If there is one thing that we can agree on, it is that coffee and cafe culture is now dominant in the UK. After all, Britons spent a staggering £7.9 billion in coffee shops during 2015 alone, while the market itself grew by an impressive 10% despite an uncertain economic climate.
Just as the market continues to grow in-line of consumer demand, it is also diversifying at an incredible rate. This is driving constant evolution in the marketplace, as consumer behaviour continues to pose new and challenging questions to even established brands.
In this post, we will look at five emerging coffee shop trends for 2017, and help your brand to adapt successfully: -
#1 - Discerning Coffee Drinkers Will Demand Greater Quality
While major, UK coffee chains such as Costa and Caffe Nero continue to account for more than half of the branded market, the share of these giants has been diluted during the last five years. This is due to the rise of independent chains, which typically focus on the delivery of premium and high-quality beverages that are included as part of a smaller, more selective range.
Over time, this has created a generation of discerning coffee drinkers, who are increasingly resistant to inferior or instant brands. Instead, they demand high-quality beans and roasts that appeal to a more refined palette, particularly when frequenting a branded coffee shop that places a high premium on their products. So while customers are content to pay slightly higher prices for premium coffee, they are also increasingly capable of discerning between good and poor quality beverages.
For independent chains, the message here is clear. Not only must you look to create a refined and targeted range of drinks that utilise high-quality beans, but it is also imperative that you create a pricing structure that maintains your existing profit margins. More specifically, the additional cost of superior beans and equipment must be shared with consumers, who are more than happy to pay a premium price for beverages that meet their exacting standards.
#2 - Convenience and the Rise of Non-specialist Coffee Outlets
We have already touched on the rise of independent coffee shops, which began in earnest in 2014. While independent cafes now account for an impressive 30% of the overall market, however, we have also seen a huge rise in the number of non-specialist outlets during the last two years.
In fact, these establishments (such as supermarkets and public houses) account for a dominant 39% of the total market, as Britons continue to increase their coffee consumption and demand more convenient and accessible outlets where they can grab a drink while on the move. These non-specialist coffee providers (of which there are nearly 8,000 active nationwide), have also thrived by placing a keen emphasis on quality, creating intensified levels of market competition and huge challenges for independents.
It is crucial that independent and branded chains adapt to this growing trend, while also recognising the consumers need for convenience. This development should also change the way in which you compare the marketplace and appraise your local competition, as you must also factor in the range and price points being offered by non-specialist outlets that have the potential to diminish your market share.
This will enable you to create more competitive price points and value propositions, particularly if you can develop systems of reducing service delays and driving a quicker (and more efficient) consumer experience.
#3 - The Rise of the Coffee Shop Experience
As the market becomes increasingly competitive, so too brands and independents go to greater lengths to consolidate and grow their market share. This means that we will see outlets continue to conceive and implement memorable coffee shop experiences for their customers, in order to build loyalty and turn casual drinkers into returning customers.
This not only applies to existing shops, but also new outlets and cafes that are entering the market for the first time. An example of this has recently been provided by Shanghai-based design studio Xuberance, who have announced that they intend to open the region's inaugural 3D printing-themed coffee shop. Including three-dimensional coffee cups and fabricated lighting, the establishment will create the type of genuinely unique and immersive experience that brands are striving for in a crowded space.
This represents an extreme example, of course, and established outlets will need to build on their existing premise if they are to successfully offer an enhanced customer experience. Whether this involves creating an interactive interior design theme or integrating self-service style kiosks that enable customers to quickly create their own, unique beverage (using high-quality ingredients, of course) the key is to think creatively but within the boundaries of your carefully cultivated brand identity.
This will ensure that you create an experience or superior customer journey that both meets the needs of consumers and reflects your unique brand identity.
#4 - The World Beyond Coffee Will Continue to Grow
There was a time when coffee shops restricted themselves to serving a limited supply of traditional beverage, from the classic Americano to flat whites and decaf alternatives. This is a trend that has changed gradually but noticeably over the last five years, both in terms of the range of drinks available and the nature of the ingredients that is used to create them.
This evolution has been driven by consumer behaviour, and while some brand may have limited their range in order to guarantee quality selecting from a modern, coffee shop menu can still be a complex task for newcomers to the market. Perhaps the biggest innovation in this space is the so-called cold brew, which hit the UK mainstream in 2014 and is now widely available in both major chains and independents nationwide.
The cold brew has thrived in the market thanks to its sweeter and less acidic taste, which appeals to a broader range of consumers (specifically non-coffee drinkers) and extends the size of the target market available to brands. This type of refreshing drink has also triggered a rise in the number of colder beverages made available by coffee shops, enabling them to optimise sales during the summer and drive more profitable levels of business all-year-round.
In terms of ingredients, customers have also become increasingly knowledgable about the composition of coffee beverages and how this effects their body. This has led to the popularisation of healthy, dairy alternatives such as soya milk, which while once being the preserve of vegans is now widely consumed by everyday coffee drinkers. This is backed by industry figures too, with sales of soya milk increasing by nearly 30% between 2008 and 2010 and showing no signs of slowing down.
So what does this mean for coffee brands? Above all else, it underlines the importance of understanding customer consumption trends and adjusting your ingredients accordingly. It is also worth investing in cold brew beverages and more refreshing variations for the summer months, during which time the demand for traditional coffee drinks tends to fall.
#5 - Customer Rewards and Loyalty Schemes Will Really Be About You
Given the competitive nature of the coffee market, you should not underestimate the importance that customer loyalty schemes have on your audience. More specifically, the use of a creative and tailored rewards package can positively influence the buying habits of customers, while helping to distinguish one brand ahead of even its closest rivals.
In general terms, there is a growing demand for personalised loyalty schemes that are driven by actionable data and the core buying habits of consumers.
One coffee brand that is managing to lead the way in this field is American giant Starbucks, which has strived hard to create an immersive rewards program that collates data, tracks consumer behaviour and enables mobile app payments.
The result of this is promotions, products and rewards that are tailored to suit each individual consumer's tastes, which in turn helps to forge a stronger bond between the brand and each customer.
Not only did these scheme help Starbucks to increase its profit margin by an estimated 26% during 2011, but it also had a profound impact on every stage of the consumer journey. From creating tailored rewards to driving a more seamless purchasing experience, this is the type of loyalty scheme that is required if your brand is to compete in an increasingly competitive market in 2017.
The Last Word
These emerging trends are all driven by the changeable behaviour of consumers, so your ability as a brand to track this and leverage actionable data will ultimately determine your success in the months ahead. So while you will need to focus on utilising high-quality ingredients and reviewing your price points, it is also imperative that you consider additional changes based on the precise habits of your existing customers.