While the out-of-home (OOH) coffee market has been hit hard by lockdowns, we were very encouraged to see how quickly value returned to the sector when restrictions eased (briefly) last summer. There is every chance that a similar pattern will emerge this year with further (hopefully more permanent) easing. It’s worth taking the opportunity to look at some of the demographic patterns in the latest Kantar data release and reflecting on what the future – short and long term - might hold:

‘It’s a man’s world’….or is it?

In terms of total spent in the total OOH coffee market, men accounted for 13% more than women at £1.66bn of a £3.1bn market1. Men also make 23% more trips to buy coffee than women2. However, 61.8% of the female population as a whole buys coffee, compared with only 59.4% of the male population and women actually spend more on coffee with each trip they make!

What might this mean for the future?
While volume and frequency of coffee consumption might be driven by the male population, finding the best coffee profiles for all consumers is essential.

Capturing a higher spend with each coffee shop visit is just as important as encouraging consumers to visit more often – and more now than ever before as we emerge from lockdown. Encouraging the higher spenders to linger a little is no bad idea, while attracting new drinkers – male or female - is a great way to build the consumer base.

‘Coffee is just a southern city thing’….or is it?

Even during the pandemic, the North has remained the region with the biggest spend on OOH coffee, accounting for 25% share - or £783m - of the nation’s coffee spend4. While overall UK coffee penetration – the measure of how many of the population buy any OOH coffee at all - fell from 72% to 60.7% last year, the North & Scotland are the regions where a higher number of shoppers buy coffee than the market average5 – and indeed higher than any other region of the UK. Over a quarter (26%) of all UK coffee trips were made in the North last year6.

Even though the pandemic resulted in northern shoppers buying a coffee 28.6 fewer times than the year before, shoppers in this region still buy more frequently than any other7.

What might this mean for the future?
With so many coffee trips in the North, there are great opportunities for extending the coffee repertoire, widening the overall offering and developing customer loyalty, perhaps with imaginative reward schemes. And, while it’s interesting to compare sizes of regional coffee markets, it’s important to remember that coffee has universal appeal. Pre-pandemic, for example, London and Wales were among regions seeing the biggest growth in coffee spend, while the East & The Midlands were seeing the biggest growth in attracting new customers to coffee (Note to Craig below).

‘You’re never too old…or ever too young for coffee’

The over-55s are still the biggest-spending demographic group, accounting for £1.49bn this year8. Although in this pandemic year they spent 10% less than all other groups, in 2019, over 55s spent 19% more than all other age groups combined, underlining just how important a consumer group this is9.

Over 55s over-index in terms of penetration too: 60.6% of the total population bought coffee this year, but 70.9% of over 55s did so; over 55s also buy coffee more frequently than any other group – 51.8 times per year vs 45.4 times per year.

Nonetheless, it has been this older segment that has seen the biggest drop in coffee trips during the pandemic: the average 55+ year old made 730 million, or 54% fewer coffee trips this year than last year. In contrast, under 25s made 51 million fewer trips this year, a reduction of 30% fewer10.

What might this mean for the future?
Conventionally, it will be the youngest groups that will be first to get back to normal coffee buying patterns again, but we have to factor in the confidence boost that widespread vaccinations have brought the over-55s. Arguably, this age group will not only have the desire to return to their traditional coffee habits, but they will be much more confident about doing so. Given the continuing popularity of WFH, this might provide an added boost to the regional – or destination - coffee shop outlets as much as the commuter-driven businesses.

The demographic time bomb and ageing population could mean that the over 55 age group will become more important still in the future. Will this mean a continuing trend towards medium roast profiles?

‘I love my children….but I love my coffee too!’

While the pandemic brought us the mixed joys of home schooling and home working, it’s easy to forget the wider challenges: playgroups, soft play, indoor entertainments - all the social activities that support young parents have been in the deep-freeze; and we know that the extra pressure to manage home schooling has arguably had a negative impact on the UK birth rate – indeed, “baby bust” reports (The Daily Telegraph, 29 March 2021) suggest that there could be 66,000 fewer children born in 2023.

In coffee, having no children in the home could be an indicator of potential coffee spend. Coffee spend by shoppers with no children at home is typically 3.4 times higher than for those with children; this multiple did not narrow substantially during the pandemic either (remaining at 2.7 times greater spend)11.

In terms of penetration, consumers without children significantly outnumbered those with children in the household during the pandemic – by a factor of 14. In essence, more consumers without children at home shop more frequently and spend more for each trip.

Aside from a suggested ‘baby boom’ as a result of Covid, there is no uptick in terms of longer-term population growth: the biggest changes in households by 2028 will be in the over-55 age groups; moreover, ONS household projections show that the number of one-person households will increase by 10.1% and two person households will increase by 8.8% by 2028. In other words, the no-children older demographic group will continue to grow in the longer term.

What might this mean for the future?
Not having children in the household might indicate that coffee lovers will spend more on coffee -  and more often. In the short term-, we think that there will also be a pent-up desire among younger groups of parents to get out and socialize again – what better way to bring everyone together again than with a favourite barista coffee?

In the longer term, a declining birth rate and an increase in the older female population my bode well for OOH coffee consumption, given that the older generation is already the biggest single consumer segment. There is every chance that this segment will grow in the longer term and – as some of the statistics in the data show – this very group will spend more per trip and go out for coffee more frequently.  

Summary

Someone once said it’s tough to make predictions – especially about the future. But what we can say with some certainty is that coffee shops of every kind can be ready to welcome back coffee lovers from every background, location or age group. Better still, there’s nothing in the data to suggest that coffee will reverse it’s 500-year history of being a popular drink.

For more information on the UK’s coffee market, or to get in touch with us about supplying you with market leading coffee solutions, please contact info@lincolnandyork.com