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Description

Description

“As coffee is now an expected product in foodservice outlets, eateries with accessibly priced hot drinks, alongside a strong food offering, have an advantage over specialist coffee shops. Reviewing price strategies are an obvious starting point for coffee shops to fight back, as people are now spreading their budget across more establishments that offer barista-style coffee.”
– Trish Caddy, Senior Foodservice Analyst

This report looks at the following areas:

  • Coffee is an expected product in foodservice outlets
  • So, how can coffee shops compete against non-specialists?
  • How to stand out from modern independent coffee shops?

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Value of coffee shops market expected to hit £3.9 billion this year
              • Figure 1: UK coffee shops market, value sales and forecast, 2014-24
            • Companies and brands
              • Overall store count grew by 3% in 2019
                • Figure 2: Selected UK coffee shops’ market share, by outlet numbers, 2015-19
              • Costa continues to be a well-loved brand
                • The consumer
                  • Almost half bought from Costa Coffee
                    • Figure 3: Venues visited, August 2019
                  • Resurgence in tea drinking
                    • Figure 4: Types of hot drinks bought out-of-home, August 2019
                  • 16-44 year-olds are willing to splurge
                    • Figure 5: Amount consumers are willing to spend on a small coffee, August 2019
                  • Two fifths of non-users prefer to make their own
                    • Figure 6: Barriers to usage, August 2019
                  • 9 in 10 want a functional drink
                    • Figure 7: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
                  • Preferred recycling solution: reusable coffee cups
                    • Figure 8: Attitudes towards coffee shops, August 2019
                  • What we think
                  • Issues and Insights

                    • Coffee is an expected product in foodservice outlets
                      • The facts
                        • The implications
                          • So, how can coffee shops compete against non-specialists?
                            • The facts
                              • The implications
                                • How to stand out from modern independent coffee shops?
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Value of coffee shops market expected to hit £3.9 billion this year
                                        • Future coffee supply is volatile
                                          • Challenge of recruiting and retaining staff
                                            • Pressure to come up with better recycling solutions
                                            • Market Size and Forecast

                                              • Value of coffee shops market expected to hit £3.9 billion this year
                                                • Figure 9: UK coffee shops market, value sales and forecast, 2014-24
                                              • Non-specialists have well and truly disrupted the market
                                                  • Figure 10: UK coffee shops market, value sales and forecast, 2014-24
                                                • Forecast methodology
                                                • Market Drivers

                                                  • Future coffee supply
                                                    • Retention of hospitality staff
                                                      • Better recycling solutions
                                                        • Charge a fee for disposable cups
                                                          • Reward those who use their own cups
                                                            • Make reusable Christmas cups
                                                                • Figure 11: Reusable festive cups, by Costa Coffee, October 2019
                                                              • Offer stainless steel straws
                                                                • Figure 12: Stainless steel straws, as seen in The Manufactory, by Tartine Bakery (US), September 2019
                                                              • #CupCupandAway scheme
                                                              • Companies and Brands – What You Need to Know

                                                                • Overall store count grew by 3% in 2019
                                                                  • Greggs continues to innovate with technology
                                                                    • Seamlessly fitting into busy lives
                                                                      • Ad spend drops to £14.8 million in 2018
                                                                        • Costa continues to be a well-loved brand
                                                                        • Key Players and Market Share

                                                                          • Overall store count grew by 3% in 2019
                                                                              • Figure 13: Selected UK coffee shops’ market share, by outlet numbers, 2015-19
                                                                            • Mergers and acquisitions
                                                                              • Coca Cola completes Costa acquisition
                                                                                • Black Sheep buys Taylor Street Baristas
                                                                                  • Figure 14: Selected modern independent coffee shops, by outlet numbers, 2017-19
                                                                              • Competitive Strategies

                                                                                • Non-specialists continue to encroach
                                                                                  • Figure 15: Examples of non-specialists offering specialty coffee, 2019
                                                                                • Comparative case study: Greggs vs Costa Coffee
                                                                                  • Figure 16: Comparison between Greggs and Costa Coffee breakfast coffee meal deals, October 2019
                                                                                • Greggs is full steam ahead into the future
                                                                                  • Figure 17: Greggs click and collect
                                                                              • Launch Activity and Innovation

                                                                                • New formats
                                                                                  • Delivery
                                                                                    • Express
                                                                                      • Vending machines
                                                                                        • Figure 18: easyCoffee rolls out vending machines, 2019
                                                                                      • Mobile ordering
                                                                                        • Figure 19: Costa Coffee launches mobile ordering, August 2019
                                                                                      • Coffee subscription
                                                                                        • New menu options
                                                                                          • Caffè Nero’s coffee-themed menu
                                                                                            • Figure 20: Bacon, Sausage and Egg Ciabatta Roll, £3.65, by Caffè Nero
                                                                                          • Caffè Nero’s coffee tonic
                                                                                            • Figure 21: Espresso & Tonic, by Caffè Nero
                                                                                          • Ready-to-drink ranges
                                                                                            • Costa Coffee: familiarity
                                                                                              • Figure 22: Costa Coffee, by Coca-Cola, UK
                                                                                            • Starbucks: functional
                                                                                              • Figure 23: Starbucks Triple Shot Energy, by Starbucks Coffee, USA
                                                                                          • Advertising and Marketing Activity

                                                                                            • After a bumper 2017, ad spend drops to £14.8 million in 2018
                                                                                              • Figure 24: Advertising expenditure, by selected coffee shops, 2015-19
                                                                                            • Starbucks’ award-winning campaigns
                                                                                              • Figure 25: Advertising expenditure, by selected coffee shops, by media type, 2015-19
                                                                                            • McCafé still the biggest ad spender
                                                                                              • Costa digs deep for recycling solutions
                                                                                                • Pret’s ‘limited edition’ strategy
                                                                                                  • Nielsen Ad Intel coverage
                                                                                                  • Brand Research

                                                                                                      • Brand map
                                                                                                        • Figure 26: Attitudes towards and usage of selected brands, October 2019
                                                                                                      • Key brand metrics
                                                                                                        • Figure 27: Key metrics for selected brands, October 2019
                                                                                                      • Brand attitudes: McCafé seen as good value whilst Costa delivers consistently high quality
                                                                                                        • Figure 28: Attitudes, by brand, October 2019
                                                                                                      • Brand personality: Starbucks tops unethical rating while Pret seen as most exclusive
                                                                                                        • Figure 29: Brand personality – macro image, October 2019
                                                                                                      • Caffè Nero and Starbucks need to stand out more as they are too samey
                                                                                                        • Figure 30: Brand personality – micro image, October 2019
                                                                                                      • Brand analysis
                                                                                                        • Costa is much loved in the UK
                                                                                                          • Figure 31: User profile of Costa Coffee, October 2019
                                                                                                        • McDonald’s McCafé is disrupting the coffee shops market
                                                                                                          • Figure 32: User profile of McDonald’s McCafé, October 2019
                                                                                                        • Caffè Nero lacks differentiation
                                                                                                          • Figure 33: User profile of Caffè Nero, October 2019
                                                                                                        • Pret has a premium image
                                                                                                          • Figure 34: User profile of Pret a Manger, October 2019
                                                                                                        • Starbucks can’t shake off its “unethical” image
                                                                                                          • Figure 35: User profile of Starbucks, October 2019
                                                                                                      • The Consumer – What You Need to Know

                                                                                                        • Almost half bought from Costa Coffee
                                                                                                          • Resurgence in tea drinking
                                                                                                            • 16-44 year-olds are willing to splurge
                                                                                                              • Two fifths of non-users prefer to make their own
                                                                                                                • 9 in 10 want a functional drink
                                                                                                                  • Preferred recycling solution: reusable coffee cups
                                                                                                                  • Venues Visited

                                                                                                                    • The consumer mix
                                                                                                                      • Almost half bought from Costa Coffee
                                                                                                                        • Figure 36: Venues visited, August 2019
                                                                                                                      • One in four bought hot drinks from fast food chains
                                                                                                                        • Starbucks’s popularity is limited to Younger Millennials
                                                                                                                          • Londoners are third-wave coffee connoisseurs
                                                                                                                            • 16-44 year-olds like visiting multiple venues
                                                                                                                              • Figure 37: Repertoire of venues visited, August 2019
                                                                                                                          • Types of Drinks

                                                                                                                            • Resurgence in tea drinking
                                                                                                                              • Figure 38: Types of hot drinks bought out-of-home, August 2019
                                                                                                                            • Young consumers’ sweet spot for hot chocolate
                                                                                                                              • Young consumers like having a bit of everything
                                                                                                                                • Figure 39: Repertoire of types of hot drinks bought out-of-home, August 2019
                                                                                                                            • Coffee Shop Price Sensitivity

                                                                                                                              • The importance of a tiered pricing strategy
                                                                                                                                  • Figure 40: Amount consumers are willing to spend on a small coffee, August 2019
                                                                                                                                • Most low spenders get their coffee fix from food-to-go
                                                                                                                                  • Figure 41: Venues visited, by coffee shop price sensitivity, August 2019
                                                                                                                              • Barriers to Usage

                                                                                                                                • New generation of at-home hot drinks enthusiasts
                                                                                                                                  • Figure 42: Barriers to usage, August 2019
                                                                                                                              • Functional Properties of Coffee

                                                                                                                                • 9 in 10 want a functional drink…
                                                                                                                                    • Figure 43: Functional properties of drinks desired by out-of-home hot drink consumers, August 2019
                                                                                                                                  • …regardless of their coffee budget
                                                                                                                                    • Figure 44: Functional properties of coffee desired by consumers, by amount consumers are willing to spend on a small coffee, August 2019
                                                                                                                                • Attitudes towards Coffee Shops

                                                                                                                                  • Charge a fee for disposable cups
                                                                                                                                    • Figure 45: Attitudes towards coffee shops, August 2019
                                                                                                                                  • Food venues are taking a slice of the pie…
                                                                                                                                    • Figure 46: Attitudes towards coffee shops, by amount consumers are willing to spend on a small coffee, August 2019
                                                                                                                                  • …so coffee shops must deliver value-added products and services
                                                                                                                                    • Getting more out of coffee on-the-go
                                                                                                                                      • Focus on the efficiency of service
                                                                                                                                        • Justify the cost of fair
                                                                                                                                          • Offer different quality of coffee for different purposes
                                                                                                                                            • Consumers want a choice in coffee variety – CHAID Analysis
                                                                                                                                              • Figure 47: Coffee shops – CHAID – Tree output, August 2019
                                                                                                                                            • High spenders most interested in customisation
                                                                                                                                              • Figure 48: Attitudes towards coffee shops, by amount consumers are willing to spend on a small coffee, August 2019
                                                                                                                                            • What does a create-your-own coffee model look like?
                                                                                                                                              • Figure 49: An example of a create-your-own coffee drink concept, by Pasión del Cielo, Miami (USA),
                                                                                                                                          • Coffee Shop Consumer Segmentation

                                                                                                                                            • Consumer tribes
                                                                                                                                              • Figure 50: Coffee shop attitudes – cluster analysis, August 2019
                                                                                                                                            • Typical characteristics of each group
                                                                                                                                              • Pro-premiumisation
                                                                                                                                                  • Figure 51: Venues visited, by attitudes towards coffee shops - clusters, August 2019
                                                                                                                                                • Traditionalists
                                                                                                                                                  • Figure 52: Amount consumers are willing to spend on a small coffee, by attitudes towards coffee shops - clusters, August 2019
                                                                                                                                                • Ethical warriors
                                                                                                                                                    • Figure 53: Most popular types of functionality, by behaviours towards coffee shops - clusters, August 2019
                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                    • Abbreviations
                                                                                                                                                      • Consumer research methodology
                                                                                                                                                        • CHAID methodology
                                                                                                                                                          • Figure 54: Coffee shops – CHAID – Table output, August 2019
                                                                                                                                                        • Cluster analysis group definitions
                                                                                                                                                          • Innovation
                                                                                                                                                            • Premiumisation
                                                                                                                                                              • Cup solution
                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                • Forecast methodology
                                                                                                                                                                    • Figure 55: Best- and worst-case forecasts for UK coffee shops market, 2019-24

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