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Coffee Shops - UK - November 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Value of coffee shops market expected to hit £3.9 billion this year
Figure 1: UK coffee shops market, value sales and forecast, 2014-24
Companies and brands
Overall store count grew by 3% in 2019
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
Figure 3: Venues visited, August 2019
Resurgence in tea drinking
Figure 4: Types of hot drinks bought out-of-home, August 2019
16-44 year-olds are willing to splurge
Figure 5: Amount consumers are willing to spend on a small coffee, August 2019
Two fifths of non-users prefer to make their own
Figure 6: Barriers to usage, August 2019
9 in 10 want a functional drink
Figure 7: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
Preferred recycling solution: reusable coffee cups
Figure 8: Attitudes towards coffee shops, August 2019
What we think
ISSUES AND INSIGHTS
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
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
Value of coffee shops market expected to hit £3.9 billion this year
Figure 9: UK coffee shops market, value sales and forecast, 2014-24
Non-specialists have well and truly disrupted the market
Figure 10: UK coffee shops market, value sales and forecast, 2014-24
Forecast methodology
MARKET DRIVERS
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
Figure 11: Reusable festive cups, by Costa Coffee, October 2019
Offer stainless steel straws
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
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
Overall store count grew by 3% in 2019
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
Figure 14: Selected modern independent coffee shops, by outlet numbers, 2017-19
COMPETITIVE STRATEGIES
Non-specialists continue to encroach
Figure 15: Examples of non-specialists offering specialty coffee, 2019
Comparative case study: Greggs vs Costa Coffee
Figure 16: Comparison between Greggs and Costa Coffee breakfast coffee meal deals, October 2019
Greggs is full steam ahead into the future
Figure 17: Greggs click and collect
LAUNCH ACTIVITY AND INNOVATION
New formats
Delivery
Express
Vending machines
Figure 18: easyCoffee rolls out vending machines, 2019
Mobile ordering
Figure 19: Costa Coffee launches mobile ordering, August 2019
Coffee subscription
New menu options
Caffè Nero’s coffee-themed menu
Figure 20: Bacon, Sausage and Egg Ciabatta Roll, £3.65, by Caffè Nero
Caffè Nero’s coffee tonic
Figure 21: Espresso & Tonic, by Caffè Nero
Ready-to-drink ranges
Costa Coffee: familiarity
Figure 22: Costa Coffee, by Coca-Cola, UK
Starbucks: functional
Figure 23: Starbucks Triple Shot Energy, by Starbucks Coffee, USA
ADVERTISING AND MARKETING ACTIVITY
After a bumper 2017, ad spend drops to £14.8 million in 2018
Figure 24: Advertising expenditure, by selected coffee shops, 2015-19
Starbucks’ award-winning campaigns
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
Brand map
Figure 26: Attitudes towards and usage of selected brands, October 2019
Key brand metrics
Figure 27: Key metrics for selected brands, October 2019
Brand attitudes: McCafé seen as good value whilst Costa delivers consistently high quality
Figure 28: Attitudes, by brand, October 2019
Brand personality: Starbucks tops unethical rating while Pret seen as most exclusive
Figure 29: Brand personality – macro image, October 2019
Caffè Nero and Starbucks need to stand out more as they are too samey
Figure 30: Brand personality – micro image, October 2019
Brand analysis
Costa is much loved in the UK
Figure 31: User profile of Costa Coffee, October 2019
McDonald’s McCafé is disrupting the coffee shops market
Figure 32: User profile of McDonald’s McCafé, October 2019
Caffè Nero lacks differentiation
Figure 33: User profile of Caffè Nero, October 2019
Pret has a premium image
Figure 34: User profile of Pret a Manger, October 2019
Starbucks can’t shake off its “unethical” image
Figure 35: User profile of Starbucks, October 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
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
The consumer mix
Almost half bought from Costa Coffee
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
Figure 37: Repertoire of venues visited, August 2019
TYPES OF DRINKS
Resurgence in tea drinking
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
Figure 39: Repertoire of types of hot drinks bought out-of-home, August 2019
COFFEE SHOP PRICE SENSITIVITY
The importance of a tiered pricing strategy
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
Figure 41: Venues visited, by coffee shop price sensitivity, August 2019
BARRIERS TO USAGE
New generation of at-home hot drinks enthusiasts
Figure 42: Barriers to usage, August 2019
FUNCTIONAL PROPERTIES OF COFFEE
9 in 10 want a functional drink…
Figure 43: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
…regardless of their coffee budget
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
Charge a fee for disposable cups
Figure 45: Attitudes towards coffee shops, August 2019
Food venues are taking a slice of the pie…
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
Figure 47: Coffee shops – CHAID – Tree output, August 2019
High spenders most interested in customisation
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?
Figure 49: An example of a create-your-own coffee drink concept, by Pasión del Cielo, Miami (USA),
COFFEE SHOP CONSUMER SEGMENTATION
Consumer tribes
Figure 50: Coffee shop attitudes – cluster analysis, August 2019
Typical characteristics of each group
Pro-premiumisation
Figure 51: Venues visited, by attitudes towards coffee shops - clusters, August 2019
Traditionalists
Figure 52: Amount consumers are willing to spend on a small coffee, by attitudes towards coffee shops - clusters, August 2019
Ethical warriors
Figure 53: Most popular types of functionality, by behaviours towards coffee shops - clusters, August 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID methodology
Figure 54: Coffee shops – CHAID – Table output, August 2019
Cluster analysis group definitions
Innovation
Premiumisation
Cup solution
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 55: Best- and worst-case forecasts for UK coffee shops market, 2019-24

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