Lucy Williams recently enjoyed an iced strawberry matcha at Blank Street Coffee, a cafe popular for its vibrant selection of matcha drinks, which has attracted a following that includes celebrities. In contrast, Costa Coffee does not offer matcha drinks. This difference is notable as the owner of Costa, Coca-Cola, is reportedly considering selling the chain, potentially at a valuation of £2 billion, significantly less than the £4.9 billion it spent to acquire it in 2019.
The coffee market is witnessing changing trends, especially among younger consumers who are increasingly turning to specialty drinks. Analysts suggest that chains like Costa face challenges due to rising prices and cost-of-living pressures. Blank Street Coffee, which started in Brooklyn in 2020, has expanded rapidly, now boasting around 35 locations in London and several others in other UK cities. Its success may be attributed to its popularity on social media platforms, particularly TikTok.
Consumers like Bree Taylor and Rebecca Trow from Australia sought out Blank Street based on its online presence, highlighting how visual appeal influences cafe choices today. The rise in demand for matcha has also resulted in supply challenges globally, pushing prices up and prompting competitors, including Starbucks and Pret, to introduce their own matcha beverages.
Costa, meanwhile, reported a revenue of £1.2 billion in its latest financial year, yet faced an operating loss due to inflation and increased costs. Coca-Cola’s CEO acknowledged that Costa is “not where we wanted it to be,” leading to discussions about potential growth strategies or a sale of the brand.
As the coffee landscape evolves, with both chain and independent shops expanding, competition increases for consumer loyalty amidst shifting preferences. Insights from industry experts indicate a need for established chains to innovate and respond to the changing tastes of consumers, particularly as many younger customers favor small, independent establishments over larger brands.
Source: https://www.bbc.com/news/articles/c3dpjvy5em1o?at_medium=RSS&at_campaign=rss