Coffee shop market up 7.3% despite Brexit pressures

More than 1,200 coffee shops were opened in the UK in the past year, according to a new study.

Store openings contributed to 7.3% hike in turnover to £9.6bn across the category in 2017, reported analysts firm Allegra World Coffee Portal in its Project Café 2018 UK study. Over the year, 1,215 openings took the total number of stores to 24,061.

Branded chains accounted for 10.5% of the sales growth, with combined revenue of £4bn. Costa, Starbucks and Caffè Nero continue to dominate the market, and together make up 52.9% of the total branded chain market.

Specialised artisanal chains such as Gail’s, Grind and Joe & The Juice gained momentum in 2017, said Allegra, by catering to “more discerning and less brand-loyal millennials with premium-quality coffee and service”.

Some 71% of coffee sector executives interviewed were positive about the trading environment in 2017, although concerns remained about key Brexit issues such as trade and jobs.

This had been reflected in dampened like-for-like sales and impeded outlet growth, said Allegra, adding that a lack of clarity over the UK’s future relationship with the EU was a headwind for the industry.

But although the decline in sterling had pushed up equipment and import costs, increased tourism and the popularity of ‘staycations’ has boosted sales for some operators.

Allegra expects the total UK coffee shop market to grow to 31,400 outlets, with a turnover of £13bn by 2022.

“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.

“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.”

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