All about the artisan

Eating out remains flat but upmarket coffee and artisan breads are driving growth writes Peter Backman

This summer, Tesco unveiled one of its biggest, most modern stores to date. The Tesco Extra store in Watford has more than 80,000sq feet of retail space and heralds a new look.

We can safely assume that the design and content of Tesco Watford have been the result of considerable research and blue-sky thinking by a company desperate to claw back its market dominance. Tesco Watford, therefore, represents the company’s view of the future of food retailing and its hope for the way consumers could combine food shopping with other leisure pursuits. But is this what customers really want?

At least two of the concepts that have gone into Tesco Watford reflect key trends I have observed emerging in high streets across the UK over the past few years: the rise of specialist coffees and bakery products.
Coffee & cake: Treats go upmarketThe growth of upmarket coffee shops, artisan bakeries and patisseries has taken consumers away from the supermarket into something more specialist, more upmarket and more expensive. But whether it’s for a treat or a grab-and-go breakfast, an element of the population is responding positively to these offers.

Horizons has long observed that following the onset of the recession, consumers have adapted their eating-out patterns. Our research shows they tend to eat out less, but spend more when they do. Average spend per meal may have increased year on year to £13.30 from £12.30, including drinks, but frequency of eating out is falling.


  • POSH: Upmarket coffee shops and artisan bakeries and patisseries are performing well.
  • SPEND: People are eating out less, but spending more (average spend is £13.30 from £12.30).
  • SNACKING: Snacking is on the up – which is good news for hospitality as these habits tend to stick.
  • FRESH: Demand for fresh bakery products has increased by 20% since 2011.

At the same time, statistics show the incidence of snacking – that is, buying food at non-traditional meal times – is on the up. Coffee-buying is increasing, as is eating breakfast out of home. Consumers seem willing to treat themselves to coffee, cakes or artisan breads instead of dining out. It’s a small pick-me-up in a generally depressed economy and the good news for the hospitality industry is that these habits tend to stick.

Get Fresh: Bakery up 20% since 2011

So it makes sense for Tesco to capitalise on these trends and for other operators – both retail and catering – to take note. The recently published Lantmannen’s 2013 Bread Barometer Survey reports that consumer demand for freshly-baked bakery products has increased by 20% since 2011 and suggests that the future of bakery lies in freshly-baked bread.

Euphorium Bakery, a chain set up and owned by Daniel Bear, is very much about artisan values. The company’s flagship bakery and café opens on October 7 in Threadneedle Street in London. The bakery produces hand-baked pastries, breads, sandwiches and cakes, as well as supplying gourmet coffee.

In a tie-up with the company, Tesco now has now six Euphorium sites across its London estate and together they have launched The Bakery Project, designed to “restore old-school classics, train apprentice bakers, work with local suppliers and charities, but most of all, make simple, great bread and cakes”.

I have followed this trend for artisan breads, cakes and patisserie since the emergence of some of the early chains, such as Paul, the French bakery and patisserie. Last year, in the UK alone, Paul served 777,504 retail customers through its 30 UK stores, selling some 63,000 cappuccinos and nearly 17,000 large fruit tarts.

High-street operators – as well as their wholesalers and suppliers – need to ensure they have products to compete with these stores, as they may be small chains now but the trends they are setting will influence the rest of the eating-out market in years to come.

Right feel: Service and surroundings are key

But it’s not just the food that attracts consumers to these new chains. Horizons’ Ones to Watch research has charted the growth of artisan coffee shops and patisseries where operators are tapping into the nation’s thirst for good quality coffee and snacks served in a relaxed environment with great ­service.
Cleverly, they build their brands on sophistication, independence and caring about their product. These chains at some point will start to challenge the dominance of Costa, Starbucks and Caffè Nero, the limited food offers of which has given rise to the opportunity. Brands such as Coffee#1, SOHO Coffee Co, Love Coffee and Sacred are never likely to be as big as Costa, but their impact is beginning to be felt.

It’s this feeling of something independent that Tesco has recreated, somewhat disingenuously, with Harris+Hoole. The joint venture with Taylor St Barista has shown dramatic growth, opening 10 sites within five months of its launch in August 2012. This year, our Ones to Watch research found that overall, fledgling coffee brands saw a 132% increase year on year.

Bread buzzword: Artisan up 46% compared with last year

Artisan bakeries and patisseries have also seen huge growth, with brands such as Le Pain Quotidien, the Hummingbird Bakery, Apostrophe, Gail’s, Sacred and Richoux, to name just a few. Artisan bakeries saw a 46% increase in outlet numbers, and patisserie and coffee shops experienced a 30% hike this year, compared with last year. With the impending entry into the UK of the German bakery chain Kamps, which is the largest in Europe, we can see even more impetus for growth.

Consumer confidence is still fragile, and while fears over unemployment are said to be falling, consumers are becoming more fearful about their households’ overall financial situations. This sentiment will drive future change in their eating-out habits.

Operators have worked hard over the past decade to develop new products to satisfy changing patterns in eating out. This innovation, along with improved marketing and money-off promotions, has kept customers coming through the door.

The sector has emerged pretty much unscathed from the recession because of the dynamism and willingness to adapt and change shown by operators and their suppliers. And with the likes of Costa seeing like-for-like sales up 6.8% to February, and Coffee#1 seeing a hike of 3.2% in the year ending September 2012, it seems many have been extremely successful by doing so.

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Peter Backman is the managing director of Horizons, the analyst and specialist information consultant for the foodservice and hospitality sector.


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