According to the market research company’s findings, spending at coffee shops is at an all-time high, with sales forecast to top £4 billion this year.
But while coffee shop sales continue to thrive, annual growth has slowed from 9% in 2015 when the market was worth £3 billion, to 3% in 2019 when it was valued at £3.9 billion.
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, and one in six (16%) buy their hot drinks from traditional cafes. Overall, 19% of Brits said they had not bought a hot drink outside their home in the three months to August 2019.
Mintel senior foodservice analyst Trish Caddy said: “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.”
While coffee (80%) was by far the most popular hot drink purchased out-of-home in the three months to August 2019, tea has seen a resurgence. According to Mintel research, 43% of consumers who imbibe hot beverages out-of-home drink tea, compared with 39% a year ago. And the popularity of a cuppa has not escaped Millennials. Mintel claims some 50% of Millennials (aged 20-39) drink tea out of home, compared with 40% of Baby Boomers (aged 55-73).
Trish said: “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.”
More than half (57%) of consumers surveyed agreed that more coffee shops should charge customers a fee for using disposable coffee cups. Meanwhile, as many as 82% of customers agreed that more people should use reusable coffee cups and 67% agreed that it’s worth paying more for coffee from coffee shops that pay fair wages to coffee farmers.
Trish commented: “There is no doubt that disposable coffee cups have been an essential component to the convenience of takeaway coffee. 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.”
The consumer research for Mintel’s ‘Coffee Shops UK 2019 Report’ was carried out among 2,000 internet users aged 16+ in August 2019.