UK: coffee bar market still growing despite recession, consumers looking for independent coffee shops

A new report by management consultancy, Allegra Strategies, shows that the number of branded coffee shops will reach 4,000 UK outlets this year, representing an industry growth of more than 5% in the past 12 months, despite the UK being in deep recession. While many sectors of the economy have faced their worst trading period for 60 years, branded coffee shops remain on track to record a 15th consecutive year of sales.

Interviews conducted in April 2009 with more than 130 senior coffee executives and key suppliers reveal that trading has been difficult over the past 6 months, yet branded coffee shop operators have weathered the storm well and remain firmly optimistic about opportunities ahead. Nearly two-thirds of branded coffee operators have shown flat or growing like-for-like sales performance in the last two quarters. The industry remains on track to reach £2billion in consumer spend by 2012.

Continued growth in outlets by the larger players, as well as firmly entrenched consumer eating-out behaviour are main reasons why the sector is holding up well in the economic downturn. Consumers may be trading down when they can, and they are certainly more demanding with their choice of outlet, but few British consumers, it seems, are prepared to forgo the luxury of their daily or weekly cappuccino or latte. Moreover, in these difficult times ‘affordable’ treats are an important way for many to get through the recession, and what Allegra calls the ‘I’m worth it’ factor.

Allegra’s research identifies a growing trend towards more authentic individual coffee shops serving hand-crafted quality coffee. Allegra’s research indicates that today’s consumers are increasingly looking for higher quality coffee real ‘experience’ and localness. Large, branded, ubiquitous chains frequently do not fully cater for the needs of the most progressive consumers.

Full results of the research will be presented at Allegra’s UK Coffee Leader Summit at the Waldorf Hotel, Aldwych London on 19 May 2009. The summit will play host to more than 250 leading executives in the coffee sector.

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