The coffee market in the United Kingdom used to be very different from other European countries. However, the market is changing rapidly. While tea used to be the traditional hot beverage in the United Kingdom, the coffee sector is growing in importance. While British consumers traditionally drink more instant coffee compared to the European countries, the sales of ground and speciality coffees are growing. Especially certified coffee is important for the British consumer.

Product description

There are two main types of green coffee beans:

• Coffea Arabica: Plantations are generally at altitudes over 1,000 metres. This makes it a so called highland coffee. The average length of coffee beans of this variety is around 9 mm. Their colour is greenish to blue-green. The coffee beans have a strong, full flavour. Arabica beans have a caffeine content of approximately 1.2%.
• Coffea Robusta: Robusta coffee can be considered a lowland coffee. Its plantations are below 1,000 metres. Robusta beans are small, round and generally brownish to yellowy green. Their beans have a higher water content than Arabica coffee. They generally have a less powerful flavour. Robusta beans have a caffeine content of approximately 2.3%.

In Europe, the Combined Nomenclature (CN) uses Harmonized System (HS) codes to classify products that are traded. The HS codes for green coffee beans are given below. The available data do not distinguish between conventional and speciality coffees.

Speciality coffee is defined by the Speciality Coffee Association of Europe (SCAE, now integrated into the Specialty Coffee Association – SCA) as the art of manufacturing a quality cup of coffee, which is judged by the consumer to have a unique quality, characteristic taste and personality, superior to the common beverages offered. This beverage consists of coffee beans which have grown at a designated location and have been processed under the highest quality standards for raw processing, roasting, storing, and finally the preparation to a beverage.

Recently, specialty coffee shops have become very fashionable in the UK. Although coffee consumption in the UK as such is not increasing, more and more Britons are drinking coffee out-of-home in coffee shops. The List of Coffee Roasters in the United Kingdom and Ireland gives a good idea of the profiles of roasting companies and their roasting characteristics. The general consumer preference in the United Kingdom is for lighter roasts, similarly to Germany and slightly lighter than in the Netherlands.

1. What makes the United Kingdom an interesting market for coffee?

Coffee consumption in the United Kingdom grows steadily

The United Kingdom is the fifth largest consumer market for coffee in Europe. Britain consumed a total of 216 thousand tonnes (3.6 million 60 kg bags) in 2015. This accounted for around 9% of the total green coffee consumption in Europe in 2015. The British coffee market grows at around 10% yearly.

Although the United Kingdom is the fifth largest coffee market in Europe, per capita coffee consumption is relatively low. Each British person consumes only around 3.3 kg of coffee per year. This is much lower than the European average of 5.4 kg.

The United Kingdom has traditionally been a nation of tea drinkers, but coffee is starting to win over more and more British consumers. Compared to most other countries in Europe, consumers in the United Kingdom favour instant coffee, especially among older generations. However, the consumption of (higher quality) ground coffee and single-serve pods is increasing significantly among millennials.

Coffee imports are growing

The United Kingdom was the seventh largest importer of green coffee beans in Europe in 2017, with a volume of 165 thousand tonnes. Imports between 2013 and 2017 grew at an annual rate of 3.0% in volume and 8.0% in value.

Growth in British re-exports is slowing down

British re-exports of green coffee beans amounted to 8 thousand tonnes in 2017. This represents 1.2% of the total European re-exports of green coffee beans. After high re-exports in 2016, these have slowed down in 2017. Overall, re-exports from 2013-2017 have grown at an annual rate of 3.9% in volume and 11% in value.

The United Kingdom mainly re-exports within Europe. The main destinations in 2017 were:

• Ireland (47%)
• Sweden (8.5%)
• Germany (5.9%)

Exports to Sweden increased significantly in 2013–2017, at an annual rate around 18%. In the same period, exports to Ireland increased by 6% annually, while exports to France and Germany decreased at -3.0% and -8.8%, respectively. South Africa is the leading non-European destination, accounting for 5% of British coffee re-exports in 2017.

British consumers are changing their preference from tea to coffee

The United Kingdom is going through a major shift, from a tea to coffee-consuming country. While tea has been the traditional hot beverage in the United Kingdom until now, younger generations have started to drink more coffee than tea. As a result, the number of coffee shops in the United Kingdom have increased significantly. Costa Coffee is the main coffee shop chain in the country, with a sales growth of +14% between 2014 and 2015.

In addition, the United Kingdom is a hotspot for new and innovative coffee brews. See for example these articles by about the popularity of ‘fizzy coffee’ and nitrogen induced coffee.

The specialty coffee market in the United Kingdom grows at full speed

Traditionally known for the consumption of instant coffee, the United Kingdom is experiencing a significant growth in higher quality coffees. The specialty coffee segment is expected to grow by 13% yearly until 2020, surpassing the general growth of the coffee market (estimated at 10% yearly).

The growth of the specialty coffee market is highly influenced by out-of-home consumption. The market for coffee shops, espresso bars and other establishments grows faster than the retail market. The expansion of speciality coffee chains (examples: Department of Coffee and Social Affairs, Taylor St Baristas, and Notes) and the involvement of established chains such as Starbucks, Costa and Caffè Nero in speciality coffees are shaping this market.

The changes in the British coffee market also affect in-home consumption. The third wave (see our study on coffee trends) has led to the premiumisation of the consumer market. This has increased competition among speciality coffee brands. It is estimated that 7% of consumers in the United Kingdom owned coffee equipment at home in 2015, compared to 2% in 2014. Example of such equipment: V60, aeropress and chemex.

This fast pace has also led to a fourth wave in the British coffee market (see this development in our study on coffee trends). Examples of progressive coffee companies identified by the World Coffee Portal are:

• Workshop Coffee Co.
• Square Mile Coffee Roasters
• Caravan
• Origin Coffee.

There is also focus on new technology and scientific methods to refine the coffee-making process, from farm to cup. This focus supports the argument that the specialty market is moving toward to “science of coffee”.

Certification continues to play a big role in the United Kingdom

Certification schemes are well established on the British market. Sustainability concepts and labels are important in both mainstream and niche markets for coffee.

In the United Kingdom, sales of Fairtrade coffee have increased nearly 10 times in the last 12 years. Several coffee shop chains such as Soho Coffee and AMT Coffee and larger retailers such as Tesco sell Fairtrade-certified coffee.

Rainforest Alliance is the leading certification in the mainstream coffee market in the United Kingdom. The United Kingdom has the largest number of Rainforest Alliance certified coffee retailers, coffee shops and brands in Europe (these include Costa Coffee, Tesco and Marks & Spencer).

The innovative British market is also open to lesser-known certification schemes such as Bird Friendly-certified coffee. The United Kingdom has most of the Bird Friendly-certified importers in Europe. However, the scheme represents a very small share of the market.

2. What requirements must coffee comply with to be allowed on the market in the United Kingdom?

The United Kingdom will leave the European Union in 2019, the so-called Brexit. The exact implications on import regulations are unclear at this time. These next few years coffee exported to the United Kingdom must still comply with strict food safety legislation as well as other European Union legislation.

You can only export your product to Europe if you comply with strict requirements. In our study on buyer requirements for coffee you can find a detailed analysis of these requirements. Specifically for the British coffee market the following topics are important:

Legal requirements

You must follow European Union legal requirements applicable to coffee. These mainly deal with food safety. Traceability and hygiene are the most important themes. Special attention should be given to specific sources of contamination. Pesticides, mycotoxins and Salmonella (though coffee is considered low-risk) are the most common for green coffee beans.

There are no specified import regulations in the United Kingdom that differ from European Union regulations for coffee. However, you should note the United Kingdom will leave the European Union in the near future. Import regulations might change on the longer term.

Quality criteria for coffee

Green coffee beans can be classified using two methods:

• the Specialty Coffee Association (SCA) green coffee grading protocols 
• the Brazilian/New York green coffee classification (applicable to Brazilian coffee only)

Grading is usually based on the following criteria:

• Altitude and/or region
• Botanical variety
• Preparation (wet or dry process, washed or natural)
• Bean size (screen size), sometimes also bean shape and colour
• Number of defects (imperfections)
• Roast appearance and cup quality (flavour, characteristics, cleanliness)
• Density of the beans

Higher quality coffee (specialty coffee) is graded according to a cupping score. Fragrance, flavour, aftertaste, balance, acidity, sweetness, uniformity and cleanliness are important topics in the grading process (see below for more information).

The definition of specialty coffee has not been formally established within the coffee industry. A cupping score below 80 is considered standard quality and not specialty. This is in line with the Coffee Quality Institute, which states that coffees graded and cupped with scores above 80 are considered specialty coffees. The cupping protocols of the Specialty Coffee Association also consider a score of 80 as being below specialty quality. However, the exact minimum scores defining speciality coffee differ per country and buyer. Some buyers consider 80 as too low and demand a cupping score of 85 or higher.

Roasting

Coffee can be roasted in several ways. In general, lighter roasts are less heavy, more acidic. They have more flavour than the darker roasts. Darker roasts have more body.

The degree or darkness of roast, as well as its duration, has a direct impact on the flavour profile of coffee.

There are other important variables which affect the flavour or can develop the potential of the coffee. Some of them are:

• Roasting time
• Charge temperature
• Rate of rise
• Drum speed or air flow & cooling speed
• First and second crack timing
• Sensory experience of the roaster.

Labelling requirements

Labelling of coffee exported to the United Kingdom should be written in English. Labels should contain the following topics to ensure traceability of individual batches:

• Product name
• International Coffee Organisation (ICO) identification code
• Country of origin
• Grade
• Net weight in kg
• Certified coffee: name/code of the inspection body and certification number.

Packaging requirements

Green coffee beans are sensitive to water absorption. They are therefore transported in woven bags made from natural fibre (jute or hessian). These allows free circulation of air.

Most green coffee beans of standard quality imported into the United Kingdom are packed in container-sized bulk flexi-bags. These hold roughly 20 tonnes of green coffee beans. The rest of the green coffee is transported in traditional 60-kilo jute sacks, which will have a net volume of around 17-19 tonnes of coffee.

Materials such as Grainpro or other innovative materials can be used to pack specialty coffees.

Additional requirements

Quality management system certification may be required by buyers. A system based on Hazard analysis and critical control points (HACCP) is often a minimum standard required, but some buyers will also expect you to have certificates such as International Featured Standards: Food (IFS) or British Retail Consortium (BRC).

Corporate responsibility and sustainability is growing in importance in the coffee sector. Adopting codes of conduct or sustainability policies related to environmental and social impacts of your company can provide you with a competitive advantage. See for example the corporate responsibility policy of Nestlé UK, which has an important presence on the British coffee market. Also see the sustainability policy of Tassimo (from Jacobs Douwe Egberts), one of the main coffee products sold in the United Kingdom. Traders such as ED&F Man also have elaborate social responsibility policies which guide their businesses.

The United Kingdom is one of the largest worldwide markets for Rainforest Alliance. UTZ certified is less prominent. As described under trends, the United Kingdom has the largest number of Rainforest Alliance-certified coffee retailers, coffee shops and brands in Europe. These include Costa Coffee, Tesco and Marks & Spencer.

Requirements for niche markets

The United Kingdom is the largest market for Fairtrade-certified coffee. Fairtrade appeals to British consumers. Organic-certified coffee also represents an important niche market, with brands such as Cafedirect, Equal Exchange and Percol focusing on organic coffees (commonly in combination with Fairtrade). Some smaller speciality roasters such as Beanberry Coffee Company also focus on the organic market.

3. What competition do you face on the British coffee market?

The six leading developing country suppliers of green coffee beans are shown in Figure 2. Vietnam has the highest share in the British coffee market at 22%, followed closely by Brazil (21%) and Indonesia (15%).

Vietnamese supplies are recovering from a drop of exports to United Kingdom in 2013-2014. In 2017, exports were almost at the level of 2013. Brazilian supplies have fluctuated strongly in recent years. Overall, its imports increased at an annual rate of 3.0% in volume and 4.4% in value from 2013-2017.

Other large suppliers in 2017 were:

• Colombia (12% of British imports)
• Honduras (4.9%)
• Peru (4.2%)
• Ethiopia (3.4%).

4. Through what channels can you get coffee on the British market?

The British coffee sector can be divided into two segments:

• In-home consumption – British consumers are traditionally known for the consumption of instant coffees of low quality such as Nescafé. However, the market for instant coffees is declining with the introduction of coffee pods and filtered coffee. The British market segment is becoming more diverse. More and more consumers are also interested in higher-quality coffee. This brings retailers to offer a wider coffee portfolio. In general, Tesco is the leading retailer in the United Kingdom (29% of the market), followed by ASDA (17%), Sainsbury’s (16%) and Morrisons (11%).
• Out-of-home consumption – This market segment is growing. More and more British consumers are having coffee out of their homes, such as at restaurants, coffee shops and cafes. The number of coffee shops is increasingly rapidly in the United Kingdom, reaching over 20,000 outlets in 2015. The leading coffee shop chains in the United Kingdom are Costa, Starbucks and Caffè Nero (together controlling more than half of the market). The number of independent speciality coffee shops increases at a fast pace. In addition, the Daily Mail predicts that coffee shops will overtake pubs across Britain in 2030.

The coffee market can also be segmented according to quality (for example, the percentage of high quality Arabica coffees in blends, single origins, micro-lots, marketing aspects, etc.) and related prices (see the section on prices below). The British market reflects the segments found on the European market (see our study on channels and segments in the European coffee sector): upper-end, middle range and lower-end segments. Both in-home and out-of-home consumption of coffee incorporate these segments.

Figure 3: Market channels for coffee in the United Kingdom

The United Kingdom has a traditional coffee trade structure. It has a wide network of importers connecting suppliers in producing countries to roasters around the country and elsewhere in Europe. The expansion of the speciality coffee market has also opened possibilities in niche markets. A number of smaller-scale roasters became involved in direct trade with producers in developing countries, making the chain shorter.

As an exporter, entering the British market will depend on the quality of your coffee, your volume capacities (for example, more or less than 10 containers per year) and the strategy of your company (for example, supplying the market through intermediaries or directly to end-users).

If you are an exporter that can offer higher volumes of green coffee beans (10 containers or more), you can enter the British market through large importers. Some of the main players are:

• DRWakefield 
• ED&F Man
• Falcon Coffees
• Complete Coffee
• CTCS Group: Green Coffee
• Mercanta – the Coffee Hunters.

These importers cover a wide range of qualities, varieties and certifications. Some focus exclusively on speciality green coffee beans (thus requiring high-quality beans).

The United Kingdom also has importers which specialise in ethical products, including coffee. Normally they focus on specific organic and fair-trade markets. Examples of specialised British importers are:

• Equal Exchange
• Cafédirect
• FA Coffee (rare speciality coffees)
• Twin Trading.

If you offer bulk green coffee beans of standard quality in high volumes (10 containers or more), you can also explore directly supplying large roasters. These are mostly subsidiaries of multinational companies (examples: Nestlé and Jacobs Douwe Egberts) that dominate the retail market in the United Kingdom. In the United Kingdom roasters such as UCC Coffee and Lincoln & York  supply the private label industry (sold under a retailer’s brand name).

You can also target smaller roasters directly. This is an interesting option, as independent roasters are rapidly expanding in the United Kingdom. The British market sees an increase in speciality roasters who import directly from producing countries.

Smaller speciality roasters normally focus on higher quality green coffee beans. They give special attention to long-term partnerships. Examples of specialised British roasters that import directly are:

• TripleCoRoast
• Artisan Roast
• Capital Coffee
• Other: the list of coffee roasters in the UK and the database of GoodatCoffee.

Is your experience with entering new markets limited? You have the option to sell your coffee beans to an agent. Such agents function as an intermediary between you and the importer or roaster. In the United Kingdom, a few agents (and brokers) operate on the coffee market.

Agents and brokers are most useful if you deal with commodity-type coffees in bulk volumes. Some examples of agents and brokers operating on the British market are: Marex Spectron and Sucden Financial.

Note that London is one of the global centres for commodity exchange, specifically for Robusta Coffee Futures.

5. What are the end market prices for coffee?

End-market prices for coffee vary depending on the segment of the market. Our study on channels and segments in the European coffee sector provides an overview of the characteristics of the upper-end, middle range and lower-end of the coffee retail market. Typically, export prices of green coffee only account for around 5-25% of the end-market prices, depending on the coffee quality, the size of the lot and the supplier’s relationship with the buyer.

These are price ranges for the British coffee market:

• Upper-end: €226 per kg (Kopi Luwak – 250 gram packaging); €114 per kg (Jamaica Blue Mountain Peaberry – 250 gram packaging)
• Middle range: €17.20 per kg (Sainsbury’s Fairtrade Colombian Coffee – 227 gram packaging;  €18.44 per kg (Taylors of Harrogate Rich Italian Coffee Beans Dark – 227 gram packaging)
• Lower-end: €12.60 per kg (Morrisons Anytime Coffee Beans – 227 gram packaging).

Sources: Sainsbury’s, Morrisons, The Bean Shop, Coffee Bean Shop

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Source: https://www.cbi.eu/market-information/coffee/uk