Table of Contents
Executive Summary
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- The market
- Value of coffee shops market expected to hit £3.9 billion this year
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- Figure 1: UK coffee shops market, value sales and forecast, 2014-24
- Companies and brands
- Overall store count grew by 3% in 2019
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- Figure 2: Selected UK coffee shops’ market share, by outlet numbers, 2015-19
- Costa continues to be a well-loved brand
- The consumer
- Almost half bought from Costa Coffee
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- Figure 3: Venues visited, August 2019
- Resurgence in tea drinking
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- Figure 4: Types of hot drinks bought out-of-home, August 2019
- 16-44 year-olds are willing to splurge
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- Figure 5: Amount consumers are willing to spend on a small coffee, August 2019
- Two fifths of non-users prefer to make their own
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- Figure 6: Barriers to usage, August 2019
- 9 in 10 want a functional drink
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- Figure 7: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
- Preferred recycling solution: reusable coffee cups
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- Figure 8: Attitudes towards coffee shops, August 2019
- What we think
Issues and Insights
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- Coffee is an expected product in foodservice outlets
- The facts
- The implications
- So, how can coffee shops compete against non-specialists?
- The facts
- The implications
- How to stand out from modern independent coffee shops?
- The facts
- The implications
The Market – What You Need to Know
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- Value of coffee shops market expected to hit £3.9 billion this year
- Future coffee supply is volatile
- Challenge of recruiting and retaining staff
- Pressure to come up with better recycling solutions
Market Size and Forecast
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- Value of coffee shops market expected to hit £3.9 billion this year
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- Figure 9: UK coffee shops market, value sales and forecast, 2014-24
- Non-specialists have well and truly disrupted the market
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- Figure 10: UK coffee shops market, value sales and forecast, 2014-24
- Forecast methodology
Market Drivers
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- Future coffee supply
- Retention of hospitality staff
- Better recycling solutions
- Charge a fee for disposable cups
- Reward those who use their own cups
- Make reusable Christmas cups
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- Figure 11: Reusable festive cups, by Costa Coffee, October 2019
- Offer stainless steel straws
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- Figure 12: Stainless steel straws, as seen in The Manufactory, by Tartine Bakery (US), September 2019
- #CupCupandAway scheme
Companies and Brands – What You Need to Know
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- Overall store count grew by 3% in 2019
- Greggs continues to innovate with technology
- Seamlessly fitting into busy lives
- Ad spend drops to £14.8 million in 2018
- Costa continues to be a well-loved brand
Key Players and Market Share
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- Overall store count grew by 3% in 2019
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- Figure 13: Selected UK coffee shops’ market share, by outlet numbers, 2015-19
- Mergers and acquisitions
- Coca Cola completes Costa acquisition
- Black Sheep buys Taylor Street Baristas
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- Figure 14: Selected modern independent coffee shops, by outlet numbers, 2017-19
Competitive Strategies
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- Non-specialists continue to encroach
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- Figure 15: Examples of non-specialists offering specialty coffee, 2019
- Comparative case study: Greggs vs Costa Coffee
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- Figure 16: Comparison between Greggs and Costa Coffee breakfast coffee meal deals, October 2019
- Greggs is full steam ahead into the future
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- Figure 17: Greggs click and collect
Launch Activity and Innovation
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- New formats
- Delivery
- Express
- Vending machines
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- Figure 18: easyCoffee rolls out vending machines, 2019
- Mobile ordering
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- Figure 19: Costa Coffee launches mobile ordering, August 2019
- Coffee subscription
- New menu options
- Caffè Nero’s coffee-themed menu
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- Figure 20: Bacon, Sausage and Egg Ciabatta Roll, £3.65, by Caffè Nero
- Caffè Nero’s coffee tonic
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- Figure 21: Espresso & Tonic, by Caffè Nero
- Ready-to-drink ranges
- Costa Coffee: familiarity
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- Figure 22: Costa Coffee, by Coca-Cola, UK
- Starbucks: functional
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- Figure 23: Starbucks Triple Shot Energy, by Starbucks Coffee, USA
Advertising and Marketing Activity
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- After a bumper 2017, ad spend drops to £14.8 million in 2018
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- Figure 24: Advertising expenditure, by selected coffee shops, 2015-19
- Starbucks’ award-winning campaigns
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- Figure 25: Advertising expenditure, by selected coffee shops, by media type, 2015-19
- McCafé still the biggest ad spender
- Costa digs deep for recycling solutions
- Pret’s ‘limited edition’ strategy
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 26: Attitudes towards and usage of selected brands, October 2019
- Key brand metrics
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- Figure 27: Key metrics for selected brands, October 2019
- Brand attitudes: McCafé seen as good value whilst Costa delivers consistently high quality
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- Figure 28: Attitudes, by brand, October 2019
- Brand personality: Starbucks tops unethical rating while Pret seen as most exclusive
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- Figure 29: Brand personality – macro image, October 2019
- Caffè Nero and Starbucks need to stand out more as they are too samey
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- Figure 30: Brand personality – micro image, October 2019
- Brand analysis
- Costa is much loved in the UK
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- Figure 31: User profile of Costa Coffee, October 2019
- McDonald’s McCafé is disrupting the coffee shops market
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- Figure 32: User profile of McDonald’s McCafé, October 2019
- Caffè Nero lacks differentiation
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- Figure 33: User profile of Caffè Nero, October 2019
- Pret has a premium image
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- Figure 34: User profile of Pret a Manger, October 2019
- Starbucks can’t shake off its “unethical” image
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- Figure 35: User profile of Starbucks, October 2019
The Consumer – What You Need to Know
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- Almost half bought from Costa Coffee
- Resurgence in tea drinking
- 16-44 year-olds are willing to splurge
- Two fifths of non-users prefer to make their own
- 9 in 10 want a functional drink
- Preferred recycling solution: reusable coffee cups
Venues Visited
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- The consumer mix
- Almost half bought from Costa Coffee
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- Figure 36: Venues visited, August 2019
- One in four bought hot drinks from fast food chains
- Starbucks’s popularity is limited to Younger Millennials
- Londoners are third-wave coffee connoisseurs
- 16-44 year-olds like visiting multiple venues
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- Figure 37: Repertoire of venues visited, August 2019
Types of Drinks
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- Resurgence in tea drinking
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- Figure 38: Types of hot drinks bought out-of-home, August 2019
- Young consumers’ sweet spot for hot chocolate
- Young consumers like having a bit of everything
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- Figure 39: Repertoire of types of hot drinks bought out-of-home, August 2019
Coffee Shop Price Sensitivity
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- The importance of a tiered pricing strategy
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- Figure 40: Amount consumers are willing to spend on a small coffee, August 2019
- Most low spenders get their coffee fix from food-to-go
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- Figure 41: Venues visited, by coffee shop price sensitivity, August 2019
Barriers to Usage
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- New generation of at-home hot drinks enthusiasts
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- Figure 42: Barriers to usage, August 2019
Functional Properties of Coffee
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- 9 in 10 want a functional drink…
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- Figure 43: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
- …regardless of their coffee budget
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- Figure 44: Functional properties of coffee desired by consumers, by amount consumers are willing to spend on a small coffee, August 2019
Attitudes towards Coffee Shops
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- Charge a fee for disposable cups
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- Figure 45: Attitudes towards coffee shops, August 2019
- Food venues are taking a slice of the pie…
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- Figure 46: Attitudes towards coffee shops, by amount consumers are willing to spend on a small coffee, August 2019
- …so coffee shops must deliver value-added products and services
- Getting more out of coffee on-the-go
- Focus on the efficiency of service
- Justify the cost of fair
- Offer different quality of coffee for different purposes
- Consumers want a choice in coffee variety – CHAID Analysis
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- Figure 47: Coffee shops – CHAID – Tree output, August 2019
- High spenders most interested in customisation
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- Figure 48: Attitudes towards coffee shops, by amount consumers are willing to spend on a small coffee, August 2019
- What does a create-your-own coffee model look like?
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- Figure 49: An example of a create-your-own coffee drink concept, by Pasión del Cielo, Miami (USA),
Coffee Shop Consumer Segmentation
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- Consumer tribes
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- Figure 50: Coffee shop attitudes – cluster analysis, August 2019
- Typical characteristics of each group
- Pro-premiumisation
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- Figure 51: Venues visited, by attitudes towards coffee shops - clusters, August 2019
- Traditionalists
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- Figure 52: Amount consumers are willing to spend on a small coffee, by attitudes towards coffee shops - clusters, August 2019
- Ethical warriors
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- Figure 53: Most popular types of functionality, by behaviours towards coffee shops - clusters, August 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID methodology
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- Figure 54: Coffee shops – CHAID – Table output, August 2019
- Cluster analysis group definitions
- Innovation
- Premiumisation
- Cup solution
Appendix – Market Size and Forecast
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- Forecast methodology
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- Figure 55: Best- and worst-case forecasts for UK coffee shops market, 2019-24
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