Costa sses great European expansion in 2018, Brexit causes doubt for 2019 rates

Costa sses great European expansion in 2018, Brexit causes doubt for 2019 rates

Whitbread-owned Costa Coffee helped the UK lead Europe in coffee shop sector growth in 2018 but Brexit is casting a shadow over the next 12 months, according to Project Cafe Europe 2019, Allegra World Coffee Portal’s report on the European market.

Costa Coffee is Europe’s largest branded chain, holding 8.7% market share with 2,923 stores across 12 markets, the majority of them in the UK.

The second-largest operator, Starbucks, has more than 2,600 stores but operates in twice the number of European countries.

McCafé is the third-largest branded coffee chain, with 2,376 outlets across 17 countries, representing 7% market share.

Together these chains comprise almost a quarter of the European branded coffee shop market, which totals 33,745 outlets, a 6% rise from 2017.

Allegra forecasts the market will reach 42,000 outlets by 2023, displaying five-year growth of 4.8%. The report spans 24 national markets, with 23 of them showing a rise in coffee shops.

Romania showed the strongest annual outlet growth rate (25.1%) as eastern European consumers rapidly adopt coffee shop culture.

Denmark (14.5%) showed the second-highest growth with Cyprus (11.2%) third. More than half of industry leaders believe like-for-like sales will outstrip GDP in their country during the next 12 months.

The UK remains Europe’s most developed coffee shop market, with a burgeoning crop of fifth-wave operators “driving innovation and influence across the continent”.

However, Brexit uncertainty continues to hamper planning and investment, with labour shortages, rising costs and diminishing consumer confidence causing serious concern among coffee businesses.

The majority of industry leaders surveyed cited good location as having the greatest impact on coffee shop performance, with coffee quality and store atmosphere second and third. More than one-third of industry leaders cited high rent and property costs as their major challenges.

Allegra chief executive 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 cafe 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.”


Article credit: Propel info