Propel Morning Briefing

Starbucks leads European coffee league, UK most advanced market

Starbucks is the fastest-growing branded coffee chain in Europe having opened 194 stores in 2016, according to the Project Café2017 Europe report from Allegra World Coffee Portal (WCP).

The coffee company has grown its European estate to 2,154 sites across 24 countries and, with its planned entry to Italy next year, it will be present in all major European markets.

As the most developed market in Europe, the UK remains the model for the branded coffee shop industry, the report said.

The total number of branded outlets is estimated at 21,198 outlets, with 1,268 outlets added in 2016. This represents growth of 6.4% versus 9% a year earlier.

A total of 21 of the 25 countries analysed in the report saw expansion, yet the rate of growth has slowed compared with 2015.

The report revealed the UK, Turkey and Greece were the fastest-growing markets in terms of outlet expansion in the past 12 months.

Continued investment by leading chains saw the top three brands maintain a 32% market share of the total European coffee chain market in 2016.

Whitbread-owned Costa Coffee leads the way, operating 2,512 outlets across 12 European countries, followed by McCafé with 2,199 outlets across 17 countries and then Starbucks.

The report identified strong sustained growth in markets with an established artisan wave presence such as the UK, Russia, Nordics and Netherlands.

Successful branded chains are adapting to this influence with new in-store design, origin coffee and fresh hand-prepared food.

Allegra WCP has predicted the “fifth wave, the business of coffee” would present an important new era for the global coffee industry.

The fifth wave encompasses a combination of all four previous waves – tradition, branded chains, artisan, and the science of coffee – where high-quality boutique chains will be a major feature of the market going forward.

It said brands that didn’t adapt would risk losing business.

The report observed traditional branded chains across Europe – such as Coffee House, Kahve Dukkani, Ozsut and Coffea – have already suffered multiple outlet closures in 2016.

It added there would be a greater investment in new technologies from operators to fully engage with savvy millennials and increase consumer satisfaction.

Allegra Group chief executive Jeffrey Young said: “We are entering an exciting, yet challenging era for the European coffee industry within a global context – one that will ultimately see the leading brands compete on excellence in an environment where winning is everything. Success will be defined by brands that develop and retain highly motivated and passionate staff. The industry will put more emphasis on hyper-professionalism and invest in people development programmes to support long-term career paths for hospitality professionals.”


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