GCR linkedin Logo

Strong summer sales see UK’s iced beverage consumption rise

From the July 2018 issue.

Allegra World Coffee Portal has released the 2018 edition of Project Iced Beverages – an extensive study on the United Kingdom’s burgeoning iced and blended beverage market.

The Allegra report reveals that total iced beverage sales across the specialised coffee shop sector, including coffee-focused branded chains, food-focused branded chains and independents, reached £370 million (about $US490 million) in 2017. Warm weather continues to be the key catalyst for iced beverage consumption in the UK, but Millennials and Generation Z could hold the key to sustained year-round growth.

Project Iced UK 2018, a definitive report on the UK’s out-of-home iced beverages market, forecasts iced beverage sales to exceed £421 million (about $US556 million) in 2018, representing year-on-year growth of 14 per cent. Sustained growth in the iced beverage segment is expected over the next five years, with the total sector expected to value £660 million (about $US872 million) by 2022.

Iced beverage consumption remains heavily dependent on weather conditions, with the summer months, typically June to August, by far the most lucrative period for coffee shop iced beverage sales in the UK. The report says a successful iced offer is dependent on the operators’ ability to respond to the UK’s mercurial weather.

Indicating long-term potential for UK consumption to emulate popularity in the US, 60 per cent of industry leaders believe iced beverages are becoming increasingly popular year-round. Most, however, expect the UK’s seasonality trend to continue in the near-term.

Millennials and Generation Z will drive future segment sales growth, with iced beverages representing significant opportunities to introduce younger consumers to the coffee shop market. Instagrammable products, such freak shakes, iced coffee martinis and the Guinness-like cascade effect of nitro cold brew all appeal to a younger, more adventurous demographic.

“Iced beverages represent a major opportunity for coffee shops, with younger consumers in particular engaged with the wide selection of highly customisable and visually appealing drinks on offer,” says Bradley Journeaux, Research Manager at Allegra World Coffee Portal. "Innovation in brewing methods has forged entirely new product lines such as cold brew and nitrogen infused coffee, which are starting to build market share. The potential is there for iced beverages to overcome the traditional British weather barrier and really become established as an all-year round mainstay.”

With their low sugar and calorie content, cold brew and nitro also represent significant opportunities for younger, health-conscious consumer spend. More than two-thirds of under 30s surveyed by Allegra said healthier options would encourage them to increase iced beverage consumption.

Allegra research also shows those under 30 are more likely to view iced beverages as good value for money and consume them year-round compared to older consumers. These factors make younger consumers a key demographic for coffee shops expanding their iced offerings.

Starbucks is the UK’s favourite coffee shop chain for iced beverages, with 29 per cent of consumers indicating it offers the best blended and handmade iced drinks. Costa at 26 per cent came second among consumers, with Caffè Nero at 7 per cent third, ahead of McDonald’s and Pret.

Independent cafés, representing 12 per cent, are also popular locations for iced beverages and noted by consumers for their strong handmade iced beverage offer.

As the most commonly visited locations for iced beverages, high street coffee-focused branded chains will continue to lead product innovation and raise consumer expectations. Allegra observes the opportunity for these retailers to capitalise on a wider range of iced beverages as many food-focused operators have yet to include iced drinks on their menus.

The future of iced beverage sales is positive, with Allegra research revealing more than half of industry leaders believe consumers are more likely to purchase iced beverages out-of-home than 12 months ago.

While more than half of industry leaders (52 per cent) expect cold brew to become a coffee shop staple within the next three years, just 12 per cent believe nitro will enter the mainstream. Industry sources state more consumer education is needed on the latter product, with a high price point still deterring many.

In the longer-term, operators remain optimistic for the potential of the UK iced beverage market to mirror the US, where iced beverage consumption remains strong year-round·

  • GCR Newsletter

    Sign up now to Global Coffee Report's newsletter and keep up to date with everything coffee.

© Copyright 2018 Prime Creative Media Pty Ltd. All rights reserved.

ABN: 51 127 239 212

X