Brewing success: Brits to splash out £4 billion at coffee shops in 2020

06-Mar-2020 - Germany

It's no surprise that it feels like there's a coffee shop on every corner, as the latest research from Mintel reveals that Brits are literally splashing out billions annually on their daily dose of caffeine. According to Mintel research, spending at coffee shops is at an all-time high, as this year sales are set to top £4 billion.

But while coffee shop sales continue to thrive, annual growth has slowed from an impressive 9% in 2015 when the market was worth £3 billion to a respectable 3% in 2019 when it was valued at £3.9 billion. Facing competition at every turn, a quarter (26%) of Brits buy hot drinks from fast food chains such as McDonald’s, while one in five (22%) buy from a supermarket/store cafe such as Tesco or Ikea. Fighting its corner, one in six (16%) buy their hot drinks from traditional cafes. Overall, 19% of Brits have not bought a hot drink outside of the home in the last three months*.

Trish Caddy, Mintel Senior Foodservice Analyst, said:

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“Coffee shops have enjoyed robust growth in the past five years, benefitting from brands’ ability to meet consumer demand for the convenience of takeaway coffee and emergence of specialty coffee. Continued growth is being boosted by more high street coffee shop brands expanding in the retail, travel, and leisure sectors.

“However, the market continues to face tough competition from non-specialists such as fast food outlets and supermarkets; a situation which is not likely to ease as non-specialists continue focusing on price and convenience. With more food outlets selling low-cost coffee, coffee shops without strong food offerings will fall behind.”

Resurgence of popularity in out-of-home tea drinking

While coffee (80%)** is by far the most popular hot drink purchased out-of-home, tea has seen something of a resurgence as of late. According to Mintel research, currently, 43% of consumers who drink hot drinks out of home drink tea, compared to 39% a year ago. And while a nice ‘cup of rosie’ has a long history of solving the nation’s woes, the popularity of a cuppa has not escaped Millennials. According to Mintel research, some 50% of Millennials (aged 20-39) drink tea out of home, compared to 40% of Baby Boomers (aged 55-73).

“The popularity of tea (in general) amongst Millennials is likely a reflection of the growing popularity of alternatives to the traditional cuppa. Speciality black, green and fruit/herbal/spice teas are particularly popular among 16-34-year-olds. Many of the latest ingredient-focused tea-based drinks, such as matcha green tea and herbal teas that give added focus to flavour and a sense of occasion, suit young consumers. That’s not to say they’ve abandoned the classic cup of ‘builder’s tea’ as some 77% of Millennials drink standard black tea.”

Brits warm to the idea of charging for disposable coffee cups

More than half (57%) of consumers agree that more coffee shops should charge customers a fee for using disposable coffee cups. Meanwhile, as many as 82% of customers agree that more people should use reusable coffee cups. Proving that coffee drinkers have a heart, 67% of consumers agree that it’s worth paying more for coffee from coffee shops that pay fair wages to coffee farmers.

“There is no doubt that disposable coffee cups have been an essential component to the convenience of takeaway coffee. In April 2019, the independent chain, Boston Tea Party, saw its sales fall by £250,000 across its 22 shops following its ban on single-use coffee cups last summer. This suggests that a total ban on the use of disposable cups will alienate some coffee shop consumers who are motivated by the convenience of takeaway coffee in the first place. Conversely, our research shows that Brits respond to rewards, and operators can look to offer rewards to help change behaviour. The sandwich chain Pret A Manger, for example, introduced a 50p discount for customers who bring reusable coffee cups. Both cost savings and a positive impact on the environment give consumers even more reason to visit.”

* 3 months to August 2019

** of those who have bought hot drinks out-of-home in 3 months to August 2019

https://www.yumda.com/en/news/1165272/brewing-success-brits-to-splash-out-4-billion-at-coffee-shops-in-2020.html