Table of Contents
Issues in the Market
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- Main issues
- Definition
- Abbreviations
Future Opportunities
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- Australian influences
- Specialists losing USP of customisation
Market in Brief
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- Period of consolidation in prospect as boom times fade
- A £1 billion-plus market
- Costa seemingly outperforming Starbucks
- Still plenty of opportunities for market growth longer-term… but it will take work
- Independents and in-store restaurants challenge specialists
Internal Market Environment
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- Key points
- Stagnation in visitor numbers
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- Figure 1: Trends in visiting coffee shops, 2007-08
- Opportunities to increase frequency?
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- Figure 2: Frequency of visiting coffee shops, 2007-08
- Instant coffee predominates
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- Figure 3: Trends in in-home instant coffee consumption, 2006-08
- Ground coffee usage on the up
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- Figure 4: Trends in in-home fresh ground coffee consumption, 2006-08
- Tea: An opportunity for coffee shop operators?
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- Figure 5: Trends in in-home tea consumption, 2004-08
- Coffee price trends: A major factor affecting retail prices
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- Figure 6: Trends in the price of coffee, 2003-07
- Figure 7: Trends in the price of coffee, 2008
- Per capita consumption: Room for growth
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- Figure 8: Per capita consumption of coffee in selected countries, 2003 and 2007
- Ethical issues
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- Figure 9: Sales of Fairtrade hot beverages in the UK, 2003-07
- The National Minimum Wage
- Rising utility costs
Broader Market Environment
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- Key points
- The reality of recession
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- Figure 10: Trends in personal disposable income and consumer expenditure, 2003-13
- How will the economic slowdown impact on consumer expenditure habits?
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- Figure 11: Areas where consumers would cut back spending, July 2008
- Continued growth for pre-/no family target market
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- Figure 12: Forecast adult population trends, by lifestage, 2003-13
Competitive Context
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- Key points
- JD Wetherspoon
- Eat
- Pret A Manger
- McDonald’s
- Burger King
- Wild Bean Café
Strengths and Weaknesses in the Market
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- Strengths
- Growth potential for UK market
- Brand equity
- Product quality and consistency
- Product range
- Economy of scale
- Weaknesses
- Vulnerable to economic downturn?
- Lack of differentiation
- Becoming ubiquitous?
- Increased competition from non-specialists
Who’s Innovating?
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- Key points
- Ethical offers gathers momentum
- Starbucks launches instant coffee
- Flavour of the month…
- … as seasonal variations keep the offer fresh
- Healthy options becoming more prevalent
- Getting creative in the kitchen
- BB’s opts for digital in-store promotion
- Coffee Republic trials contactless payment
Market Size and Forecast
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- Key points
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- Figure 13: Market size and forecast of coffee shops, at current and 2008 prices*, 2003-13
- Sales growth and new store openings drive market
- Slowdown in past 12 months…
- …worse to come but long-term growth still expected
Market Share
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- Key points
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- Figure 14: Leading operators in the UK coffee shop market, 2008
Companies and Products
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- Key points
- Major players
- Costa Ltd
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- Figure 15: Costa UK outlets by type, 2007-08
- Figure 16: Key financial indicators for Costa Ltd, 2007-08
- Starbucks Coffee Company (UK) Ltd
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- Figure 17: Starbucks outlets in the UK by type, 2007-08
- Figure 18: Key financial indicators for Starbucks Coffee Company (UK) Ltd, 2007-08
- Caffè Nero Group Ltd
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- Figure 19: Key financial indicators for Caffè Nero Group Ltd, 2007-08
- BB’s Coffee & Muffins Ltd
- Puccino’s Ltd
- Coffee Republic plc
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- Figure 20: Key financial indicators for Coffee Republic plc, 2007-08
- Figure 21: Breakdown of total network sales of Coffee Republic by type of outlet, 2007-08
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- Figure 22: Coffee Republic outlet profile, 2007-08
- AMT Coffee Ltd
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- Figure 23: Key financial indicators for AMT Coffee Ltd, 2007-08
- Other players
- Caffé Ritazza
- Coffee Primo
- Coffee Nation
Brand Communication and Promotion
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- Key points
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- Figure 24: Advertising expenditure on selected coffee shop brands, 2004-07
- Starbucks and Costa main advertisers
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- Figure 25: Advertising expenditure on selected coffee shop brands, by media type, 2007
- Mainstream media traditionally avoided
- Subtle promotions and sponsorship preferred
- Not all publicity is good publicity
- Stores provide good promotional platform
- Added-value promotions popular
- Technology matters…
- … while net gains are evident
- Students targeted
Brand Elements
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- Brand Map
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- Figure 26: Attitudes and usage of coffee shop brands, January 2009
- Costa Coffee
- What the consumer thinks
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- Figure 27: Attitudes towards the Costa Coffee brand, January 2009
- Starbucks
- What the consumer thinks
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- Figure 28: Attitudes towards the Starbucks brand, January 2009
- Caffè Nero
- What the consumer thinks
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- Figure 29: Attitudes towards the Caffè Nero brand, January 2009
- BB’s Coffee & Muffins
- What the consumer thinks
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- Figure 30: Attitudes towards the BB’s Coffee & Muffins brand, January 2009
- Tchibo
- What the consumer thinks
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- Figure 31: Attitudes towards the Tchibo brand, January 2009
- Coffee Republic
- What the consumer thinks
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- Figure 32: Attitudes towards the Coffee Republic brand, January 2009
- Brand qualities of coffee shop brands
- Starbucks seen as overrated
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- Figure 33: Personalities of various coffee shop brands, January 2009
- Experience of coffee shop brands
- Little familiarity with brands outside of the ‘big three’
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- Figure 34: Consumer usage of various coffee shop brands, January 2009
- Brand intentions for coffee shop brands
- Costa and Starbucks have best customer retention
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- Figure 35: Consideration of various coffee shop brands, January 2009
- Brand momentum for coffee shop brands
- Lack of direction holding the market back
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- Figure 36: Momentum of various coffee shop brands, January 2009
- Brand satisfaction for coffee shop brands
- Good but not great
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- Figure 37: Satisfaction with various coffee shop brands, January 2009
- Brand commitment to coffee shop brands
- Brand equity for Starbucks, but Costa consumers show more loyalty
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- Figure 38: Commitment to various coffee shop brands, January 2009
- Round up
Case Study – Starbucks
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- Key points
- Loss of direction
- The Burberry experience
- The McDonald’s experience
- Downsizing down under
Coffee Shop Usage
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- Key points
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- Figure 39: Coffee shops visited, October 2008
- ‘Big two’ are neck-and-neck in the popularity stakes
- Major chains appeal equally to men and women and to most ages
- An affluent customer base
- A different breed of consumer…
- What’s Costa’s is Starbucks’ and vice versa
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- Figure 40: Most popular coffee shops visited, by coffee shops visited, October 2008
- Customers go where convenience takes them
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- Figure 41: Next most popular coffee shops visited, by coffee shops visited, October 2008
Attitudes Towards Drinking Tea/Coffee Out-of-Home
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- Key points
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- Figure 42: Attitudes towards drinking tea/coffee out of home, October 2008
- Location bigger than brand
- USP?
- Creatures of habit
- Only one in 20 have cut back so far
- Men opt for ‘hit and run’
- Non-specialists encroaching on the traditional coffee shop market
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- Figure 43: Most popular attitudes towards drinking tea/coffee out of home, by coffee shops visited, October 2008
- Starbucks – down but by no means out
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- Figure 44: Next most popular attitudes towards drinking tea/coffee out of home, by coffee shops visited, October 2008
- Loners tend to order the same thing
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- Figure 45: Most popular attitudes towards drinking tea/coffee out of home, by attitudes towards drinking tea/coffee out of home, October 2008
- Regular routine bolsters catering sales
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- Figure 46: Next most popular attitudes towards drinking tea/coffee out of home, by attitudes towards drinking tea/coffee out of home, October 2008
Attitudes towards Branded/Specialist Coffee Shops
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- Key points
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- Figure 47: Most popular attitudes towards branded/specialist coffee shops, October 2008
- Demographic traits
- Costa leading the way as a treat
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- Figure 48: Most popular attitudes towards branded/specialist coffee shops, by coffee shops visited, October 2008
- Starbucks continues to draw on breadth of choice
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- Figure 49: Next most popular attitudes towards branded/specialist coffee shops, by coffee shops visited, October 2008
- Brand sceptics happy to sit on their own
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- Figure 50: Most popular attitudes branded/specialist coffee shops, by attitudes towards drinking tea/coffee out of home, October 2008
- Weekend usage of branded specialists
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- Figure 51: Next most popular attitudes branded/specialist coffee shops, by attitudes towards drinking tea/coffee out of home, October 2008
- Consumers who want an ordinary cuppa most likely to be put off by prices
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- Figure 52: Most popular attitudes towards branded/specialist coffee shops, by attitudes towards branded/specialist coffee shops, October 2008
- Customers who want choice choose branded outlets
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- Figure 53: Most popular attitudes towards branded/specialist coffee shops, by attitudes towards branded/specialist coffee shops, October 2008
Coffee Shops Targeting Opportunities
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- Key points
- Branded/specialist coffee shop target groups
- Loyal
- Switchers
- Promiscuous
- Non-specialist/branded outlets target groups
- Majority stick to one or two outlets
- Older consumers more habitual
- More affluent consumers tend to be more adventurous
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- Figure 54: Repertoire of non-specialist/branded outlets, by types of non-specialist/branded coffee shops visited in the last three months, October 2008
Appendix – Coffee Shop Usage
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- Most popular coffee shops visited, by detailed demographics
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- Figure 55: Most popular coffee shops visited, by detailed demographics, October 2008
- Next most popular coffee shops visited, by detailed demographics
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- Figure 56: Next most popular coffee shops visited, by detailed demographics, October 2008
Appendix – Attitudes towards Drinking Tea/Coffee Out-of-home
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- Most popular attitudes towards drinking tea/coffee out-of-home, by detailed demographics
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- Figure 57: Most popular attitudes towards drinking tea/coffee out-of-home, by detailed demographics, October 2008
- Next most popular attitudes towards drinking tea/coffee out-of-home, by detailed demographics
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- Figure 58: Next most popular attitudes towards drinking tea/coffee out-of-home, by detailed demographics, October 2008
Appendix – Attitudes towards Branded/Specialist Coffee Shops
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- Most popular attitudes towards branded/specialist coffee shops, by detailed demographics
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- Figure 59: Most popular attitudes towards branded/specialist coffee shops, by detailed demographics, October 2008
- Next most popular attitudes towards branded/specialist coffee shops, by detailed demographics
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- Figure 60: Next most popular attitudes towards branded/specialist coffee shops, by detailed demographics, October 2008
Appendix – Coffee Shops – Targeting Opportunities
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- Specialist coffee shop repertoire groups, by detailed demographics
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- Figure 61: Specialist coffee shop repertoire groups, by detailed demographics, October 2008
- Specialist coffee shop repertoire groups, by coffee shops visited
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- Figure 62: Specialist coffee shop repertoire groups, by coffee shops visited, October 2008
- Specialist coffee shop repertoire groups, by brand loyalty
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- Figure 63: Specialist coffee shop repertoire groups, by brand loyalty, October 2008
- Repertoire of non-specialist/branded outlets, by detailed demographics
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- Figure 64: Repertoire of non-specialist/branded outlets, by detailed demographics, October 2008
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