Coffee Shops - UK - February 2012

INTRODUCTION
Definition
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Coffee shop market size and forecast, 2006-16
Market factors
Companies, brands and innovation
Companies
Figure 2: Outlet numbers of coffee shops, 2010 and 2011
Innovation
The consumer
Who buys coffee out of home and where do they go?
Figure 3: Out-of-home hot drink purchasing behaviour, either sit-in or takeaway, December 2011
How have out-of-home coffee habits changed?
Figure 4: Out-of-home coffee/tea/hot drink habits, by frequency and expenditure, December 2011
Attitudes towards coffee out of home
Figure 5: Attitudes towards coffee/tea/hot drinks out of home, December 2011
Coffee shops’ menu enticements
Figure 6: Coffee shops’ menu enticements, December 2011
What we think
ISSUE IN THE MARKET
How can coffee shops reassert their position in the face of rising non-specialist competitors?
What can coffee shops learn from the rest of the eating out market?
What can coffee shops learn from trends in the retail environment to encourage interest in tea?
How much potential is there for coffee shops to tap into the healthy eating trend?
FUTURE OPPORTUNITIES
Competition from non-specialists makes tackling queuing increasingly pertinent
Innovative strategies for regaining lost loyalty
INTERNAL MARKET ENVIRONMENT
Key points
A mature marketplace
Figure 7: Frequency of using instant coffee, 2010 and 2011
Figure 8: Frequency of using tea, 2010 and 2011
Cost bases continue to increase
Figure 9: Retail price indices for coffee and other hot drinks, 2006-11
Ethical considerations and the coffee market firmly entwined
Figure 10: Attitudes towards ethical concerns, by coffee shop usage, 2011
Opportunity for coffee shops to tap into healthy eating trends more comprehensively
Figure 11: Consumer demand for display of calorie content on restaurant menus, June 2010-December 2011
BROADER MARKET ENVIRONMENT
Key points
2012: tough market conditions but opportunities too
Figure 12: GfK NOP Consumer Confidence Index, monthly, January 2007-December 2011
‘Austerity fatigue’: pros and cons
Figure 13: Consumer spending priorities (after bills), December 2009-December 2011
Figure 14: Consumer behaviour trends, ‘I treat myself to more premium foods, instead of eating out’, January 2009-December 2011
Britain’s ageing population
Figure 15: Trends in the age structure of the UK population, 2006-16
Figure 16: Forecast adult population trends, by lifestage, 2006-16
COMPETITIVE CONTEXT – IN-HOME HOT DRINKS
Key points
In-home coffee options used as well as, not instead of, out-of-home coffee shops
Figure 17: Ownership trends of filter coffeemakers/cafetières and espresso machines, 2007-11
Mintel Inspire trend Guiding Choice
COMPETITIVE CONTEXT – OUT OF HOME
Key points
Blurring boundaries between categories
 SELECTED NON-SPECIALIST COMPETITORS
Figure 18: Selected competitors to specialist coffee shop operators, by outlet numbers, 2012
Greggs
McDonald’s
Patisserie Valerie
Krispy Kreme
Pret A Manger
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Widening distribution channels as operators chase footfall
The opportunities and pitfalls of loyalty cards
Design wars
Providing additional reasons to visit
Product launches
MARKET SIZE AND FORECAST
Key points
Stronger performance in 2011, but it’s not all plain sailing for the coffee shop market
Figure 19: Market size and forecast of coffee shops, at current and 2011 prices, 2006-16
Forecast
Figure 20: Coffee shop market size and forecast, 2006-16
Forecast methodology
MARKET SHARE
Key points
Costa Coffee dominates the market
Figure 21: Outlet numbers of coffee shops, 2010 and 2011
COMPANIES AND PRODUCTS – COFFEE SHOPS
Key points
 SPECIALIST COFFEE SHOP OPERATORS
Figure 22: Outlet numbers of selected specialist coffee chains, 2011
Costa Coffee
Financial performance
Recent developments
Starbucks
Financial performance
Figure 23: Financial performance of Starbucks Coffee Limited UK, 2009 and 2010
Recent developments – stores
Recent developments – food and drink
Recent developments – other
Caffè Nero
Financial performance
Figure 24: Financial performance of Caffè Nero Group Limited, 2010 and 2011
Recent developments
Coffee Republic
Recent developments
BRAND COMMUNICATION AND PROMOTION
Key points
Operators vie for market share from non-specialists as well as each other
Figure 25: Advertising expenditure on selected coffee shop brands, 2007-11
Figure 26: Advertising expenditure on selected coffee shop brands, by media type, 2011
Coffee shop websites are largely lacklustre
Figure 27: Average daily visitors at sites of selected coffee shop brands, January 2009-December 2011
HOW OFTEN DO PEOPLE USE COFFEE SHOPS?
Key points
 SPECIALIST COFFEE SHOPS: VISITING HABITS
Usage drops marginally in 2011
Figure 28: Frequency of visiting coffee shops, 2007-11
Convenience-driven and time-pressed consumers push up takeaway usage
Figure 29: Coffee shop usage, sit-in and takeaway, 2007-11
WHO BUYS COFFEE OUT OF HOME AND WHERE DO THEY GO?
Key points
Non-specialists are competing on interiors/environments now, not just price
Figure 30: Out-of-home hot drink purchasing behaviour, either sit-in or takeaway, December 2011
Convenience drives out-of-home hot drinks purchasing behaviour, not brand loyalty
Trend towards takeaways
Figure 31: Out-of-home hot drink purchasing behaviour – sit-in vs takeaway, December 2011
HOW HAVE OUT-OF-HOME COFFEE HABITS CHANGED?
Key points
A quarter of users have been cutting back
Figure 32: Out-of-home coffee/tea/hot drink habits, by frequency and expenditure, December 2011
Creating a buzz to engage with younger consumers
Balancing concepts of value
ATTITUDES TOWARDS COFFEE OUT OF HOME
Key points
Consumer retention damaged by lack of brand differentiation
Figure 33: Attitudes towards coffee/tea/hot drinks out of home, December 2011
Fast pace of coffee shops deters older consumers
Guiding choice
Lack of loyalty in the coffee shop market
Figure 34: Attitudes towards coffee/tea/hot drinks out of home, by any agree and strongly agree, December 2011
Limited demand for better serving options
COFFEE SHOPS’ MENU ENTICEMENTS
Key points
Consumers remain value-led
Figure 35: Coffee shops’ menu enticements, December 2011
Men don’t ask for directions or read maps
Figure 36: Coffee shops’ menu enticements, by any interest and very interested, December 2011
How to provide more food whilst still being a coffee shop
Afternoon teas – capitalising on the ‘Britishness’ of 2012
Regularly changing specials – consumers looking for additional reasons to purchase
Appealing to yummy mummies
Limited appeal of tea variants
COFFEE SHOPS – TARGETING OPPORTUNITIES
Key points
Target groups
Figure 37: Coffee shop target groups, December 2011
Apathetic
Quality-Driven
Adventurous Drinkers
Fuss-Free
Undetermined
APPENDIX – HOW OFTEN DO PEOPLE USE COFFEE SHOPS?
Figure 38: Frequency of visiting coffee shops, by detailed demographics, 2011
Figure 39: Sit-in or takeaway visits to coffee shops, by detailed demographics, 2011
APPENDIX: WHO USES COFFEE SHOPS AND WHERE DO THEY GO?
Figure 40: Out-of-home hot drink purchasing behaviour, by venue, December 2011
Figure 41: Most popular out-of-home hot drink purchasing behaviour (drink in), by detailed demographics, December 2011
Figure 42: Next most popular out-of-home hot drink purchasing behaviour (drink in), by detailed demographics, December 2011
Figure 43: Most popular out-of-home hot drink purchasing behaviour (takeaway), by detailed demographics, December 2011
Figure 44: Next most popular out-of-home hot drink purchasing behaviour (takeaway), by detailed demographics, December 2011
Figure 45: Out-of-home hot drink purchasing behaviour (lapsed/non-users), by detailed demographics, December 2011
APPENDIX – HOW HAVE OUT-OF-HOME COFFEE HABITS CHANGED?
Figure 46: Out-of-home coffee purchasing behaviour, December 2011
Figure 47: The number of times tea/coffee/other hot drinks bought out of home, by detailed demographics, December 2011
Figure 48: The amount of money I spend on buying tea/coffee/other hot drinks out of home, by detailed demographics, December 2011
Figure 49: Drinking in out-of-home coffee purchasing behaviour, by most popular coffee shops visited, December 2011
Figure 50: Drinking in out-of-home coffee purchasing behaviour, by next most popular coffee shops visited, December 2011
Figure 51: Takeaway from out-of-home coffee purchasing behaviour, by most popular coffee shops visited, December 2011
Figure 52: Takeaway from out-of-home coffee purchasing behaviour, by next most popular coffee shops visited, December 2011
Figure 53: Out-of-home coffee purchasing behaviour, by financial situation, December 2011
Figure 54: Out-of-home coffee purchasing behaviour, by anticipations about next year financial situation, December 2011
Figure 55: Where do you choose to spend your extra money, by the number of times tea/coffee/other hot drinks bought out of home, December 2011
Figure 56: Where do you choose to spend your extra money, by the amount of money spent on buying tea/coffee/other hot drinks out of home, December 2011
APPENDIX – ATTITUDES TOWARDS COFFEE OUT OF HOME
Figure 57: Attitudes towards coffee out of home, December 2011
Figure 58: Agreement with the statements ‘I’m not very adventurous when it comes to ordering different drinks’ and ‘I don’t tend to choose anything new/different, because it’s not always clear what the other drinks are’, by detailed demographics, December 2011
Figure 59: Agreement with the statements ‘I know what I like and am not interested in trying anything new’ and ‘I like to choose something different from what I tend to drink at home’, by detailed demographics, December 2011
Figure 60: Agreement with the statements ‘Quality is most important to me when choosing where to buy tea/coffee, etc out of home’ and ‘I just like to order my coffee/hot drink with the minimum of fuss’, by detailed demographics, December 2011
Figure 61: Agreement with the statements ‘Convenient location is more important than brand of coffee chain’ and ‘When available I will often order seasonal drinks’, by detailed demographics, December 2011
Figure 62: Agreement with the statements ‘I don't like the mugs/cups etc that tea/coffee out of home are served in’ and ‘I usually choose the cheapest place for tea/coffee etc out of home’, by detailed demographics, December 2011
Figure 63: Agreement with the statements ‘I tend to pick the place with the shortest queues’ and ‘I have a favourite brand which I will always use/visit where available out of home’, by detailed demographics, December 2011
Figure 64: Drinking in any agreement with attitudes towards coffee out of home, by most popular coffee shops visited, December 2011
Figure 65: Drinking in any agreement with attitudes towards coffee out of home, by next most popular coffee shops visited, December 2011
Figure 66: Takeaway from any agreement with attitudes towards coffee out of home, by most popular coffee shops visited, December 2011
Figure 67: Takeaway from any agreement with attitudes towards coffee out of home, by next most popular coffee shops visited, December 2011
Figure 68: Agreement with attitudes towards coffee out of home, by most popular any agreement with attitudes towards coffee out of home, December 2011
Figure 69: Agreement with attitudes towards coffee out of home, by next most popular any agreement with attitudes towards coffee out of home, December 2011
Figure 70: Agreement with attitudes towards coffee out of home, by other any agreement with attitudes towards coffee out of home, December 2011
Figure 71: Agreement with attitudes towards coffee out of home, by the number of times tea/coffee/other hot drinks bought out of home, December 2011
Figure 72: Agreement with attitudes towards coffee out of home, by the amount of money spent on buying tea/coffee/other hot drinks out of home, December 2011
APPENDIX – COFFEE SHOPS’ MENU ENTICEMENTS
Figure 73: Coffee shops’ menu enticements, December 2011
Figure 74: Lower-calorie drinks available on coffee shops’ menus, by detailed demographics, December 2011
Figure 75: Lower-caffeinated drinks/decaffeinated drinks available on coffee shops’ menus, by detailed demographics, December 2011
Figure 76: Herbal/fruit teas available on coffee shops’ menus, by detailed demographics, December 2011
Figure 77: Speciality teas available on coffee shops’ menus, by detailed demographics, December 2011
Figure 78: Better descriptions of what drinks are in coffee shops, by detailed demographics, December 2011
Figure 79: Fruit juices/smoothies available on coffee shops’ menus, by detailed demographics, December 2011
Figure 80: More general information on drinks on coffee shops’ menus, by detailed demographics, December 2011
Figure 81: Meal deals (drink and food item for one price) available on coffee shops’ menus, by detailed demographics, December 2011
Figure 82: Smaller drink/cup sizes on coffee shops’ menus, by detailed demographics, December 2011
Figure 83: Range of regularly changing specials on coffee shops’ menus, by detailed demographics, December 2011
Figure 84: Afternoon tea available on coffee shops’ menus, by detailed demographics, December 2011
Figure 85: Wider variety of food available on coffee shops’ menus, by detailed demographics, December 2011
Figure 86: Any interest in the coffee shops’ menu enticements, by most popular coffee shops visited (drink in), December 2011
Figure 87: Any interest in the coffee shops’ menu enticements, by next most popular coffee shops visited (drink in), December 2011
Figure 88: Any interest in the coffee shops’ menu enticements, by most popular coffee shops visited (takeaway), December 2011
Figure 89: Any interest in the coffee shops’ menu enticements, by next most popular coffee shops visited (takeaway), December 2011
Figure 90: Any interest in the coffee shops’ menu enticements, by change in the number of times tea/coffee/other hot drinks bought out of home, December 2011
Figure 91: Any interest in the coffee shops’ menu enticements, by change in the amount of money spent on buying tea/coffee/other hot drinks out of home, December 2011
APPENDIX – COFFEE SHOPS – TARGETING OPPORTUNITIES
Figure 92: Target groups, by detailed demographics, December 2011
Figure 93: Attitudes towards coffee out of home, by target groups, December 2011