Branded coffee bars are threatening independent coffee shops in their quest to expand outside London, according to retail analyst Allegra Strategies.

Allegra said the regions were outpacing London's saturated coffee market, growing by 7.2% to 1,525 outlets in the seven months to January 2005.

Growth was more sluggish in the capital, where the number of outlets in the branded sector reached 903 - a 2.8% growth on the same period last year.

Overall, branded chains grew by 5.6% to 2,428 shops to January 2005 and now make up 29.1% of the coffee market.

Costa: fastest expansion outside London

Whitbread-owned Costa Coffee expanded its market share most outside London, grabbling 16% of the market with a total of 244 outlets outside the capital.

Expansion was slower among the independent sector, which grew by just 2% in the same period to 4,738 outlets.

"There is evidence from property companies that branded firms are buying up independents, or that independents are closing down," said Allegra consultant Jamie Edmonds.

Report highlights:

• Starbucks remains the UK market and brand leader with a total of 430 outlets. Costa Coffee was next with 346 outlets and Caffè Nero (198 outlets) third.
• Coffee Republic, which has lost 5% of the market since 2001, has closed another 10 non-core bars since June last year.

by Shirley Kumar

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