Coffee shop markets in focus: Germany

Germany’s 5,500-strong branded café market continues to face challenges following Covid-19 with footfall slow to return to pre-pandemic levels and outlet growth in country’s traditionally strong food-focused segment remaining flat. Project Café Germany 2022 research also indicates one in four consumers expect to permanently change their coffee consumption behaviour due to the pandemic, with drive-thru demand outstripping availability

Despite a traditionally strong bakery presence, growth in Germany's branded café market has more recently been led by the coffee-focused segment | Photo credit: Roman Kraft

The German branded café market is the second largest in Europe by outlets behind the UK, with the total branded segment growing 1.3% to reach 5,464 outlets over the last 12 months.

Despite a traditionally strong bakery-café segment, growth has more recently been led by coffee-focused outlets, which grew 2.1% to reach 2,343 outlets. The food-focused segment achieved sluggish growth of 0.6%, expanding by 20 outlets over the last 12 months to reach 3,121 stores. 
Domestic bakery Markt-Bäckerei is the largest chain in Germany with 800 stores. Having opened 66 net new outlets in the last 12 months, US-based McCafé is the second largest and fastest growing branded coffee chain in Germany, with 749 outlets.    
Confidence rising but consumers slow to return in-store  
Coffee business confidence has increased for the first time since the start of the pandemic, with 63% of industry leaders surveyed reporting positive trading conditions, up from 38% in 2021.
This positivity is reflected in annual trading comparisons, with 59% reporting sales growth of 1% or more, compared with 68% reporting losses of over 5% in 2021.  
Although 82% of German industry leaders now believe consumers should feel safe visiting coffee shops, this view is only shared by 63% of consumers, indicating that some work is needed to encourage a return to in-store trade. 
With footfall yet to return to pre-pandemic levels, 43% of industry leaders remain cautious of the potential long-term impact of consumer desire for coffee out-of-home. Additionally, only 47% of consumers are visiting coffee shops at least once-a-week, with daily visits declining by almost half. 
Indicating that German coffee shops will need to adapt their business models to new trading realities, Project Café Germany shows that 26% of consumers believe the pandemic will permanently change their coffee consumption behaviour, up from 13% the year previous.   
Consumer attitudes changing as drive-thru preferred to delivery 
Like many European markets, Germany’s branded coffee chains had to adapt to new consumer routines during the pandemic. Project Café Germany 2022 found that 54% of coffee shop consumers would purchase beverages via a drive-thru if the facility were more readily available.  
Given its association with fast food, it is not surprising that McCafé is a proponent of the drive-thru model, with the majority of nearly 1,000 McDrive locations in Germany linked to McCafé outlets.
In contrast, appetite for beverage delivery has not risen in Germany as noticeably as other European countries in the last 12 months. Nearly half (47%) of consumers would not order a coffee for delivery if the option was more readily available, an increase of 3% on the year previous. 
Oatmilk popularity rising as sustainability returns to focus 

Project Café Germany 2022 reports that the climate crisis, temporarily moved down the agenda of hospitality businesses during the height of the pandemic, is returning to the forefront.
The climate crisis is an important sustainability issue to tackle for 25% of industry leaders, although less of a concern in comparison to packaging waste (66%) and energy inefficiency (34%).   
Although consumer desire to purchase ethically sourced coffee remains unchanged at 48%, oatmilk has seen a rise in popularity, with 13% of consumers indicating they typically like to pair it with their beverage, making it more popular than almond milk (10.9%).   
The popularity of oatmilk prompted Germany’s national rail company, Deutsche Bahn, to begin serving Oatly with coffee beverages sold on board its trains in January 2022, marking the first time Germany’s national rail carrier has served a plant-based milk alternative on its services. 
When asked what health-based beverage trends have the most longevity, 43% cited dairy-free as most important. However, no added sugar (63%) and additive-free (50%) are considered more long-term beverage trends.
Global economic headwinds likely to dampen growth 
Like much of Europe, growth in Germany’s branded café market will likely be impeded by external factors, including supply chain challenges related to the pandemic and more recently the war in Ukraine. 
Germany is among Europe’s most heavily dependent nations on Russian gas and oil, and despite a recent €16bn ($16.5bn) relief package to ease the burden of rising energy costs, hospitality businesses are likely to feel the brunt as Germany attempts to end Russian gas imports by mid-2024. 
Increasing global fuel prices are also a factor behind the emergent cost of living crisis, which threatens footfall as disposable income levels are reduced. In April 2022, the Cologne-based Institute of Trade indicated that two-thirds of Germans are cutting back or planning to curtail their spending because of inflation, with hospitality spend likely to be impacted. 
World Coffee Portal forecasts that the German branded coffee shop market will struggle to maintain its current level of growth over the next five years, with an estimated contraction of the food-focused segment to below 3,000 outlets. Only one domestic food-focused brand, Junge, experienced double-digit outlet growth in the last 12 months, with seven of the chains with more than 20 stores showing a net loss of outlets. 
In contrast, the coffee-focused sub-segment is to exceed 2,500 outlets over the period. However, the growth is unlikely to offset an overall slowdown of the German branded café market evident before the pandemic struck. 


Project Café Germany 2022 is World Coffee Portal’s annual deep-dive study into the branded coffee shop markets in Germany.

The report features market sizing and growth forecast, Covid-19 impact analysis, industry insight and a consumer study of more than 2,000 coffee shop visitors across Germany.

To purchase the report or to make an enquiry, please contact: | +44(0)20 7691 8800

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