UK coffee shops thriving despite Brexit uncertainty

A new report from Allegra World Coffee Portal, Project Café2018 UK, has found that the total UK coffee shop market added 1215 stores over the last 12 months to reach 24,061, representing 5.3 per cent growth. The industry mood remained confident in 2017, with 71 per cent of coffee sector executives interviewed by Allegra positive about the trading environment. However, deep concerns over key Brexit issues, such as trade and jobs, remain – a climate reflected in dampened like-for-like sales and impeded outlet growth. A lack of clarity over the UK’s future relationship with the EU is a headwind for the industry, but while the fall in sterling has led to higher equipment and import costs, increased tourism and the popularity of ‘staycations’ has boosted sales for some. Costa Coffee, Starbucks Coffee Company and Caffè Nero continue to dominate the UK coffee shop market, with 2326, 956 and 675 outlets respectively. Together, the UK’s top three coffee chains comprise a 52.9 per cent share of the total branded chain market. By far still the largest branded chain in the UK, Costa Coffee has been voted the ‘Nation’s Favourite’ coffee shop for the eighth year in a row by Allegra’s independent panel of consumers. The artisan scene that developed in the mid-2000s has become widespread in the UK.  The market is now entering a new era of exceptional professionalism and paves the way for European coffee shop development. Dubbed the ‘5th Wave, The Business of Coffee’, this era sees high-quality chains adopting more advanced business practices to deliver boutique concepts at scale. Specialised artisanal chains such as Gail’s, Grind and Joe & The Juice gained momentum in 2017, all embracing the ‘5th Wave’ trend to cater to more discerning and less brand-loyal millennials with premium-quality coffee and service. Allegra anticipates the total UK coffee shop market will exceed 31,400 outlets, with a turnover of US$18 billion by 2022. Allegra Group CEO, Jeffrey Young, said: “The UK coffee shop market continues to be robust despite current challenges, laying down modest growth in 2017 amid severe concern over the Brexit impact on jobs and investment… “As the market matures and we enter the ‘5th Wave’, we’re seeing a new era of leading brands competing on excellence. Key players are sharpening their focus on customer experience to stay ahead of rivals. If leading coffee shops can do this successfully, the market will remain strong – it’s time for the industry to dig deep and capitalise on the opportunities ahead.”