Coffee houses – The new local?

Coffee outlets expected to outnumber UK pubs

By Alexandra Badea | 30th September 2017

Coffee house outlets have been booming across the UK and Internationally, alike. So much so, that by 2030, they are expected to outnumber pubs in the UK.

The Power Of Demand

In an ever-changing world, it’s normal for brands to answer to consumer demand, especially when 65% of Brits have visited a coffee shop in the past 3 months.

For a generation that loves socialising and for which visiting coffee shops is a routine, there’s no wonder that the UK coffee shop market has enjoyed its biggest growth period since 2008 when it was valued at £2.2 billion. In 2016, figures grew by 37% to £3.4 billion. And the future also looks ‘brewtiful’ for this sector, with forecasted sales figures expecting to jump a further 29% to £4.3 billion.

The growth in the total number of outlets forecast for the next years is another sign of strength for this sector, with an expected over 32,000 outlets by 2025 in the UK alone, compared to the estimated 6,940 outlets in 2017.

Where Craft Steps In

Whilst chains Costa Coffee, Starbucks and Caffè Nero lead the outlet share by 53%, a significant rise in small and medium-sized coffee houses is starting to show. Places like Joe & The Juice or Taylor St. Baristas are driving comparable sales across the sector ahead of the leading chains.

As the market becomes saturated with mainstream chains, the 5th wave of coffee, otherwise known as specialty coffee, makes its presence known. Past are the times when the previous 4 waves (tradition, chain, artisan and science) were new kids on the block – we’ve written a thing or two on how quickly trends become norm, here. The coffee consumer is getting savvy and will look at in-store experience, craft and specialty and subsequently, is ready to pay more for high quality.

Which is why Caffè Nero’s purchase of Harris+Hoole can be seen as a future-proofed move that acknowledges independent coffee shops as a serious threat to leading chains.

Starbucks chose a different path to this. Realising they can’t continue to lead the Global coffee market just by selling Unicorn Frappucinos alone, they’ve introduced a new type of format – The Roastery and Reserve Bars. Obviously, they cater to a different audience, people who scrutinise over quality. They also cater to a whole new type of consumption pattern, bypassing the usual coffee shop quality of a pit stop whilst at the mall and turning into destinations in their own right. With former CEO Schultz stepping down to focus on the Roasteries, the concept is sure to be a success. One, because it offers connoisseurs rare and exotic small-batch blends, test-kitchen beverages like Nitro Coffee otherwise unavailable in your local Starbucks, in a 4,000 square feet space specifically rolled out to impress. Two, because they offer Starbucks insight through allowing them to test new beverages before rolling them out into whole wide world. And three, because it seems like Starbucks have potentially found a way to patch a whole, with the numbers of customers dwindling when it comes to brick-and-mortar stores and them moving more and more into the online segment.

Considering that 61% of Brits now prefer a cup of coffee over a cup of tea (tea consumption in the UK has fallen by 19% since 2010, if you were wondering) and consume 2.1 billion cups of coffee to 874 million cups of tea a year, we now know that the coffee trend has hit the UK with its best shot.

All that’s left to see now is who will own who: craft or chain?

By Alexandra Badea | 30th September 2017

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