Growth of coffee shops could be slowed by hard Brexit

15 January 2019 by
Growth of coffee shops could be slowed by hard Brexit

Sustained growth of the £10.1b UK coffee shop market over the past 20 years could be hampered by a hard Brexit.

A new report from data company Allegra World Coffee Portal reveals that the UK market saw an 8.7% growth in the number of branded coffee outlets last year to 8,149 stores, with the sector forecast to exceed 10,000 outlets by 2023. The total number of coffee outlets, including the branded sector, independents and non-specialist outlets, now stands at 25,483 units.

However, Project Café UK 2019 showed that ongoing uncertainty regarding the country's future relationship with the EU caused some frustration to the coffee shop sector in 2018, led by growing anxiety on labour shortages, rising prices, investment and eroded consumer confidence.

Nearly half (49%) of industry leaders surveyed by Allegra indicated Brexit was negatively affecting their business, with 46% remained neutral and 5% reported a positive impact. Some 69% agreed the plans for the UK's exit from the EU had negatively impacted consumer confidence, while 87% of industry leaders surveyed believed Brexit had damaged the UK economy.

Costa Coffee (recently bought from Whitbread by Coca-Cola), Starbucks and Caffè Nero remain the three largest coffee-focused branded chains in the UK, with 2,655 outlets, 992 and 683 stores respectively.

Meanwhile in the specialty segment, a new wave of artisan concepts has continued to grow, with the Department of Coffee and Social Affairs having acquired several independent café businesses to increase its portfolio to 22 stores in 2018. London-based Grind has developed as travel hub partnership with SSP, and Caravan has expanded its portfolio with private investment firm, Active Partners.

Jeffrey Young, chief executive of Allegra, said: "Twenty 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."

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