Allegra World Coffee Portal’s new "Project Café Europe 2019" report has revealed that Costa Coffee, Starbucks and McCafé hold nearly a quarter of European branded coffee shop market share.
The report found that Costa Coffee is Europe’s largest branded chain, holding an 8.7% market share with 2,923 stores across 12 markets, the majority of which are in the UK. The second largest operator, Starbucks, has just over 2,600 stores but is present in twice the number of European countries than the market leader. McCafé was found to be the third-largest branded coffee chain, with 2,376 outlets across 17 national markets, representing a 7% market share. Together, these chains comprise nearly a quarter of the total European branded coffee shop market.
According to the report, Romania, Denmark and Cyprus set the pace as the fastest-growing European markets in 2018, with Romania exhibiting the continent’s strongest annual outlet growth rate of 25.1%.
Denmark’s branded chains appear to be gaining ground in a challenging at-home coffee culture with annual outlet growth of 14.5% – the second-highest in Europe. Cyprus is the third fastest-growing market at 11.2%.
The Brexit Factor
The report found that the UK remains Europe’s most developed coffee shop market, with a burgeoning crop of 5th Wave operators driving innovation and influence across the continent. However, ongoing uncertainty regarding the UK’s future relationship with Europe continues to frustrate planning and investment, with labour shortages, rising costs and diminishing consumer confidence causing serious concern among coffee businesses.
Location, Quality And Atmosphere
The majority of industry leaders surveyed by Allegra cite good location as having the greatest impact on coffee shop performance, with coffee quality and store atmosphere ranking second and third place. Over a third of industry leaders surveyed indicated high rents and property costs as the major challenges to their business, making these the top concerns among European businesses in 2018.
Italy is the only country in Europe where a majority of industry leaders believe traditional coffee culture is impeding branded chain growth. Market-wide adoption of premium café concepts will, however, likely be catalysed by the gradual arrival of international branded chains, such as Starbucks, which entered the market in September 2018.
Commenting on the research, Allegra CEO Jeffrey Young said, "The European coffee shop sector continues to perform well, with healthy growth recorded in a vast majority of national markets and adoption of contemporary café culture now widespread. However, the future of the UK coffee shop market, Europe’s most developed, is a key concern as businesses grapple with volatile trading conditions and dampened consumer confidence generated by sustained Brexit uncertainty."
© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.