- The £10.1bn UK coffee shop market grew by 7.9 per cent in turnover during 2018 - representing 20 consecutive years of sales and outlet growth- but many industry leaders say Brexit is negatively impacting trade and creating business uncertainty, according to a report by Allegra World Coffee Portal
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The organisation’s Project Café UK 2019 report reveals the total UK coffee shop market is valued at £10.1bn across 25,483 outlets.
Allegra research shows coffee shops are well placed to catalyse growing consumer preference for experience-led and digitally-enhanced retail concepts – 45 per cent of industry leaders surveyed consider social media to be the most effective form of marketing. However, coffee quality remains the biggest factor behind café success according to industry leaders surveyed by Allegra.
The report also shows that uncertainty on the UK’s future relationship with the EU continued to frustrate the coffee shop industry in 2018. The political impasse over the last 18 months has contributed to growing anxiety on labour shortages, rising prices, investment and eroded consumer confidence.
49 per cent of industry leaders surveyed by Allegra indicated Brexit was negatively affecting their business, with 46 per cent remaining neutral and 5 per cent reporting a positive impact. 69 per cent agreed it was negatively impacting consumer confidence, while 87 per cent of industry leaders surveyed believe Brexit has damaged the UK economy.
In the specialty segment, a burgeoning 5th Wave of scaled artisan concepts continues to grow and promote market-wide premiumisation. Department of Coffee and Social Affairs acquired several independent café businesses to increase its portfolio to 22 stores in 2018. London-based Grind continues to develop its travel hub partnership with SSP, and Caravan has expanded its portfolio with private investment firm, Active Partners.
Jeffrey Young, Allegra CEO said, “20 years of consecutive growth, in terms of outlets, turnover and like-for-like performance is an impressive feat by this robust segment that has become intrinsic to UK lifestyles.
More growth will continue, albeit at a slower pace, as the economy is subjected to myriad pressures, including structural retail change, technological development, changing consumer habits and deep uncertainty on the numerous potential outcomes of Brexit.”