The European branded coffee shop market (25 countries
[1]) grew by 6.4% in 2017 to reach an estimated 22,714 outlets. With the expansion matching the previous year, the market has continued to grow at a steady pace, facilitated by a generally positive economic environment.
The
Project Café2018 Europe report from Allegra World Coffee Portal reveals that the fastest growing markets in terms of outlet expansion in the last 12 months are the United Kingdom, Turkey and Russia. 21 of the 25 European countries have seen expansion of their branded coffee shop market, and 18 of those have displayed growth of 3% or higher.
The UK is the most developed market and has long been the model for the branded coffee shop industry in Europe, driving the expansion in 2017 by adding 643 units to reach an estimated 7,421 outlets.
Costa Coffee remains the largest chain in Europe, adding 243 stores in the past 12 months to bring its total to 2,755 outlets. Starbucks added 251 new stores to reach 2,406 outlets and has now overtaken McCafé to become the second largest operator in the market. With its Italian debut in 2018, commencing with the opening of the ultra-premium Reserve roastery in Milan, Starbucks will be the first coffee shop chain to have a presence in all 25 key European markets.
Artisan influence and changing market dynamics
The influential ‘third wave’ artisan scene is growing across Europe and is already established in the more dynamic cities in countries such as UK, Russia, Nordics and the Netherlands. Successful branded chains are adapting to this influence, invigorating their brands with new in-store design, single origin coffee and freshly prepared food offerings. The report observes that those markets which have yet to embrace this trend are starting to fall behind in terms of outlet growth compared with the rest of Europe.
In the most advanced markets a new trend is emerging and is set to become a major force on the global coffee industry over the next decade. Dubbed the ‘5
th Wave, The Business of Coffee’, this trend sees high quality artisan chains adopting a more advanced set of business practices and higher standards of professionalism in order to deliver boutique concepts at scale.
The future marketplace
Despite the current political uncertainties, the economic growth in Europe has shown signs of improvement over the last 12 months, which in turn has had a positive effect on the branded coffee shop market. Allegra anticipates the market growth to continue at a steady rate with key opportunities lying in countries where international chains are influencing the expansion of domestic brands.
The future of the coffee shop market will be shaped by the continued increase in consumer participation and the desire for quality coffee anywhere and anytime. The ‘5
th Wave’ trend will see leading brands investing in technology and people development programmes and ultimately compete on operational excellence.
‘We are entering an exciting new era of leadership in the industry, one that is based on a culture of excellence,’ says Jeffrey Young, Managing Director of Allegra Group.
‘Addressing these rapidly changing market dynamics is a business imperative and leading chains will need to adapt or risk getting left behind.’
The Project Café2018 Europe Report is now available to purchase from Allegra World Coffee Portal.
[1] Includes: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Republic of Ireland, Italy, The Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, and the UK