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Coffee Shops - UK - December 2014

Published By :

Mintel

Published Date : Dec 2014

Category :

Hotels & Restaurants

No. of Pages : 104 Pages

In a market with low brand loyalty, operators could benefit from building a deeper relationship with fans to foster real loyalty rather than just catering to consumers’ bargain-hunting and promiscuous spending behaviour.
Table of Content

Introduction

Definition
Abbreviations

Executive Summary

The market
Figure 1: UK coffee shops market size and forecast, 2009-19
Market factors
Companies, brands and innovation
Companies
Figure 2: Outlet numbers of the three largest UK coffee shop chains, 2011 and 2013-14
Who’s innovating?
The consumer
Outlets used to buy hot drinks out of home
Figure 3: Outlets used to buy hot drinks out of home, July 2013 and September 2014
Frequency of using a coffee shop
Figure 4: Frequency of using coffee shops, September 2014
Reasons for buying hot drinks out of home
Figure 5: Reasons for buying hot drinks out of home, September 2014
Attitudes towards buying hot drinks out of home
Figure 6: Attitudes towards buying hot drinks out of home, September 2014
Interest in products and services when buying coffee out of home
Figure 7: Interest in products and services when buying hot drinks out of home, September 2014
Specialist coffee shops’ menu enticements
Figure 8: Coffee shops’ menu enticements, September 2014
What we think

Issues and Insights

Diversifying selling formats offers scope for growth
The facts
The implications
Operators must tap into brand personality trends to foster loyalty
The facts
The implications
Scope for further menu expansion
The facts
The implications
Diversifying drinks ranges could help create standout
The facts
The implications

Trend Application

Extend My Brand
Data Creators
Many Mes

Market Drivers

Key points
In-home coffee consumption holds steady
Figure 9: UK household purchases of coffee and tea, 1974-2012
Coffee prices
Figure 10: RPI: coffee and other hot drinks, Q1 2010-Q3 2014
Despite momentum in the economy, income squeeze continues in 2014
The ageing population poses a challenge to coffee shops
Figure 11: Trends in the age structure of the UK population, 2009-19

Strengths and Weaknesses

Strengths
Weaknesses

Competitive Context

Key points
In home
The in-home coffee market
Coffee pods
Figure 12: Ownership of coffee pod machines, by age, April 2014
Flavoured coffee
Out of home
Competition from non-specialist operators intensifies
Greggs
Fast food brands
Lunch and other snacking operators
Pizza/pasta restaurants
Pubs

Who’s Innovating?

Key points
Food expansion: blurring boundaries between categories
Packaging trends
Creating standout
Playing on Play Ethic
‘Green’ trends
Globalisation issues

Market Size and Forecast

Key points
Coffee shops expected to retain growth
Figure 13: UK coffee shops market size and forecast, at current and 2014 prices, 2009-19
Outlet diversification continues
Branding concerns come to the fore
Food growth opportunities
Forecast
Figure 14: UK coffee shops market size and forecast, 2009-19
Forecast methodology

Market Share

Key points
Costa Coffee remains the dominant operator
Figure 15: Outlet numbers of selected UK coffee shops, 2011 and 2013-14

Companies and Products

Key points
Specialist coffee shop operators
Costa Coffee
Financial performance
Recent developments – Stores
Recent developments – Food and drink
Recent developments – Other
Starbucks
Financial performance
Figure 16: Financial performance of Starbucks Coffee Limited UK, 2009-13
Recent developments – Food and drink
Recent developments – Other
Caffè Nero
Financial performance
Figure 17: Financial performance of Caffè Nero Group Limited, 2010-14
Recent developments
Coffee Republic
Recent developments

Brand Communication and Promotion

Key points
Above-the-line adspend has fallen amongst most brands bar Starbucks
Figure 18: Advertising expenditure on selected coffee shop brands, 2010-14
Figure 19: Advertising expenditure on selected coffee shop brands, by media type, 2014*
Online and social media channels
Driving recommendation through free gifts
Starbucks looks to integrated media to show ‘special coffee moments’
Figure 20: Internet penetration, ever used, by age and gender, Q1 2011 Q1-Q1 2014
Brands play on Play Ethic to bolster positive connotations

Brand Research

Brand map
Figure 21: Attitudes towards and usage of brands in the coffee shop sector, September 2014
Correspondence analysis
Brand attitudes
Figure 22: Attitudes, by coffee shop brand, September 2014
Brand personality
Figure 23: Coffee shop brand personality – Macro image, September 2014
Figure 24: Coffee shop brand personality – Micro image, September 2014
Brand experience
Figure 25: Coffee shop brand usage, September 2014
Figure 26: Satisfaction with various coffee shop brands, September 2014
Figure 27: Consideration of coffee shop brands, September 2014
Brand recommendation
Figure 28: Recommendation of selected coffee shop brands, September 2014

The Consumer – Who Buys Coffee Out of Home and Where do They Go?

Key points
Venues visited
Figure 29: Outlets used to buy hot drinks out of home, July 2013 and September 2014
Competition from non-specialists
The threat from free coffee
One in five people don’t drink hot drinks out of home
Frequency of visiting coffee shops
Figure 30: Frequency of using coffee shops, July 2013 and September 2014
Figure 31: Frequency of using coffee shops, September 2014

The Consumer – Reasons for Buying Coffee Out of Home

Key points
Reasons for buying hot drinks out of home
Figure 32: Reasons for buying hot drinks out of home, September 2014
Two in five turn to hot drinks for a break, equal share to relax
Convenience drives one in four hot drink buyers
Self-service machines
Ready-to-drink products
Vending opportunities
Coffee karts
Slow it all down
Coffee in the meal context

The Consumer – Attitudes towards Buying Coffee Out of Home

Key points
More than a quarter like to vary where they go for coffee
Figure 33: Attitudes towards buying hot drinks out of home, September 2014
Standout products
Highlighting the venues’ coffee credentials

The Consumer – Interest in Products and Services When Buying Coffee Out of Home

Key points
Wider service formats appeal most to the 16-34s
Figure 34: Interest in products and services when buying hot drinks out of home, September 2014
Tailored service formats
Drive-throughs and self-service machines
Mobile units
Smartphone technology
Digital loyalty schemes, promotions and payment apps
Smartphone payments
Location-based marketing
‘Push’ marketing
In-store wireless charging
Video content can help promote new services

The Consumer – Specialist Coffee Shops’ Menu Enticements

Key points
Menu enticements
Figure 35: Coffee shops’ menu enticements, September 2014
Localism
Food expansion opportunities
Hot sandwiches
Wider product categories
Wider menus linked to trials of other meal occasions
Drinks expansion opportunities
Soft drinks
Dessert coffees
Tea innovation

Appendix – Market Size and Forecast

Figure 36: Best- and worst-case forecasts for UK coffee shops market, 2014-19

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