Germany’s branded coffee shop market shows flat growth in outlet numbers and a 2.2% increase in turnover as operators concentrate on improving product offers and store profitability, according to a definitive report from Allegra Strategies World Coffee Portal, Project Kaffee2015 Deutschland.
The German branded coffee shop market, which includes coffee-focused American-style chains, large bakery chains, fast food outlets, petrol stations and other travel operators, totals over 25,000 outlets and is valued at almost €3.5 billion in 2015. While outlet growth has dropped overall at an average rate of 0.1% in the last five years, turnover increased by 2.2% annually. The top 100 bakery chains remain a fundamental ‘traditional’ force; however, nearly 450 branded bakery outlets have closed between 2010 and 2015.
Total market contraction offsetting growth of branded coffee-focused chains
According to Allegra Strategies, branded coffee-focused chains total 1,882 outlets and generate a turnover of €974m in 2015.
The coffee-focused market shows 1.6% growth in outlets this year, led by Coffee Fellows which is forecast to add at least 10 new stores to reach 80 stores. Market leader is McCafé adding 7 stores to reach 867 by year end. Growth is also driven by Espresso Team adding 7 stores to reach 37 and Chicco di caffè with 87 (+4).
In the next five years, annual average outlet growth for branded coffee-focused chains is expected to level at 1.1%, due to intense competition for out of home coffee and snack spend, in particular from bakeries.
Operators focus on improving product offers and store profitability
Strong growth in speciality coffee sales of over the last five years as out of home operators discover the ‘opportunity of coffee’. Driven by increasing competition for bread sales from retailers, traditional bakeries are shifting their focus to coffee and snack sales and are closing unprofitable stores.
Further growth is generated by sales of take away food and beverages driving growth in the travel segment which is expected to grow at an annual rate of 1.1% average over the next five years. This presents branded coffee-focused chains with the opportunity to increase their presence in traffic hubs. A compelling food offer is critical for the continued success of branded chains in this competitive market.
More coffee enthusiasts and more take-away coffee Germany is historically a filter coffee drinking nation. This is slowly changing and consumers have started to seek more variety. Latte macchiato is the most popular beverage in German coffee shops in 2015 ordered by one in five customers).
Coffee is mostly consumed at home (12 cups per week), followed by at work (6 cups) and then in coffee shops (3 cups). Frequency of coffee shop visits is expected to increase, largely fuelled by growing demand for takeaway; 20% of consumers state they intend to visit coffee venues more often in the next 12 months.
Convenient location is the most important factor for consumers in selecting a coffee shop ranked first by 17% of all visitors. Consumers attribute more importance to coffee quality, with 27% revisiting a coffee venue because of the high standard of coffee quality.
The future coffee shop marketplace will be shaped by an increasing appetite for new coffee drinks, with 62% of consumers willing to try out a new product at a coffee venue. This compares with just 47% willing to do so three years ago.
Director of Insight at Allegra Strategies World Coffee Portal Anya Marco comments: ‘From the research we can see that two things really make a difference to the success of operators. First, German consumers have become increasingly mobile and seek convenient places to have a coffee.
This presents an excellent opportunity for businesses to expand their coffee offer in locations with high footfall or at traffic hubs. Secondly, consumers demand increasingly higher coffee quality and are keen to try out new drinks. Although still strong, there is a trend away from a traditional filter coffee led culture to a more diverse and experience-centered at out of home coffee consumption.’
The Project Kaffee2015 Deutschland report is now available to purchase from Allegra Strategies World Coffee Portal Limited.