sales, 2011-21
- Key players
- Costa Coffee continues to dominate the market
- Premium pricing of specialty coffee may have peaked
- Starbucks changes business mix
- The consumer
- Non-specialists continue to threaten branded coffee shops
- Men and women equally likely to buy coffee out-of-home
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- Figure 2: Outlets used to buy hot drinks out-of-home, October 2016
- Young men are likely to sit-in than takeaway
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- Figure 3: Frequency of using coffee shops, 2014-16, October 2016
- Afternoon teas could appeal to women
- Users want healthier beverages as much as guilty pleasures
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- Figure 4: Interest in coffee shop product concepts, October 2016
- Efforts to cut down on packaging waste could appeal to coffee drinkers
- More men prefer to drink hot drinks at home
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- Figure 5: Coffee shop buying behaviours and preferences, October 2016
- Young women see coffee from branded coffee shops as too expensive
- Young men value the convenience of takeaway drinks
- Women and parents demand better food options
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- Figure 6: Attitudes towards coffee shops/hot drinks outlets, October 2016
- What we think
Issues and Insights
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- Low-cost coffee can win customers’ favour
- The facts
- The implications
- Efforts to reduce coffee cup waste can attract customers
- The facts
- The implications
- Coffee shops offer better food options in a competitive eating out market
- The facts
- The implications
The Market – What You Need to Know
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- The coffee shop market is in growth...
- ...and looks set to continue growing
- Coffee production comes under pressure
- Sugar tax is key challenge for drinks with added sugar
- Central London rising rents and rates could temper growth
Market Size and Forecast
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- The coffee shop market is worth £3.4bn in 2016…
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- Figure 7: UK coffee shop market, value sales, 2011-21
- …and forecasted to reach £4.4 bn by 2021
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- Figure 8: UK coffee shops market, value sales and forecast, 2011-21
- Forecast methodology
Market Drivers
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- Savings to rival eating out as main discretional spending area
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- Figure 9: Selected consumer spending priorities (after bills), October 2015-September 2016
- Britain’s ageing population
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- Figure 10: Trends in the age structure of the UK population, 2011-16 and 2016-21
- Coffee production comes under pressure
- Sugar tax is key challenge for drinks with added sugar
- Central London rents and rates continue to rise above inflation
Key Players – What You Need to Know
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- Costa Coffee to focus on its food options
- Independents at risk of overpricing coffee
- Starbucks changes business mix
- Caffè Nero acquires Harris + Hoole
Market Share
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- Costa Coffee retains lead by store and usage numbers
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- Figure 11: Outlet numbers of selected UK coffee shops, 2013-16
- Independents boost the coffee shop market
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- Figure 12: Coffee shop usage habit, 2013-16, October 2016
- Starbucks shows preference for more licensed stores
- Caffè Nero acquires Harris + Hoole
Launch Activity and Innovation
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- Reducing sugar intake
- Cutting coffee cup waste
- Boosting out-of-home tea consumption
- New concepts
- 24-hour trading can bolster sales and offer flexibility to staff
- Starbucks and Costa expand into Express formats
- A greater choice of food and drinks to increase all-day usage
- Serving up alcohol to increase evening visits
- Caffè Nero rolls out mobile wallet scheme
Advertising and Marketing Activity
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- Overall ad spend fell in 2015
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- Figure 13: Recorded above-the-line, online display and direct mail advertising expenditure on selected coffee shops, 2012-16
- Starbucks uses digital, outdoor and press to support Teavana
- Esquires Coffee uses print ads to support franchise business
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- Figure 14: Advertising expenditure by selected coffee shops, by media type, 2012-16
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 15: Attitudes towards and usage of selected brands, October 2016
- Key brand metrics
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- Figure 16: Key metrics for selected brands, October 2016
- Brand attitudes: Costa and Caffé Nero lead on reputation, quality and customer service
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- Figure 17: Attitudes, by brand, October 2016
- Brand personality – Macro: Greggs and McCafé stand on par with Costa as vibrant, accessible and fun
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- Figure 18: Brand personality – Macro image, October 2016
- Brand personality – Micro: Starbucks takes the lead as cool, Costa is most welcoming
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- Figure 19: Brand personality – Micro image, October 2016
- Brand analysis
- Greggs rivals coffee shops as the most trusted brand of all
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- Figure 20: User profile of Greggs, October 2016
- Costa Coffee appeals to women
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- Figure 21: User profile of Costa Coffee, October 2016
- Only 5% of users see McCafé as a favourite brand
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- Figure 22: User profile of McCafé, October 2016
- Caffè Nero viewed as a boring brand
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- Figure 23: User profile of Caffè Nero, October 2016
- Starbucks is exciting but unethical
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- Figure 24: User profile of Starbucks, October 2016
The Consumer – What You Need to Know
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- Three in five Brits have bought from coffee shops
- 44% of Brits have bought hot drinks from non-specialists
- 70% of 45-65s find coffee from big coffee shop chains too expensive
- 36% of women are interested in afternoon tea in coffee shops
- Users want healthier beverages as much as guilty pleasures
- 16% of coffee drinkers interested in different levels of caffeine
- 51% of coffee drinkers prefer to drink hot drinks at home
- 32% of coffee drinkers value the convenience of takeaway drinks
- 54% of coffee drinkers would like more food options
Coffee Shop Usage Habits
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- More than three in five Brits have bought from coffee shops
- Non-specialists continue to grab the market
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- Figure 25: Coffee shop usage habit, by outlet type, October 2016
- Costa Coffee continues to dominate the market
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- Figure 26: Outlets used to buy hot drinks out-of-home, October 2016
- Almost three in 10 buy hot drinks from fast food chains
- Older women are core users of independent coffee shops
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- Figure 27: Outlets used to buy hot drinks out-of-home, 2013-16, October 2016
- Scope to engage with older age groups
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- Figure 28: Usage of any coffee shop specialist to buy hot drinks out-of-home, by age groups, October 2016
Frequency of Using Coffee Shops
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- Figure 29: Frequency of using coffee shops, October 2016
- More people sit-in than takeaway
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- Figure 30: Frequency of using coffee shops, 2014-16, October 2016
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Interest in Coffee Shop Product Concepts
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- Afternoon teas could help create a new revenue stream
- Users want healthier beverages as much as guilty pleasures
- Offering different levels of caffeine could add interest to coffee shops
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- Figure 31: Interest in coffee shop product concepts, October 2016
Coffee Shop Buying Behaviours and Preferences
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- Coffee drinkers prefer to drink hot drinks at home
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- Figure 32: Examples of coffee retail brands in the UK, 2016
- Efforts to cut down on packaging waste could help appeal to coffee drinkers
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- Figure 33: Coffee shop buying behaviours and preferences, October 2016
Attitudes towards Coffee Shops/Hot Drinks Outlets
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- Coffee from branded coffee shops is seen as too expensive
- One in three users values the convenience of takeaway drinks
- Food options are in demand by women and parents
- Scope for targeted discounts
- Almost two in five coffee drinkers are enthusiasts
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- Figure 34: Attitudes towards coffee shops/hot drinks outlets, October 2016
CHAID Analysis
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- Methodology
- Meal deals can help branded coffee shops grab lunch market
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- Figure 35: Coffee shops – CHAID – Tree output, October 2016
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- Figure 36: Target groups based on people’s attitudes towards coffee shops – CHAID – Table output, October 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast Methodology
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- Figure 37: Best- and worst-case forecasts for UK coffee shops market, 2015-20
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