Table of Contents
Overview
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- What you need to know
- Products covered in this report
Executive Summary
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- The market
- The coffee shop market is estimated to see 6% value growth in 2015
- Forecast
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- Figure 1: UK coffee shops market size and forecast, 2010-20
- Growth in real wages should prompt greater frequency of consumption
- National Living Wage is likely to prompt price rises for consumers
- Stalled growth in the core 16-34 user group
- Companies and brands
- Costa aims for 2,500 stores by 2020
- Starbucks starts serving alcohol
- Caffè Nero and Starbucks expand hot food
- Investment pours into SMEs
- Second Cup enters the UK market
- Starbucks and Costa launch new formats
- The consumer
- Three quarters of Brits buy hot drinks out-of-home
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- Figure 2: Outlets used to buy hot drinks out-of-home, July 2013, September 2014 and September 2015
- Specialist coffee shops are used more widely for sitting in than for a takeaway
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- Figure 3: Frequency of using coffee shops, July 2013, September 2014 and September 2015
- Coffee is the most popular drink bought at specialist coffee shops
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- Figure 4: Types of hot drinks purchased at specialist coffee shops, September 2015
- Location and high quality coffee are seen as important by over half of buyers
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- Figure 5: Factors influencing where hot drinks are purchased out-of-home, September 2015
- Limited edition coffee appeals to 29% of consumers
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- Figure 6: Interest in coffee shop product concepts
- 47% of hot drinks buyers prefer venues offering customisation
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- Figure 7: Coffee shop buying behaviours and preferences, September 2015
- Traditional British baked goods are popular with half of out-of-home hot drink buyers
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- Figure 8: Interest in complementary products/services at coffee shops, September 2015
- What we think
Issues and Insights
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- Reducing waiting times should win customer favour
- The facts
- The implications
- Coffee subscriptions: a threat and an opportunity for UK coffee shops
- The facts
- The implications
- Operators experiment with late night and alcohol trials in a competitive landscape
- The facts
- The implications
The Market – What You Need to Know
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- Growth in real wages should benefit coffee shops
- The National Living Wage will increase operators’ costs
- Stalled growth in the core 16-34 user group
- The coffee shops market is estimated to grow by 6% in 2015
- Market growth of 26% is expected in 2015-20
Market Size and Forecast
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- UK coffee shops value growth estimated at 6% in 2015
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- Figure 9: UK coffee shops market size and forecast, at current and 2015 prices, 2010-20
- Forecast
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- Figure 10: UK coffee shops market size and forecast, 2010-20
Market Drivers
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- Growth in real wages should prompt greater frequency of consumption
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- Figure 11: Trends in how respondents would describe their financial situation, February 2009-September 2015
- The introduction of the National Living Wage is likely to prompt price rises for consumers
- Concern over future coffee bean supplies
- Stalled growth in the core 16-34 user group may affect market growth going forward
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- Figure 12: Trends in the age structure of the UK population, 2010-15 and 2015-20
Key Players – What You Need to Know
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- Costa aims for 2,500 stores by 2020
- Investment pours into SMEs
- Second Cup enters the UK market
- Starbucks trials serving alcohol
- Caffè Nero and Starbucks extend their hot food ranges
- Starbucks and Costa launch new store formats
- Apps help to cut queueing time
Market Share
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- The UK specialist coffee shops market: background
- Starbucks, Costa Coffee And Caffè Nero explore new directions
- Caffè Nero expands its hot food options
- Costa launches new Costa Fresco format
- Starbucks launches new Starbucks Reserve and Starbucks Evenings in the UK
- Starbucks Reserve
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- Figure 13: Photographs showing coffee-making methods at the Starbucks Reserve store in Covent Garden, London
- Starbucks Evenings
- Coffee shop specialists lay out expansion plans
- Costa aims for 2,500 stores by 2020
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- Figure 14: Outlet numbers of selected UK coffee shops, 2011 and 2013-15
- Small and medium-sized enterprises attract investment
- Canada’s Second Cup opens in the UK
Brand Communication and Promotion
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- Starbucks is the biggest spender on advertising
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- Figure 15: Recorded above-the-line, online display and direct mail advertising expenditure on selected coffee shops, 2011-15
- Operators foster greater engagement through social media
- Big brands seek to portray ‘handcrafted’ coffee
- Caffè Nero uses lifestyle branding
- Costa looks to lenticular technology to grab attention of passers-by …
- … and partners with BuzzFeed
- First official International Coffee Day established
- Free coffee
Brand Research
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- What you need to know
- Brand map
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- Figure 16: Attitudes towards and usage of selected coffee shop brands, November 2015
- Key brand metrics
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- Figure 17: Key metrics for selected coffee shop brands, November 2015
- Starbucks and Costa have well rounded images influenced by their wide availability
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- Figure 18: Attitudes, by coffee shop brand, November 2015
- Coffee Republic has closest association with negative connotations
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- Figure 19: Brand personality – Macro image, November 2015
- Harris+Hoole is seen as special, whilst BB’s is associated with family
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- Figure 20: Brand personality – micro image, November 2015
- Brand analysis
- Costa Coffee enjoys advantageous position over its competitors
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- Figure 21: User profile of Costa Coffee, November 2015
- Figure 22: User profile of Caffè Nero, November 2015
- Starbucks’ overall positive image limits impact of unethical associations
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- Figure 23: User profile of Starbucks, November 2015
- BB’s Coffee & Muffins is noted for value and family
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- Figure 24: User profile of BB’s Coffee & Muffins, November 2015
- Harris+Hoole enjoys a special image but low exposure limits usage
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- Figure 25: User profile of Harris+Hoole, November 2015
- Coffee Republic struggles to create a positive brand image
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- Figure 26: User profile of Coffee Republic, November 2015
Launch Activity and Innovation
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- Apps
- Pre-ordering apps help customers cut down on queuing time
- Operators move into coffee subscription services
- Operators look to expand their roasting capability
- In-store roasting
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- Figure 27: The coffee roaster in Coffee@33’s store, Brighton
- Cold brew gains traction in the UK
- Draught cold brew/nitro coffee
- Coffee shop industry increases its focus on waste
The Consumer – What You Need to Know
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- Three quarters of Brits buy hot drinks out-of-home
- Specialist coffee shops used more widely for sitting in than for takeaway
- Almost three quarters buy coffee at specialist coffee shops
- Location and high quality are the most important outlet choice factors
- Limited edition coffee appeals to 29% of consumers
- 47% of hot drinks buyers prefer venues offering customisation
- Traditional British baked goods would be popular with half of out-of-home hot drink buyers
Outlets Used to Buy Hot Drinks Out-of-home
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- Three quarters of Brits buy hot drinks out-of-home
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- Figure 28: Outlets used to buy hot drinks out-of-home, July 2013, September 2014 and September 2015
- Costa Coffee is the most widely used coffee shop chain
- Non-specialists make up a significant part of the market
- One in seven Brits buy hot drinks from restaurants/pubs/hotels
- A quarter of Brits use independent coffee shops
- Half of consumers use two or more outlets to buy hot drinks
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- Figure 29: Repertoire of coffee shops used, September 2015
Frequency of Using Coffee Shops
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- Coffee shops are more popular for sitting in than taking away
- Usage remains unchanged since 2013
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- Figure 30: Frequency of using coffee shops, July 2013, September 2014 and September 2015
Hot Drinks Purchases Made at Coffee Shops
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- Coffee is the most popular drink bought at specialist coffee shops
- Boosting interest in tea out-of-home
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- Figure 31: Types of hot drinks purchased at specialist coffee shops, September 2015
- Making coffee shops more appealing to women and the young
Factors Influencing Where Hot Drinks are Purchased Out-of-home
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- A convenient location and high quality coffee are key
- Convenient location
- High quality coffee
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- Figure 32: Factors influencing where hot drinks are purchased out-of-home, September 2015
- Friendly staff influences choice of venue for one in three buyers
- Short waiting time influences the venue choice of 29% of users
- High quality food is important for one in five hot drinks buyers
Interest in Coffee Shop Product Concepts
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- Limited edition coffee appeals to 29% of consumers
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- Figure 33: Interest in coffee shop product concepts, September 2015
- One in five interested in coffee made with non-dairy ‘milk’
- Brits are more interested in nitro/draught coffee than in cold-brew
Coffee Shop Buying Behaviours and Preferences
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- Half of hot drinks buyers prefer venues offering customisation
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- Figure 34: Coffee shop buying behaviours and preferences, September 2015
- Hot drinks buyers favour production provenance information over roasting provenance
- One in four would drink more decaffeinated coffee out-of-home if available
Interest in Complementary Products/Services at Coffee Shops
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- The role of food in coffee shops is on the rise
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- Figure 35: Interest in complementary products/services at coffee shops, September 2015
- Traditional British baked goods garner widest interest amongst out-of-home hot drinks buyers
- 14% of out-of-home hot drinks buyers would be interested in ethnic food at their favourite coffee shop
- Blurring boundaries between coffee and alcoholic drink venues
- There is scope for coffee shops to branch out into ice cream/gelato
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Abbreviations
Appendix – Market Size and Forecast
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- Forecast methodology
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- Figure 36: Best- and worst-case forecasts for UK coffee shops market, 2015-20
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