2015 and early 2016 have been dynamic times for global specialist coffee shops, with consistently growing demand for modern café experiences driving rapid innovation and growing competition in the category all over the world.
With the launch of Euromonitor’s new 2016 edition of consumer foodservice data from 54 global markets, here are three key insights for operators looking to stay ahead of the international coffee shop market.
Coffee shops are the fastest growing restaurant category
In 2016, specialist coffee shops were the fastest growing major restaurant category in terms of global sales, increasing 9.1% from 2014-2015 according to Euromonitor International data. This bests the international restaurant industry as a whole, which grew at 5.7%, and was stronger even than global fast food, at 5.8%, despite historically being one of the primary drivers of chained restaurant growth world-wide.
Perhaps even more notable is the fact that this growth was consistent across all world regions, including those that are considered emerging market regions as well as those that are highly mature. Western Europe for example, despite seeing just 1.5% sales growth in the industry as a whole, and negative growth in some similar categories like traditional cafés, recorded 10.8% in specialist coffee shops driven by growing interest in chained café concepts and increasing acceptance of modern, international coffee-drinking culture as a whole.
The largest growth opportunities will be in Asia
While all regions will see strong growth in the category, Asia Pacific will be home to the largest sales increase in specialist coffee shops, totaling over US$3.7 billion dollars in new value growth from 2016-2020. This is as compared to North America, at US$3.3 billion in growth, as well as another US$1.7 billion from Western Europe over the same period.
As much as US$2.2 billion of this growth will come from China alone, where Starbucks is leading the charge for a rapidly growing, Western-style tradition of drinking premium takeaway coffee and socializing in coffee shops; however, many smaller Asian markets will see impressive growth in the category as well. South Korea will contribute another US$715 million in new specialist coffee shops growth from 2015-2020, driven in large part by local chains rather than international brands alone.
Competition is growing quickly, leading to rapid diversification
This move toward a highly diversified playing field is a global phenomenon as well. Though Starbucks and McCafe are some of the only chains to have achieved a truly broad presence in terms of geographic coverage, a number of international brands are now taking steps toward becoming viable multi-regional competitors. The UK-based Costa Coffee has made significant progress toward a presence in Eastern Europe, Asia Pacific and the Middle East, while Japanese chain Doutor Coffee has begun expanding across other Asian markets like South Korea and Taiwan. South Korean chain Caffe Bene has cast its net even wider, expanding into China and the US, capitalizing on its ties to Korean pop-culture entertainment and targeting markets where interest in Korean entertainment is growing.
Top Ten Global Specialist Coffee Shop Chains by 2015 Sales (US$ mn)
| Brand | Operator | 2015 Sales (US$ mn) | 2015 Outlets |
| Starbucks | Starbucks Corp | 21,095 | 22,557 |
| Costa Coffee | Whitbread Plc | 1,809 | 3,036 |
| McCafe | McDonald’s Corp | 1,462 | 5,044 |
| Doutor Coffee Shop | Doutor Nichires Holdings Co Ltd | 718 | 1,108 |
| Coffee Bean & Tea Leaf, The | International Coffee & Tea LLC | 520 | 925 |
| Caffe Nero | Caffe Nero Group Ltd | 442 | 683 |
| Tully’s | Tully’s Coffee Corp | 440 | 605 |
| Ediya Espresso | Ediya Co Ltd | 361 | 1,240 |
| Caribou Coffee | Caribou Coffee Co Inc | 311 | 522 |
| Gloria Jean’s Coffees | Retail Food Group | 303 | 666 |
Competitive dynamics in the coffee shop market are changing at the local level as well. In emerging markets, this has meant an increasingly large number of brands competing for share, many of which are going to creative new heights to differentiate themselves. In South Korea this has manifested in the form of a vast array of themed cafes, from mango desserts to cookie decorating or cats, whereas in Western Europe many coffee shops have been experimenting with adding alcohol offerings to bring in evening traffic. Likewise, some more traditional bars/pubs have even been experimenting with adding coffee offerings and breakfast or lunch menus, resulting in a blurring of the definition lines between beverage-based concepts and even greater competition for coffee and tea occasions.
In developed markets competition has been increasing too, though in a slightly different form. In the US, competition has become a regional and even city-level game, with large numbers of independent, third-wave cafés and boutique chains like Blue Bottle Coffee and Intelligentsia popping up to compete with larger brands. Over the long-term, this kind of movement toward a highly diversified, highly fragmented, and most of all highly competitive global coffee shop market is only expected to continue. Operators all over the world have all taken note of the rapidly growing demand in coffee shops, and everyone is looking to get in on the opportunity before it’s too late.