Last week’s UK Coffee Leader Summit provided a fascinating overview of the current world of coffee in the UK, with insights coming from some of the largest organisations operating in the market – Starbucks, Compass Group – as well as the small independents such as Artisan, Kaffeine and Volcano.
Some real contrasts in scale, revenue and objectives, therefore, but all part of what is now a major part of the UK hospitality sector. H&C News will report on some of the presentations over the coming days, starting with Jeffrey Young, CEO of Allegra Strategies World Coffee Portal (below), who set the scene for the day with some impressive statistics – and expectations.
£6.2 billion in revenues
The total UK coffee shop market now achieves £6.2 billion in revenues, with 6.4% sales growth generated by over 16,500 outlets, an increase of 5.7% or 886 outlets year-on-year. And 85% of consumers are now visiting a coffee shop at least once a month – many far more frequently, as we witness or experience ourselves.
On the branded side, turnover has now reached £2.6 billion (up 9.3%) with 5531 outlets. The sector is lead by Costa Coffee with 1670 outlets and £700 million turnover, followed by Starbucks with 790 outlets.
By 2018…
Growth is expected to reach 20,500 outlets, of which branded is expected to account for 7,000 and £4 billion in revenue.
The role of Coffee Shops
As we all know, coffee shops do not just serve coffee, they have a wider role and impact, including their social role – relaxation, social and business meetings, community engagement, lifestyle…
At the same time, they have what was described as an ‘ignition’ role: increasingly, their success attracts customers and community and, in turn, other retailers. This positive effect is positive both for customers and communities, but also for retail and business.
More on this, perhaps, later this year when Allegra produce their report on the Role of Coffee Shops in the High Street.
Last year’s great is this year’s ordinary
A fast expanding, highly competitive industry such as coffee provides many challenges for operators of all sizes and skills, and Jeffrey Young outlined many of the issues – and opportunities – ahead, including
- Tap and pay: the new electronic systems that can permit advance ordering, faster ordering and processing of payments, reduced waiting times
- Understanding and meeting the changing and increasing needs and priorities of customers
- The imperative of delivering great taste and quality of coffee
- Ethical business standards: a ‘given’ not an option
- Neural loyalty – a new description – delivering the great (not just adequate) value and experience that produces the emotions in customers that result in ‘neural loyalty’
- Partner or perish: small businesses in particular cannot be expert in everything, so need to find partners, especially when innovating
- Staff, staff, staff – critical in delivering products, values, experiences to customers
- Localism and local integrity: relating and being relevant to the local community and environment
Next: H&C News reports on the presentation by Steve Flanagan, Director, Marketing and Category for Starbucks UK – Relevant, real and responsible