Thriving European coffee shop market shows accelerated growth in 2015

The European branded coffee shop market is showing stronger growth in 2015 compared with 2014. The total number of branded outlets is estimated at 19,472 stores, with 1,615 stores added in 2015. This represents growth of 9% per annum, according to Project Café16 Europe, the latest report from Allegra World Coffee Portal.
Strong multinational brands continue to flourish across European markets

19 of the 24 countries within the report saw expansion in number of outlets, as leading chains Costa Coffee (2,315), McCafé (1,993) and Starbucks (1,965) continue to invest in the European market. These three international brands have a combined market share of 32% and are influencing the growth of strong, focused national chains including Espresso House and Columbus Coffee.

The UK remains the most developed branded coffee shop market, representing 33% of the total European market and adding 713 stores in 2015 to reach a total of 6,409 outlets as of October 2015. Turkey also shows strong signs of growth, with a total of 2,495 stores after adding 306 outlets in 2015. Russia (new to this year’s report) is the third largest market by number of outlets, with significant growth of 12% to reach 1,896 stores, despite its prevailing political and economic fragility.

Denmark and Turkey both showed growth of 14% in the last twelve months, while Germany has re-entered a growth period, adding 35 stores. In the Nordics, Sweden is the largest branded coffee shop market, growing 10% in the last year to reach 406 stores. From a low base of 89 outlets, Romania shows overall growth of 31%.

As the market evolves, strong multinational brands continue to flourish as do focused, quality national operators. However, weaker traditional concepts are being challenged by the wave of lifestyle coffee shops across Europe and exiting the market, with Spanish chain Café y Té closing 40 stores and Segafredo closing 21. These challenges can also be seen in the net contraction of branded coffee shop outlets in Slovakia (-12%) and Austria (-3%).

Costa Coffee leads the branded chains in Europe

Costa Coffee dominates the market across Europe, with 2,315 stores across eleven countries. This international brand is also the fastest growing chain in Europe, adding 209 outlets in the last twelve months, giving Costa a 12% share of the total market.

McCafé is present in 16 countries, but overall growth was slower, with 64 stores added to reach a total of 1,993 outlets. Starbucks has a strong presence in 22 of the 24 European countries examined in this report and opened 185 stores in the last year, bringing its total to 1,965 outlets. Caffé Nero added 42 stores in 2015 and now trades from 660 outlets across three countries.

Speciality coffee and café culture increasingly integral to European lifestyle

The influential third wave artisan scene continues to grow and successful branded chains are adapting to this artisan influence with new in-store design, origin coffee and fresh, hand-prepared food.

This sustained growth of speciality coffee culture shows that consumers are unwilling to give up their daily coffee treat, especially across strong growth markets such as Turkey, Denmark, Sweden and the UK.

As economies throughout Europe recover and market confidence increases, more consumers are embedding coffee out-of-home as part of their social lifestyle. This is particularly prominent in key European markets including the Netherlands, Nordics, UK and Greece.

Although this trend shows no sign of abating, coffee shops across Europe must offer quality coffee in a high footfall location, with compelling food served by engaged, passionate staff in order to be successful. Despite the recent economic growth, price also remains an important consideration for coffee shops and their consumers.

Multichannel coffee shop experience key to future growth and success

Key opportunities for growth remain positive in all brand-embracing markets such as Russia, Turkey, France, the Netherlands and Scandinavia where existing international chains are influencing the expansion and emergence of domestic brands.

Allegra predicts that as consumer appreciation for high-quality coffee and food increases, consumers will not only look for speciality coffee, but also a more diverse coffee shop experience, particularly the variety of beverage choice and brewing methods available. Milk texturing and water quality will also become more important for operators as consumers expect and demand excellence.

Coffee equipment and technology will also improve significantly, with the rise of mobile and digital technologies leading to advanced payment and loyalty systems that help to enhance the multichannel customer experience.

Despite technological advances, branded chains must continue to engage with their customers to gain consumer trust and maintain market leadership. Ultimately, success will be defined by brands that develop and retain highly motivated, passionate staff members.

The Project Café16 Europe report is now available to purchase from Allegra Strategies World Coffee Portal Limited.

Editor’s Notes
• 450+ interviews with CEOs, managing directors, senior managers and store managers of major industry players

World Coffee Portal
The Allegra World Coffee Portal is the premier global information platform for senior decision makers across the coffee and related retail and foodservice sectors. Building upon the unparalleled coffee expertise of Allegra Strategies, the World Coffee Portal delivers live data, coffee trend information, brand profiles and strategic analysis on some of the most important coffee markets across the world.

Allegra Strategies
Allegra Strategies is a London-based strategic research consultancy recognised as a global leader in the foodservice and coffee shop sector. Allegra is best known for its definitive reports on European markets. Allegra has accurately predicted trends in the branded coffee shop market since 1999. The report is considered by the industry as ‘the Bible’ of the coffee sector.

Suggested Reading