I have a morning ritual that I’m happy to tell you about. I drive down to our local petrol station, open 24 hours a day, to buy a newspaper and coffee. When I arrive at around 7am I normally have to join the end of a queue of people – invariably builders making an early start – to buy my Coffee Nation cappuccino. The sight of half a dozen people waiting to spend £2.25 to buy a coffee still strikes me as slightly surreal. It is a phenomenon that has a relatively short history. Good coffee has been widely available in a retail context for little more than a decade after all.
It’s an area of the market in exponential growth. The UK branded coffee chain market grew sales by 10% last year to hit an estimated turnover of £2.1bn, with the market doubling since 2005. A remarkable 600 new coffee outlets opened last year, around a dozen a week. One in ten people visit coffee shops daily and 39% of people surveyed by market specialists Allegra Strategies stated they visited coffee shops more often than 12 months ago.
To put this total spend in context, coffee shops now achieve a full 10% of the total annual spend of the entire 50,000-strong pub market.
There’s an obvious need for the pub sector to up its game on the coffee front. It’s an area where even the biggest players have struggled to get their offer right. A board director of a major managed pub company once told me that the main problem is one of finding the right degree of focus. With so many other moving parts in the mainstream pub offer, it’s an obvious challenge to provide the appropriate amount of training and development to ensure quality coffee is served every time. And then there’s the considerable cost, many thousands of pounds, involved in acquiring a decent coffee machine.
To be fair, there is a lot of progress being made. Kevin Sammons, of 46-strong Pub People Company, told me last week that the company has made real inroads on the quality coffee front. One unlikely pub in Lincoln, for example, racks up £1,000-a-week in coffee sales after the company invested heavily in equipment and Barista training.
But it’s still worth reminding ourselves of the size of the prize here. Overall sales in the branded coffee market are forecast to jump by a further £1.1bn in the next three years. At my local petrol station, a helpful employee tells me they sell more than 200 coffees a day during the week, producing £400 of turnover per day. Whitbread’s Costa Coffee arm was advertising just recently in magazines like Forecourt Trader and Convenience Stores, trumpeting the profit potential of one of its Coffee Nation/Costa machines. Stockists, Whitbread reported, could earn £40,000 a year in profit from renting one of its machines.
Coffee, like beer, is a product for which consumers will pay a premium, assuming it’s of the right quality. Like draught beer, good quality coffee isn’t available in the majority of UK homes. But the two products fall into the affordable treat category that consumers are loathe to give up even in the toughest of times. Makes you wonder whether the time has arrived for a quality accreditation body, like Cask Marque, for coffee in UK pubs.