Costa ready to capitalise on UK’s “third wave” of coffee, owner Whitbread says

Like-for-like sales growth at Costa Coffee has slowed to 0.6%. Picture: PA/PA Wire

Like-for-like sales growth at Costa Coffee has slowed to 0.6%. Picture: PA/PA Wire - Credit: PA

Costa Coffee owner Whitbread is hoping the so called 'third wave' of coffee consumption will help it bounce back from slowing sales in its coffee shops.

The group said like-for-like Costa sales grew by 0.6% in the six months to August 31, down from 2.3% growth in the same period last year, with an improved breakfast food range and broader selection of cold drinks helping it stay in positive comparable sales territory.

But it believes the UK is entering a 'third wave' of coffee – described by the company as a period in which 'consumers' preferences for coffee become more sophisticated and are willing to spend more per cup for higher quality and innovative drinks' – with Costa poised to capitalise on the new epoch.

Pre-tax profit at Costa fell 9.8% in the period to £59m, on revenue of £622m.

But Whitbread as a whole saw revenue rise 7.4% to £1.67bn, while total statutory pre-tax profit rose 19.9% to £316m.

The company saw a stronger performance in its Premier Inn hotel chain, where comparable sales rose 3.6%. The hotel arm booked a 26.5% rise in pre-tax profits to £295m as revenue topped £1bn.

Chief executive Alison Brittain said: 'Our plan is based on growing in our core UK markets, focusing on structural growth opportunities for Premier Inn in Germany, Costa in China and Costa Express, and strengthening our capabilities and efficiency to deliver these attractive opportunities.'

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Earlier this year Whitbread paid £35m to seize full control of its Costa Coffee joint venture in China, part of the firm's plan to grow internationally.

On Tuesday it again singled out China in particular as coffee culture becomes more popular in the country.

'The coffee shop market in China is expected to more than double in size by 2020 and an opportunity exists to position Costa as the strongest challenger to the market leader,' Whitbread said.