Chains tipped to scrap for share of speciality coffee market

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Innovations in equipment and a rising tide of ambitious artisan specialists is “radically transforming” the state of the UK’s coffee shop market.

That’s the verdict of a new report into the nation’s coffee scene from research firm Allegra which says that increasing numbers of coffee artisans are bringing high quality speciality coffee to a larger and more discerning audience than ever before.

It noted that espresso and coffee grinding equipment innovations are empowering baristas, helping them reach higher levels of consistency and accuracy in their quest to serve the best quality coffee for the consumer.

Streamlined bar environments and increased automation are likely to facilitate greater service-orientation from baristas in future.

The report said that speciality coffee chains such as Department of Coffee and Social Affairs, Taylor St Baristas, and Notes will grow and focus on vertical integration.

But it also predicted that the market big boys won’t take the competition lying down. Branded chains such as Starbucks, Costa and Caffè Nero will adopt speciality credentials, further increasing competitive pressure and contributing to a blurring of lines between branded chains and speciality venues.

Non-specialist operators such as retailers, pubs and restaurants will integrate speciality coffee into their businesses, too, the report said.

Speciality coffee accounts for an estimated 15% of the total volume of the out-of-home coffee market and is growing at 13% a year. The speciality segment outperforms the total market which itself is projected to grow at 10%. Speciality coffee venues are also experimenting with new beverages including cold brew and speciality teas.

Approximately 180 speciality coffee roasters currently operate in the UK, although the emerging nature of the market means that 61% of those surveyed for the study have been roasting for two years or less.

The speciality green coffee market has an estimated value of £40m per annum and Allegra forecasts it to double to £80m by 2020, representing 15% growth per annum

Growth will be driven by demand from an increasing number of artisan micro-roasters and commercial roasters broadening their offer to include speciality.

The UK speciality roasted coffee market is estimated at 5,830 tonnes per annum (based on an average mass reduction of 17% during the roasting process) and Allegra expects it to reach 10,740 tonnes by 2020.

The market has an estimated annual value of £80.1m and with value growth of 16% per annum it is forecast to reach £168.3m in value by 2020.

Allegra estimates there are 1,400 independent speciality coffee venues in the UK, rising to 2,500 by 2020, representing year-on-year growth of 12%. 65% of speciality coffee venue owners interviewed for the study plan to open new stores in the next three years.

Jeffrey Young, managing director of Allegra Group, said: “The last three to five years have seen a significant transformation of the UK coffee market with the explosion of speciality coffee venues nationwide and a particular focus on London and the South East. We have witnessed a growing presence of quality artisan roasters producing volumes of high grade speciality coffee.”

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