Coffee shop sales near £8bn as takings grow 10%

Costa is the UK's largest coffee chain with almost 2,000 branches. Picture: Newscast/PA Wire
Costa is the UK's largest coffee chain with almost 2,000 branches. Picture: Newscast/PA Wire
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The UK’s appetite for coffee shows no sign of abating, with sales growing by 10 per cent this year to reach just under £8 billion, according to new data published yesterday by market research firm Allegra World Coffee Portal.

The Project Café 2016 UK report found that an estimated 2.2 billion cups of the drink are consumed every year in coffee shops and that there are now 20,728 coffee outlets, with Costa being the UK’s largest chain with 1,992 branches.

The research also found that 16 per cent of coffee shop visitors visited an outlet at least once a day this year, up from 14 per cent last year.

Jeffrey Young, managing director of Allegra Group, said: “The strong market growth of the past 12 months has exceeded our own estimates. This provides further evidence of the growing importance of coffee shops to the British economy, and more importantly their impact on the daily lives of everyday consumers.”

Branded coffee chains recorded turnover of £3.3bn across 6,495 outlets, with 714 stores added this year and delivering sales growth of 15 per cent. Costa added 171 UK outlets during the year, Allegra said.

The chain’s owner, Whitbread, said in a trading update last week that Costa’s total number of branches around the globe reached 3,186 at 26 November, and that in the quarter ending on that date the café business delivered total sales growth up by 13.8 per cent on the year-ago period.

READ MORE: Costa owner Whitbread sees half-year profits jump

Allegra noted that second to Costa in terms of UK presence was Starbucks with 849 branches, followed by Caffè Nero with 620. Together the three leading brands reached a 53 per cent share of the branded chain market.

Also highlighted in the report was the contribution of the “non-specialist” sector, such as pubs, fast food outlets, supermarkets and retail stores. This year this segment took a further 2 per cent share of the coffee shop market to represent 39 per cent, compared with the branded chains with 31 per cent and the independents with 30 per cent. It also experienced outlet growth of 10.5 per cent.

The growth of the independent artisan coffee shop was also noted, with this segment heightening expectations about coffee quality and store design, and with some growing into small chains. Independent artisan shops in Scotland include Brew Lab and Fortitude in Edinburgh as well as Artisan Roast, which has branches in both Edinburgh and Glasgow.

Allegra said growing customer participation and expectations around coffee quality will drive the future of the marketplace, leading to “improved ­coffee offers across a broader set of channels”.

It predicted that the total UK coffee shop market will “comfortably” exceed 30,000 outlets and £15bn turnover by 2025, spurred by branded coffee chain expansion and non-­specialist operator growth. It also said the branded coffee shop segment is forecast to exceed £5.7bn with more than 8,500 outlets by 2020.

Allegra expects to see “a significant increase of multi-brand strategies by leading operators and increased investment in artisan brand concepts”.