The Roasters Report UK 2019, World Coffee Portal’s first dedicated analysis of UK roasters, reveals a rapidly developing market.
The report said demand was being driven by strong wholesale demand from independent cafés, the rise of locally-roasted coffee and growing consumer appetite for café roastery experiences but did not mention the potentially adverse effects of Brexit and a ‘no deal’ Brexit on the industry.
Despite what the report described as “an incredibly competitive retail landscape,” rising demand for high-quality roasted coffee has sustained growth across the UK roaster segment, particularly as the coffee shop market continues to expand. More than half of roasters surveyed (65%) regard current trading conditions as positive.
“Indicating that the market is poised for a new phase of development, 50% of roasters surveyed are planning expansion,” the report said. “Nearly half (44%) are operating at below 50% capacity, with just 5% currently at maximum capacity.”
A growing consumer trend for locally roasted coffee has contributed to a broad regional distribution of roasters in the UK, which are now present in virtually every major town and city. This dynamic supports a symbiosis between independent coffee shops and nearby roasters, with 44% of industry leaders surveyed anticipating the biggest growth channel for wholesale distribution will be independent cafés, followed by workplaces and contract catering.
The emergence of café roastery concepts marks another segment development. “These retail concepts are an effective strategy to capitalise on growing appetite for coffee experiences by bringing curious and increasingly savvy consumers into direct contact with the roasting process,” the report said.
A buoyant UK roasting segment continues to attract new market entrants, with an influx of new roasters seeking to disrupt the influence of established brands. Industry leaders identified competition from other roasters as the biggest market challenge currently, with nearly half (49%) perceiving an oversupply of roasters compared to consumer demand.
This dynamic has also driven M&A and investment activity within the UK roaster segment, such as Ozone Coffee Roaster’s acquisition of fellow specialty roaster, Has Bean, and roastery expansion at London-based Caravan Coffee Roasters and Grind.
The cost of property was the second most cited concern among UK roasters surveyed, indicating the segment could still be susceptible to tough high street trading. As saturation makes the roastery market less hospitable, smaller inexperienced businesses are most at risk of being outcompeted by scaled rivals.
UK roasters indicated that coffee from emerging origins will be a core focus over the next 12 months, with less familiar varieties from Rwanda, Myanmar and China growing in popularity. Strong wholesale demand from independent cafés, which often specialise in small-batch single origin coffee, reinforces this trend, as does heightened consumer consideration of coffee provenance.
An increase in sustainability initiatives also polled highly among roasters surveyed, followed by direct trade, with 62% currently operating an ethical or direct trade policy. However, while 88% of roasters indicate willingness to pay more for ethically sourced coffee, only 60% believe consumers are prepared to pay the same premium. “This indicates more work is needed to educate UK customers on the social value of ethically sourced coffee,” said the authors of the report.