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UK iced beverage segment maintains cool sales growth

From the August 2019 issue.

Iced beverage sales in the United Kingdom grew 14.3 per cent in 2018 to £395 million (about US$479 million), according to World Coffee Portal’s Project Iced UK 2019 report.

This represents 5.8 per cent of the UK specialist coffee shop segment’s £6.8 billion (about US$8.2 billion) sales revenue.

World Coffee Portal expects the UK’s iced beverage segment to build on strong market momentum with sales of £449 million (about US$544 million) forecast for 2019. It estimates more than 170 million iced beverages are served in UK cafés every year, but trade is still overwhelmingly dominated by summer sales.

Commenting on the report, Allegra Founder and CEO, Jeffrey Young said:
“Iced beverages continue to represent a growing opportunity for the UK coffee market to innovate, access younger consumers and broaden the appeal of coffee venues,” says Jeffrey Young, Founder of Allegra World Coffee Portal.

“While more work is needed to widen seasonal demand, a robust and diverse iced beverage offer is essential for operators wishing to remain firmly on the pulse of UK coffee market development.”

Forty-five percent of industry leaders surveyed identified cold brew as the most significant product opportunity in the iced beverage segment, ahead of handmade iced drinks at 42 per cent.

The report says cold brew sales remain a fraction of hot coffee, but growing availability across the UK’s three largest café chains – Costa Coffee, Starbucks, and Caffè Nero – has significantly contributed to cold brew’s broader market penetration.

Two-thirds of industry leaders surveyed expect cold brew to become a high street staple within three years. Nitro cold brew is, however, perceived to have far less commercial potential, with just 10 per cent of industry leaders forecasting its widespread availability.

The report found that UK iced beverage sales remain heavily dependent on warm, sunny weather, with sales reaching peak performance June to August and declining from September.

The 45 per cent of under-30s who drink iced beverages indicate they make a purchase on average every week. This younger demographic is also more likely to purchase iced beverages outside the core June to August sales window, with winter consumption 6 per cent higher than the average across other age ranges.

World Coffee Portal says this indicates operators should catalyse strong interest of on-trend and “Instagrammable” products, such as cold brew, blended smoothies, and “freak shakes”, toward younger consumers to stimulate broader segment growth and year-round consumption of iced beverages in coffee shops.

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