Why coffee shops are replacing pubs in Britain

Despite 15 years of rapid expansion, analysts says Britain's coffee shop sector remains one of the most successful in the UK economy and will continue to expand. So why has a nation of tea drinkers become so obsessed with milky lattes?

According to analysts at Barclays, the way Britons are drinking coffee has changed. They point out that, although the coffee shop market, has continued to grow, coffee consumption per head hasn't. In fact, consumption levels are now lower than they were in 2006. Britons consume 2.8kg per head, just a fraction of the 7kg consumed in Germany, 7.1kg in Sweden and 5.5kg in France.

"This means that the growth of coffee shops has in no way increased the UK consumption of coffee," Barclays leisure analyst, Vicki Stern, said in a recent research note. "Rather, the way in which coffee is being consumed has changed with people now visiting coffee shops where they might previously have consumed instant coffee at home or in the workplace."

Andy Harrison, chief executive of Whitbread, believes coffee shops have now filled a hole in British society that would previously have been met by pubs. Families and women in particular use coffee shops for social gatherings, he says. He also points out that women now have greater spending power than in the past.

"Think of the coffee shop as a social venue," he says. "What we have seen is the coffee shop market has grown at about 5pc per annum throughout the recession even in the most economically challenged parts of the UK. We think the reasons behind that are to do with things like the growth of female independence, female spending power. Over half of our customers are women.

"People talk about the pub as a meeting point but pubs were more about males and the evening, coffee shops are [open] all day, more female [orientated] and certainly more family."

He also believes coffee shops have been boosted by people shopping more online. Instead of spending their Saturdays trawling the shops, Britons are meeting up with friends at their local cafe.

By comparison, the number of pubs in Britain has been in steep decline for a number of years. The Campaign for Real Ale (CAMRA) says British pubs are closing at the rate of 31 a week.

At one point, Britain's coffee shop market will become saturated. But analysts don't believe that time will come any time soon.

"There are still thousands and thousands of places in the UK that don't yet have a decent coffee experience," says Jeffrey Young, managing director of Allegra Stategies, which produces detailed research on the coffee market. "Coffee shops are part of the fabric of our society now"

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