UK Coffee Summit addresses local trends & challenges

The UK Coffee Leader’s Summit, which was held 26 April in London, explored the trends, threats and opportunities affecting the UK coffee market primarily, but also the overall coffee industry.

Now in its tenth year, the summit, organized by Allegra Events, took place at the Renaissance Hotel at St Pancras and drew delegates from up and down the supply chain – from coffee buyers to baristas.

Jeffrey Young, CEO of Allegra laid out the findings from its Project Café UK 2019 report, saying, “It’s incredible to see how much coffee has changed over two decades. I still believe, thoroughly, that this is the most exciting time in coffee.”

Coffee in the UK

UK Coffee shops saw £10.1bn in sales in 2018, £4.3bn of this from branded chain stores such as Costa Coffee, Starbucks Coffee and Caffé Nero. The forecast for 2020 estimates sales reaching over 6bn in the chain coffee shop segment.

There was an overall growth in coffee shops of 5.8% in 2017-18, down from 7.1% in 2016-17. Meanwhile the chain market is growing ahead of the overall market, seeing outlet increase of 8.7% in 2017-18 vs 13.9% in 2016-17. So, while growth is slowing, chains remain ahead in terms of outlet and sales growth. “We’re not in any way predicting the market is saturating, but the growth is certainly slowing down, and the general economic climate is very difficult for a lot of people,” said Young.

Looking at the key players, Costa holds almost half (49.7%) of the outlet share in the UK, while Starbucks and Caffé Nero hold 18.6% and 12.8% respectively.

In a survey of coffee industry executives on the impact of Brexit, 5% of respondents saw it as positive for their business, while 49% said it would be damaging to their business. Seventy percent of respondents said Brexit would negatively impact consumer confidence, and 87% said Brexit will be difficult for the entire economy (just 1% said it would be positive).

(The survey was conducted in early 2019, before the ‘storm’ of politics that hit in February – I wonder if anyone still thinks it’s positive now…)

Ten years ago, Allegra predicted the flat white would grow in popularity, and now it is a menu staple, with 21% consumers preferring it. The most popular consumer choice is a latte at 54%, with cappuccino and americano at 29% and 24% respectively.

On plastic waste, 58% consumer said they felt coffee shops have been proactive in their attempts to tackle plastic waste. When asked what would motivate them to help by using a reusable cup, consumers suggest the responsibility lies with the coffee shop, for example by offering a discount or extra loyalty points if they bring their own cup. However, 16.7% said their own ethical stance would make them bring a reusable cup, while 6% said nothing would motivate them to bring a cup.

A third of orders now include alternative milks, with soy milk requested the most (9.8%), followed by almond and coconut milks at 6.7% and 6.6%, respectively. Oat milk is on the rise with 4.4% orders using it, while cashew and rice milk are least common, with just 0.7% and 0.6% respectively.

Future Global Trends

Looking at future global trends, Young said the biggest was continued mergers and acquisitions and “the big getting bigger” with deals in 2018 including Coca-Cola buying Costa, Nestlé partnering with Starbucks and Lavazza acquiring Mars’ coffee vending business.

Customer-centric technologies such as automation, order-ahead, free WiFi as standard, and increasingly cashless payments will rise. “It’s the young mindset,” said Young. “They want a seamless interaction where they order, receive and pay without actually having to do anything… they’ll pick up the tab on their phones later.”

Other trends include options and customisation to serve the health and wellness trends, new voices of women in business and increasing transparency and equality in business.

Young said we will also see a rise of non-specialists such as McCafé and Greggs – McCafé is now the fourth most recognised coffee shop brand according to Allegra and has even been trialling baristas in selected stores.

I honestly think that McCafé coffee is pretty good, at least in the UK, and where else can I get a decent, no frills, sustainably sourced cup for less than two quid?

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