International chains driving European café market

The European branded coffee shop segment remains in growth despite a challenging economic climate across the region, the Project Café Europe 2020 report reveals.

The segment added 1235 stores during the last 12 months to reach 37,598 stores, representing 3.4 per cent growth in outlets.

The report says 26 out of Europe’s 30 largest coffee shop markets expanded during 2019, with 13 enjoying growth of 5 per cent of more. Romania remains Europe’s fastest growing coffee shop market, recording 28.3 per cent outlet growth, topping the 25.1 per cent recorded in 2018. Kazakhstan experienced 26.5 per cent growth while the Ukraine saw a 16 per cent increase in outlets.

In Europe’s largest branded coffee shop market, the United Kingdom, outlet growth slowed from 8.7 per cent in 2018 to 0.9 per cent amid sustained Brexit uncertainty and dampened consumer confidence. The German branded coffee shop market recorded 2.5 per cent stores growth while French growth was more than halved to 3.2 per cent.

Turkey experienced the largest loss of branded coffee shops at -2.9 per cent. The Hungarian, Belgian, and Swedish markets contracted by 1.9, 1.8, and 1.3 per cent respectively.

Project Café Europe forecasts the European branded coffee shop market will reach 45,400 outlets by 2025, representing five-year growth of 3.9 per cent compound annual growth rate.

Major international coffee chains continue to grow their European presence, with 20 of the continent’s largest coffee chains now comprising 45 per cent of the total branded coffee shop market. Costa Coffee, Starbucks, McCafé, Paul, Illy Caffè, and Segafredo Zanetti are now present across 15 or more European markets. Starbucks, McCafé, and Costa Coffee were responsible for nearly a third of new net new outlets over the past 12 months, collectively comprising 23 per cent of the European branded coffee shop segment.

Eastern European nations continue to embrace branded coffee shop culture, with 84 per cent of the 300 industry leaders surveyed in the region reporting positive sales growth over the past 12 months.

Securing prime locations has grown in prominence among European leaders surveyed, with 48 per cent considering it critical to coffee shop success – a 7 per cent increase on 2018. However, the complexity of securing suitable sites, high rents, and property costs were cited as the primary challenges facing coffee shops.

The report says industry leaders identified specialty coffee as the primary consumer trend currently influencing the industry, confirming the continued role of premiumisation.

Meanwhile, cold brew remains the fastest growing beverage but still represents a relatively small proportion of overall sales.

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