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Coffee Market is Full of Beans as Trading Price is Dropping

The UK’s coffee market has been steadily expanding with an increasing number of imports, International Coffee Organization’s latest figures reveal. 

“Britain is moving from nation of tea drinkers to what now is becoming a nation of coffee drinkers,” – said Jeffrey Young, managing director of Allegra Strategies. The UK coffee-shop business is booming with about 2 billion coffees drunk in the UK out of home each year from more than 18,000 outlets.

The number of shops is set to grow to almost 21,000 by 2020, according to Allegra Strategies, research consultancy. Britain’s growing passion for coffee means constantly increasing demand for coffee import, which is eventually expected to lead to the expansion of the industry by at least 6% a year.

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However, Jeffrey Young is skeptical about Trading Economics forecast: “That contradicts a lot of data that we have collected. Their forecast might be true in the short-term but our predictions are that in the long-term prices will increase in specialty coffee.” He points the fundamental shortage of coffee to be one of the major reasons for future trading price hike. “The long-term dynamics for the price of coffee is actually upwards rather than downwards.”

Coffee Industry Turnover in the UK: 

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“We are going to move into much more professionally led industry, people with very sophisticated operating models and business experience. We are talking about a lot more science coming into technology and preparing the perfect cup of coffee.”

Currently leading coffee brand is Costa with almost 2000 established outlets across the UK. But independent newcomers that offer “Third Wave” coffee experience are attracting more customers each year and force major coffee chains to improve their approach to coffee.

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The influence of specialty coffee shops was clearly visible last April when consumers were encouraged to switch to independent coffee shops after brands such as Costa, Caffe Nero and Starbucks scored poorly in an assessment of their social and environmental impacts.

Although led by relatively small businesses, the trend toward quality-focused performance is manifesting itself in all of the UK’s retail coffee sectors, the latest study said. World Coffee Portal describes UK coffee scene as “radically transforming” due to the growing wave of specialty coffee shops working to improve quality of our daily caffeine fix and customer service.

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While instant coffee still holds a strong position in the UK’s market, Kantar Worldpanel Screen Shot 2015-12-10 at 12.18.06 PMnotices that UK residents are seeking for better quality and tend to switch to roast and ground coffee.

Tim Williams, founder of Coffee Sourcing and former director of operations in Workshop, stresses that the future will be definitely positive in terms of customers being aware of coffee production. “Getting to understand the nuances of coffee is going to be crucial to continue to develop coffee culture and push things forward, both for staff and for customers and ultimately for the quality in the cup,” – said Tim Williams.

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For interactive data click here.

Sources:
http://www.ico.org/historical/1990%20onwards/PDF/2b-imports.pdf
http://www.ico.org/historical/1990%20onwards/PDF/2a-exports.pdf
http://www.ico.org/prices/p1-November.pdf
http://www.tradingeconomics.com/commodity/coffee

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