"If it sometimes feels as if there is a Costa Coffee in every town and city in the UK," said The Observier, "that is because there almost is." Britain's biggest high-street coffee chain has more than 2,000 outlets and at least 14,000 self-service machines, selling "millions of cups a week". Yet despite this apparent "market dominance", Coca-Cola, which bought Costa in 2018, is reportedly "considering offloading" it amid a decline in sales.
In hot water Costa was founded in 1971 and bought by hospitality company Whitbread in 1995, by which time it was a chain with nearly 40 shops "dedicated to actual coffee", said The Telegraph. But today it is a "dowdy brand", a "proliferator of unnecessary volumes of milky liquid" and "obesity-inducing horrors".
Drought, crop failures and global supply shortages have hiked the price of coffee, while rises in inflation, energy bills, wages and National Insurance have further pushed up costs for UK employers. At the same time, the cost-of-living crisis has squeezed consumer budgets.
"You know there's a problem when the world's biggest coffee chain, Starbucks, is suffering," said The Grocer. Last year the chain recorded a £35 million loss in the UK and a 4% decline in revenue.
'TikTok appeal' It's an "undeniably tough market" for hospitality in general, said The Grocer. But the key difference in such a "competitive and overcrowded" market? Unlike Starbucks, Caffè Nero and Pret A Manger, Costa "missed out on one of the biggest trends in recent years: the viral matcha iced latte".
Costa's high-street rivals, as well as premium chain Gail's and smaller ones like Blank Street Coffee, "jumped on the trend" when colourful matcha drinks first hit the market, said the BBC. Blank Street reported a 27% growth in 35 outlets last year, "driven by its TikTok appeal in the form of "minty-fresh decorated cafes" and "pastel-hued drinks".
A luxury drink is an "affordable treat", but "when a coffee can cost you the best part of £5, you expect something you can't make yourself". So a "straight-up latte isn't a treat", independent retail analyst Clare Bailey told the broadcaster. |