Every morning, I reluctantly pick a copy of Metro at Station on my way to work. Reluctantly because, I am keen to utilise the short journey time by reading magazine subscriptions which I always leave unfinished otherwise. But somehow, I end up reading a Metro at least twice a week. Off late I have noticed quite a few adverts on Metro by Mcdonalds and Costa Coffee trumpeting how superior their coffees are in comparison with the others. Costa, understood. It’s been a Coffee Company and it’s promotions are not surprising. But McDonald’s?
On an average, 9 million coffees are sold per week in the UK, triple of what was being sold in 2000. According to Allegra Strategies, a research firm, the UK has the largest branded coffee chain market in Europe with 3,864 outlets and until last year the numbers kept growing as companies invested heavily in expanding their presence. However, in 2009 further growth has been temporarily halted due to recession. One of the leading Coffee chains, Coffee Republic (deleted even) went into administration in July this year and had to be rescued by property firm, Arab Investments Ltd.
The bleak market outlook and the recessionary trading environment has prompted coffee chains to consolidate leading to strategy directed towards strengthening of the brand. Allegra believes that the slow down in the opening up of new shops, has resulted in Coffee chains embracing an aggressive marketing strategy. Well, then where does McDonalds figure in this?
Coffee market is not new to McDonalds. It has, in the past few years, directly assaulted single brand coffee shops like Starbucks by introducing variants of coffees such as capuccinos and lattes and targeted advertising. Although, critiques are divided on the extent of market opportunities for coffee shops, companies involved tend to think otherwise. In the recent years, the market has seen an expansion beyond urban boundaries into small towns. With sensitive pricing and good quality, non-coffee centred companies such as McDonalds, Marks & Spencer etc are quietly encroaching the coffee market, which traditionally has been reserved for smaller independent cafes or single brand coffee shops.
Looks like the coffee war has just begun.