Coffee shops remain one of the UK’s strongest performing sectors despite Brexit uncertainty, according an industry report.
Allegra’s Project Café 2018 report found that the £9.6bn UK coffee shop market increased its turnover by 7.3% this year.
Another 1,215 stores opened this year, bringing the total to 24,061 stores. This represents a 5.3% growth in outlets.
Costa Coffee remained the biggest UK brand with 2,326 stores, followed by Starbucks with 956 shops. Caffè Nero came in third with 675 outlets. Together, they make up 52.9% of the total branded coffee chain market.
However, although 71% of coffee sector executives said that they felt positive about the trading environment, concerns over trade and jobs in the wake of Brexit remain.
Brexit uncertainty weakened the coffee industry’s like-for-like growth, slowed outlet expansion and raised equipment and import costs. On the other hand, a rise in tourism and the increasing popularity of ‘staycations’ has boosted sales for some.
This year also saw the development of ‘5th wave’ artisanal coffee chains such as Gail’s, Grind and Joe The Juice to cater to more discerning millennials with premium quality coffee.
Allegra predicts that total UK coffee market turnover will reach £13bn by 2022, with over 31,400 stores.
“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,” said Allegra Group CEO Jeffrey Young.
“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.”
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