The UK branded coffee shop market is defying all previous expectations with a current growth rate seven to eight times that of the British economy. While the good old cup of tea remains a national treasure, in recent years coffee has won the hearts and wallets of many British consumers. And there appears to be no end to the trend to café culture which began more than a decade ago. UK Coffee Week™ is the annual charitable event celebrating this thriving industry while raising funds for the poorest communities in coffee producing countries.
A recent report from Allegra Strategies, a London-based management consultancy which survey's 25,000 consumers, reveals that the UK coffee shop market grew by 7.5% in 2012 to reach £5.8billion in turnover. This is particularly impressive given that the latest report from the Office of National Statistics indicated the UK economy experienced a negative growth rate of -0.3% in final quarter of 2012.
So what is driving this exceptional growth?
I think one of the key reasons is that a cup of coffee is perceived to be an affordable treat. At a time when people up and down the country are being forced to forgo bigger luxuries such as dining out and holidays abroad, a good cup of coffee is seen as being a treat that can be enjoyed without breaking the bank. This means that coffee-shop drinkers are not reducing the frequency at which they indulge, whether that be daily, a few times a week or a couple of times a month. If anything, we are increasing the amount we consume coffee - in 2009 one in nine of us visited a coffee-shop daily, now it is one in five of us.
Not only are we increasing the frequency at which we visit coffee shops, we are also seeing an embedding of coffee culture into UK lifestyles which is driving a widening of consumer participation. Although the good old cup of tea is still a firm favourite and our traditional beverage of choice as a nation, Britain is more and more following suit of our friends on the continent and across the pond by becoming a new nation of coffee-drinkers. Ok yes, we are hardly Italian about coffee yet, but we are certainly shifting in that direction and as the younger generations who are more familiar with coffee grow-up, this will increase further still. Events like The London Coffee Festival also contribute to this process.
This exceptional growth of the coffee market is not just fuelled by consumer demand however. On the other side, growth of the UK coffee market is also driven by increased competition among coffee-operators. The numbers of both branded coffee chains and quality artisan independents are exploding. The branded coffee chain segment alone added 261 stores in 2012. This competition means that the UK coffee-shop consumer enjoys limited price increases by major chains and can expect good coffee which is consistently improving in quality as brands battle to stand out.
What makes some brands more successful than others?
Successful brands of the future have to tune into consumer lives to stay relevant as increasingly savvy and choosy consumers seek authentic and original experiences. Enticing store environments are key to creating a comfortable place to relax. Menu innovation is also important.
So what does that mean for the future? Well, we can expect better quality coffee, more convenience, a focus on ethics (for example supporting UK Coffee Week) and not having to feel guilty that we've stretched our budget too far. A win-win for coffee lovers!