Australia’s coffee culture has kept revenue brewing for the coffee shops industry over the past five years, with an explosion in the number of small boutique coffee houses, especially in inner city locations where office workers congregate during the morning coffee rush.
According to IbisWorld industry analyst, Stephen Gargano, industry revenue is forecast to rise by an annualised three per cent over the five years through 2014-15. This includes a forecast increase of 1.9 per cent in 2014/15, to total $2.3 billion.
“Coffee drinking is entrenched in the daily routines of many Australian consumers, which supported industry demand even during the global financial crisis,” Gargano said.
Competitive pressures in the Coffee Shops industry have been steadily rising over the past five years, as more coffee makers have entered the industry. However, market share concentration in the industry has remained low.
Consumers are being pampered with an increasing range of fine coffees, as “more establishments are set up in high traffic locations and the industry seeks more highly skilled baristas,” says Gargano.
While competition is increasing, the cost of doing business is also growing. The nation’s indulgence in fine coffees is expected to continue in the next five years, even as the industry undergoes a structural change to focus on other factors beyond the capacity to serve coffee.
However, competitive pressures will cause some industry establishments to either relocate or leave the industry altogether.
IbisWorld expects the industry’s growth will be largely due to an increase in small independent coffee houses, however, the proposed relaunch of the Starbucks brand may provide a source of growth among the larger coffee chains.