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EXECUTIVE SUMMARY
- The five-year outlook for the coffee shop market
- Market context
- Coffee shops need to demonstrate their value as menu prices rise
- Coffee shops set to benefit from changes in alcohol consumption and socialising
- Graph 1: alcohol reduction in the last 12 months, 2021-24
- Mintel predicts
- Market size & forecast
- Rising prices, innovation and tech drive sustained value growth
- Opportunities
- Deliver experiences that strengthen coffee shops’ role as community hubs
- Balance familiar consistency with bold innovation
- Tap into the rise of specialty coffee
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MARKET DRIVERS
- The German economy
- 2024 remains challenging
- Graph 2: key economic data, in real terms, 2019-25
- The inflation rate is bouncing back to more-conventional levels
- Inflation is still the key factor affecting consumers’ finances…
- …confidence and expenditure
- Graph 3: financial confidence index, 2022-24
- The impact of the economy on coffee shops
- Prices in foodservice, including at coffee shops, continue to rise
- Graph 4: evolution of consumer price index, 2022-24
- Climate change and sustainability
- As climate change drives green coffee prices up, coffee shops must prioritise education and diversification
- Graph 5: World Bank commodity monthly prices in nominal US dollars, 2022-24
- Warmer weather will fuel the popularity of cold coffee shop drinks
- The EUDR may impact coffee supply…
- …but also boost sustainability standards in the coffee industry
- Alcohol moderation trend
- As the alcohol moderation trend takes hold….
- Graph 6: alcohol reduction in the last 12 months, 2021-24
- …coffee shops are poised to steal business away from bars
- Demographic diversity
- An increasingly diverse German population will fuel the popularity of global drinks
- Make age inclusivity a focus as the German population ages
- Changing home lives
- As Germans are increasingly able to enjoy coffee shop-like drinks at home…
- …coffee shops must find new ways to connect with and entice them
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WHAT CONSUMERS WANT AND WHY
- Venues visited for purchasing drinks
- Coffee shops hold a limited share of the out-of-home freshly made cold and hot drinks market
- Bakeries dominate out-of-home purchases of fresh hot/cold drinks, encroaching on the coffee shop market
- Graph 7: venues visited to buy freshly prepared hot/cold drinks in the last six months, 2024
- Prepare for increasing competition from other venues on coffee quality as well as affordability
- 16-24s’ preference for coffee shop chains shows promise for the branded market…
- Graph 8: independent and coffee shop participation, by age, 2024
- …while independent coffee shops need to better engage them
- Attract less-engaged older Germans with tailored socialising opportunities
- Target parents of younger children as a key target audience for coffee shops
- Bring the coffee shop experience on board
- Barriers to purchasing drinks from coffee shops
- Coffee shops are tasked with balancing quality and affordability, as high prices are a key purchase barrier
- Graph 9: barriers to purchasing freshly prepared hot/cold drinks from coffee shops, 2024
- Food and drink deals deliver value for money, appealing to consumers across the financial spectrum
- Graph 10: coffee shop consumers who would like to see more value meal deals at coffee shops, by net monthly income, 2024
- Leverage the steady rise of RTD coffee to tap into the lipstick effect
- Graph 11: consumption of ready-to-drink coffee in the last month, 2020-24
- Coffee shop ordering channels
- In-person ordering and on-site consumption still dominate coffee shop behaviours
- Graph 12: channels used to buy freshly prepared hot/cold drinks from coffee shops in the last six months, 2024
- Digital ordering increasingly becoming a must…
- Graph 13: coffee shop consumers who order through an app/website, by age, 2024
- …but should be used to enhance rather than replace what makes coffee shops special
- Adapt to shifting consumer behaviours
- Graph 14: selected channels used to buy freshly prepared hot/cold drinks from coffee shops in the last six months, by age, 2024
- Types of drinks purchased from coffee shops
- Coffee shop patrons’ love for coffee reigns supreme
- Coffee shops need to future-proof their offering and messaging
- Capitalise on the rise of specialty coffee to boost value perceptions…
- …but more education will be needed to truly reap the benefits
- Younger Germans increasingly seek to treat themselves with cold coffee
- Graph 15: selected types of freshly prepared hot/cold drinks purchased from coffee shops in the last six months, by age, 2024
- Health-consciousness is fuelling demand for hot and cold tea drinks
- Graph 16: selected types of freshly prepared hot/cold drinks purchased from coffee shops in the last six months, by age, 2024
- Features associated with independent coffee shops and coffee shop chains
- Independent coffee shops excel in friendliness, ambience and quality, with chains lagging behind
- Graph 17: features associated with independent coffee shops and coffee shop chains, 2024
- Coffee shop chains are challenged to build trust through transparency…
- …and improve their value proposition
- In an increasingly digitalised world, retaining the human touch is a must
- Design spaces that embody the brand’s identity while incorporating a distinctive flair
- Behaviours towards coffee shops
- Strong demand for menu innovation at coffee shops…
- Graph 18: behaviours related to coffee shops, 2024
- …with 16-44s driving demand
- Graph 19: agreement with statements related to coffee shops, by age, 2024
- Deliver sensorial escapism…
- …with internationally inspired indulgence
- Engage the senses with contrasting colours and textures
- Leverage matcha as a vibrant canvas for better-for-you flavour innovation
- Value consciousness continues to influence coffee shop patrons’ behaviours
- Graph 20: behaviours related to coffee shops, 2024
- After-hours concepts have great potential to expand occasions
- Tap into alcohol moderation with coffee-flavoured soft drinks and mocktails
- Entice consumers who favour coffee at home…
- …with community-building social activities
- Target better-off Germans with coffee-shop-branded products…
- …by expanding distribution
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LAUNCH ACTIVITY AND INNOVATION
- Acquisitions, expansions and market entries
- Coffee Fellows acquires Waynes Coffee
- The chain market set for increased competition from local coffee shop brands…
- …and international market entrants
- Concept, menu and services highlights
- Tchibo to expand its coffee bars within branches
- Espresso House’s Fika Club loyalty program shifts to personalised and gamified deals
- LAP Coffee launches The Functionals range
- Cold foam is trending as coffee shops elevate cold coffee drinks
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MARKET SIZE, SEGMENTATION AND FORECAST
- The coffee shop market is expected to experience growth in 2024
- Steady growth is expected for the coffee shop market
- Menu and format innovation will boost growth in the short/medium term…
- …while tech and higher coffee appreciation will drive long-term market growth
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APPENDIX
- Appendix – products covered, abbreviations, consumer research methodology and language usage
- Products covered in this Report
- Abbreviations
- Consumer research methodology
- A note on language
- Appendix – market size and central forecast methodology
- Forecast methodology
- Forecast methodology – fan chart
- Market size – value
- Market forecast and prediction intervals – value
75% of German coffee shop patrons would be interested in spending an evening at a coffee shop, reflecting a shift in Germans’ out of home behaviours and socialising habits. With more people cutting back on alcohol, coffee shops can target those seeking alternatives to bars by extending opening hours and offering creative coffee mocktails/soft drinks.
Only 38% of Germans buy hot/cold drinks from coffee shops, significantly fewer than the 63% who do so from other venues like bakeries. A major factor limiting coffee shop visits is the perception that they are too expensive. With inflation still influencing consumer spending, value-for-money offers, such as food and drink deals, will help boost engagement. Moreover, as green coffee prices continue to increase, operators can tap into the rise of specialty coffee and its quality perceptions to provide added value.
55% of patrons want to see more drinks with original flavour combinations and 48% are interested in drinks using special preparation techniques, especially among engaged 16-44 year-olds. In times when Germans feel a sense of gloom, coffee shops have an opportunity to offer uplifting, sensorial escapism. They can draw inspiration from global coffee/tea cultures or create visually striking drinks with bold colours and contrasting textures that captivate taste buds and eyes.
This report looks at the following areas:
- The short-, medium- and long-term impact of inflation on coffee shops
- Venues visited for purchasing freshly prepared hot/cold drinks, with a focus on most engaged demographics, such as younger generations and parents with young children
- Barriers to purchasing from coffee shops, with a focus on improving accessibility
- Coffee shop ordering channels, including the rise of digital ordering and takeaway/delivery
- Types of drinks purchased from coffee shops, and how to future-proof menus
- Features consumers associate with independent coffee shops and coffee shop chains, and how operators can improve perceptions
- Behaviours towards coffee shops, including interest in menu and concept innovations
With changing social habits and rising home consumption, community-focused activities, innovative offerings (like coffee mocktails and globally-inspired drinks) will help coffee shops deliver memorable, worthwhile experiences that boost sales.
Eliana Riera-McInnes, Foodservice Research Analyst
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