Propel Morning Briefing

UK drives European branded coffee shop market expansion, Starbucks overtakes McCafe to become second-largest operator

The UK drove European expansion of the branded coffee shop market in 2017 as it added 643 outlets to reach an estimated 7,421 in total, according to the Project Café 2018 Europe report from Allegra World Coffee Portal.

Starbucks was the fastest-growing operator for the second year running. It added 251 new stores in 2017 to reach 2,406 outlets, overtaking McCafe to become the second-largest operator in the market.

With its Italian debut in 2018, starting with the opening of the Reserve roastery in Milan, Starbucks will be the first chain to have a presence in all 25 key European markets.

Whitbread-owned Costa Coffee remained the largest chain in Europe, adding 243 stores in the past 12 months to bring its total to 2,755 outlets.

The report showed the European branded coffee shop market grew by 6.4% in 2017 – the same as last year – to reach an estimated 22,714 outlets.

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

A total of 21 of the 25 European countries have seen expansion of their branded coffee shop market, with 18 of those displaying growth of 3% or higher.

The “third wave” artisan scene is growing across Europe and is already established in the “more dynamic cities” in countries such as the UK, Russia, Nordic nations and the Netherlands.

The report said successful branded chains were adapting to this influence, invigorating their brands with new in-store design, single-origin coffee and freshly prepared food offerings while markets yet to embrace the trend were starting to fall behind in terms of outlet growth.

In the most advanced markets a new trend was emerging, dubbed the “fifth wave, the business of coffee”. This trend sees high-quality artisan chains adopt a more advanced set of business practices and higher standards of professionalism to deliver boutique concepts at scale.

Allegra forecast market growth would continue at a steady rate, with key opportunities lying in countries where international chains are influencing the expansion of domestic brands.

It said the future of the coffee shop market would be shaped by the continued increase in consumer participation and the desire for quality coffee anywhere and at any time.

Allegra Group managing director Jeffrey Young said: “We are entering an exciting new era of leadership in the industry, one based on a culture of excellence. Addressing these rapidly changing market dynamics is a business imperative and leading chains will need to adapt or risk getting left behind.”


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