Britain’s growing passion for coffee means the market is now worth £6bn a year, but not everyone is toasting the future
Jeanette Lewis is sitting on an imitation leather chair, sipping a latte and looking out over a damp market square. She checks the buses as they pass down the high street. “If you miss a bus you can wait here in comfort. It’s a pleasant environment and the staff are friendly,” she says.
Her simple pleasures are contributing to one of the few areas of spectacular growth in the British economy. She and around a dozen customers of Caffè Nero in St Neots, Cambridgeshire, are among the millions fuelling the growth of Britain’s cafe society, according to a report published this week. It finds that the UK coffee shop market grew by 7.5% in 2012 and is now worth £5.8bn at a time when pub culture is on the wane.
In 2000, Tony Blair described his vision of a British cafe society. Since 1997, the coffee shop market has grown ten-fold, doubling in size in the last six years. The Project Cafe 2012 report says there are now 15,723 coffee shops in the UK.
According to Jeffrey Young, director of Allegra Strategies, which produced the report, Britons are increasingly making the coffee shop a part of their daily lives. The report found that almost twice as many people visit a coffee shop every day now as did in 2009.
“The UK coffee shop market continues to astound even the most optimistic of forecasters by growing significantly in value, in outlet numbers and also in the social psyche of the nation. Britain has become a new nation of coffee drinkers,” he says.
The three leading chains account for 54% of the market; Costa Coffee has 1,522 outlets, Starbucks has 752 and Caffè Nero 530 but forecasters believe there will be increased competition as Harris and Hoole, which is part-owned by Tesco, Coffee#1 owned by Brains brewery and Greggs Moment enter the market. The increased competition will lead to a 25% growth in coffee shops over the next five years, the report predicts.
Many independent coffee shops will be forced out of the market, the report forecasts, but strong independents will do well.
“The focus on quality in all areas can only continue to drive a thriving industry over the next three to five years and beyond. The entry of new players signals a new era of competition about to emerge, with quite possible merger and acquisitional activity,” says Young.
People use coffee shops for different reasons. Audrey Gill, 80, says: “I’m on my own now, so it’s nice to go to a place where people are so friendly. These places didn’t exist before and now there are so many to choose from.”
In St Neots, Caffè Nero dominates the market square and a new Costa Coffee has opened in the High Street. Paul Kavanagh, 53, had just finished work as an administrator and was relaxing before going home: “It’s nice to unwind. They have free Wi-Fi. I like to come here and watch the world go by. It’s better than sitting at home,” he says.
But it has taken him some years to get used to the concept: “I didn’t like these kind of places at first but, like everyone else in the country, I have grown to accept them. They are definitely a good addition to the high street.”
While the coffee shop market booms, the Campaign for Real Ale estimates that 18 pubs close in Britain every week. The trends are transforming the appearance of high streets but are only indirectly related. People do not want to drink coffee in a pub or alcohol in a cafe. The prospect of French-style cafes where customers are as likely to order a coffee as a beer or a pastis seems unlikely in the UK in the near future.
“In a coffee shop you have a convivial atmosphere without the alcohol or the rowdiness. I would not go to the pub for a coffee, I would go for a pint,” says Kavanagh.
Next door, the Corner House Bar has a similar number of customers, drinking wine and beer. The landlord, Omar Tahiri, says he has an espresso machine and buys expensive coffee beans but only sells four coffees a week. “If you want a coffee, you go to a coffee shop. The pub is for other things” he says.
The main reason for the closure of so many pubs is the opening of pubs by large corporations such as JD Wetherspoon which sell alcohol cheaper than competitors. “I have lost 50 per cent of my business to Wetherspoon – coffee shops haven’t affected it all,” says Tahiri.
The customers at the bar say that people are more likely to drink alcohol at home whereas they will go out for a well-made coffee.
However, the report points out that coffee companies, particularly the big corporate brands, face significant challenges. Starbucks has been under a barrage of attacks over how little tax it pays and Costa faced fierce opposition when plans to open a branch in Totnes, Devon, were successfully resisted by local people who did not want big brands invading their high street.
• This story was amended on Sunday December 23: the UK coffee market is now worth £6bn a year. It does not turn a £6bn profit a year, as was written in the headline.