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Caffeine fix: how coffee is weathering the economic storm

Coffee shutterstock 1786659164

Whether it’s iced, flavoured with Nutella or topped with gold leaf, coffee is the beverage that keeps on giving

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Despite rising costs, consumers’ love affair with coffee is withstanding the increased pressure on their budgets. Coffee remains a driver of the UK’s out of home hot drinks market, accounting for almost 80% of sales.

 

After a sharp spike in global coffee prices over the last year, it’s no surprise that figures from analyst Kantar show much of the 9.7% growth in consumer spend on coffee bought out of home in the year to March 2025 was driven by higher prices. Nevertheless, volume growth of 1.9% for coffee was a better performance than many drinks categories.

 

One reason seems to be that consumers have a strong affinity with coffee shops. Analysis by Mintel, published in March, found that despite widespread availability of takeaway drinks, an in-store coffee remains UK customers’ preferred experience, with coffee shops valued as a ‘third place’ between the home and the workplace.

 

However, this creates its own challenges for operators: the need for regular menu innovation. A recent survey by Nestlé Professional found that flavour trends are key to enticing coffee drinkers. A choice of flavoured syrups and sweeteners is the most important option, followed by non-dairy milk alternatives and decaf options.


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The study also found that many consumers care about where their coffee beans are sourced from, with 47% preferring ethically sourced beans, while 36% like the option to recycle their coffee cup. In response, brands such as the Nestlé-owned Seattle’s Best Coffee are working towards a net-zero commitment and encouraging regenerative farming.

 

Richard Milner, category insight manager at roaster Lincoln & York says: “Our own research shows that consumers are ready to pay a premium for higher-quality options, with nearly half willing to spend more on a special single-origin coffee.”

 

Lincoln & York has partnered with coffee machine specialist La Cimbali and the La Cimbali M200 to create premium, personalised drinks. This can help operators to ensure they offer “unique, Instagram-worthy experiences”.

 

Milner adds: “We’re increasingly seeing operators enhancing their menus with indulgent extras and seasonal drinks to encourage consumers to trade-up from their standard latte, whether that’s gold-leaf toppings or branded flavours such as Nutella and Biscoff.”

 

Quality speaks

The Illycaffè brand, founded by Francesco Illy, has legacy on its side, as the company is approaching a century in business.  Marcello Canetti, UK managing director, says: “Operators can ensure that their menu stands out through offering something different.” 

 

Illy’s Arabica Selection Brazile Cerrado Mineiro coffee is the result of a longstanding relationship with local producers in the support of regenerative agriculture. With an estimated five million cups of Illycaffè coffee served a day, the brand “speaks to an audience who are looking for quality as well as provenance”.

 

“With our Ambassador Chef programme, we work in partnership with the world’s leading chefs, promoting quality and taste,” adds Canetti.

 

The perfect blend

Meanwhile, Will Corby, director of supplier Pact Coffee, advises that the key to the best coffee is paying attention to precision. “The coffee which makes or loses a customer for life is just a small step away. Things like dose, yield and extraction time might sound science-y, but once you get the hang of things, they’re all quite easily achievable and make a huge difference to your business.”

 

Corby suggests that baristas should focus on adjusting the grinder to get the size of the ground coffee Goldilocks-perfect – too coarse or fine, and the flavour will be too sour or too bitter – as well as brew time and yield, where the coffee-to-water ratio should be spot-on.

Illy coffee

“We offer free training to the colleagues of our customers. We can train them in three hours to become a competent barista and make your shop the busiest in town,” he says. 

 

The value of training is also emphasised by Rob Baines, general manager at Farrer’s, the UK’s oldest independent roastery. “For operators that want to take personalisation to the next level, offering a unique blend is a sure-fire way to stand out from the crowd.

 

“We welcome operators to join us at our state-of-the art training and testing centre to find their perfect blend. At this facility, staff can additionally refine their barista skills. This includes nailing a perfect serve of espresso or perfecting detailed latte art.”

 

Iced or nothing

Mintel’s research found that younger consumers increasingly take their coffee iced, with Gen Z and Millennials driving an upturn in cold options on coffee shop menus.

 

Danny Wright, founder and chief executive of Collab Coffee, which has developed iced coffee brands for a range of partners, says: “Gen Z associate traditional hot coffees with their parents’ demographic. To them, iced coffee isn’t just a seasonal trend, it’s a year-round staple. This represents an opportunity to those in the hospitality industry who want to maintain relevance and drive growth within this influential consumer segment.”

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The Guvnor Credit Tom Parker

One partner for Collab is the Sidemen, a YouTube collective which has expanded into foodservice with Sides outlets in shopping mall locations including Bluewater in Kent, Boxpark Wembley, Manchester’s Arndale and Birmingham’s Merry Hill.

 

“The Sidemen are strategically capitalising on demand for iced coffee with the launch of a collection of four flavoured ready-to-drink [RTD] iced lattes available in select Sides restaurants. The cans are flying out of the fridges,” says Wright.

 

Somerset-based Tom Parker Creamery has developed the Guv’nor, a range of three RTD iced coffees in original, mocha and caramel varieties. Chief executive Rob Yates says: “Consumer behaviour around iced coffee has shifted. It appeals to both coffee lovers and soft drink consumers alike.

 

“By treating it as part of a wider refreshment category, operators can tap into spontaneous purchases and appeal to customers looking for a premium yet natural caffeine fix. It sits just as comfortably next to a cold-pressed juice as it does beside an Americano.”

 

Seasonality remains important to the overall market, says Lee Hyde, senior beverage expert at syrups supplier Monin. “Iced coffees are a staple for summertime whereas warming hot serves, such as hot chocolate and spiced coffees, are popular in the colder months.

 

“Frappés have also grown in popularity by tapping into the majority consumer preference for an indulgent treat, now being the second most popular iced coffee shop beverage.”

 

Suppliers

Collab Coffee wearecollab.com

Farrer’s www.farrerscoffee.co.uk

Illycaffè www.illy.com

La Cimbali www.cimbali.com

Lincoln & York www.lincolnandyork.com

Monin www.monin1912.com

Nestlé Professional www.nestleprofessional.co.uk

Pact Coffee www.pactcoffee.com

Tom Parker Creamery www.tomparkercreamery.com

 

Photo: MISTER DIN/Shutterstock

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