Families drive coffee visits, while pubs in growth
Coffee visits are growing by 2% year-on-year with breakfast and dinner driving the market. Hot drinks are included in 25% of out-of-home visits, with 70% of those being coffee occasions, the research revealed.
“Families and young adults are driving growth at 14% and 15% respectively," said Dominic Allport, insights director, at The NPD Group.
“Breakfast is strong, but we are seeing dinner growing about seven times faster than the whole of the market.”
He said that the independent coffee shop sector needs to be better at attracting the family market and is “missing a trick”.
“That is an opportunity to work on,” he said.
The research also revealed that half (50%) of all coffee drunk out-of-home is in the Quick Service Retail (QSR) sector. This was followed by 17% in non-commercial, 14% in travel and leisure, 11% in full service and 8% in pubs.
“This looks like QSR and coffee shops are in a relatively good place but be aware that all of the growth is coming from pubs. Pubs are really pushing coffee at the moment,” he said.
“Coffee is everywhere and everyone is pushing coffee, as it's seen as such a footfall driver. Be aware of the wider market and how wide coffee is. Coffee is hugely mass market.”
The research also said that globally out-of-home hot drinks are ‘big business’ being worth £105bn. There are 45 billion visits every year and an average of 38 out-of-home visits per person.
But when UK is compared to coffee visits per person in France or Italy, research shows there is an opportunity to do better, said Allport.
The research also looked at consumer behaviour revealing that off-premise, such as takeaway, delivery and drive-thru, are in growth.
While there are some people entering the delivery market, with Starbucks and Greggs, the biggest growth is in Click and Collect.
“The coffee market is pretty flat but Click and Collect visits are growing 10 times more than out-of-home visits – but it is from a small base,” Allport said.
“It represents 1% of the coffee market but it is in double-digit growth."
Allport continued: “Click and Collect plays into habitual visits. Almost 30% of coffee visits are like that and it represents over £1bn worth of spend and it is growing 14 times faster than the rest of the market."
He said that while habitual visitors don’t always spend the most amount of money, there is the opportunity to upsell into them on more occasions, such as breakfast and dinner.
The number one type of coffee drunk by consumers is the latte (24%) – up 7%. The second most popular was Cappuccino at 23% – up 5% while the Americano at 21% fell by 8%.
Allport puts this down to consumers looking for a treat when drinking out-of-home.
However, the flat white is on trend and growing by 40% year-on-year, representing about 7% of all coffee servings.
“It is growing a lot faster than the more established types of coffee,” Allport said.
“It has hit the mass market with McDonald's doing it now and Costa is trying to maintain its leadership in the coffee market so they are coming up with ‘flat blacks’ and all different versions of the flat coffee. It is where a lot of focus is.”
The good news is that customer satisfaction in out-of-home is rising with 77% of them are saying their experience was excellent or very good.
Of the remaining 23% that were not satisfied, there was 19% who would probably not go back to the venue.