Tuesday 16 January 2018

Costa Coffee sales growth slows but timely 'cold brew' rollout cheers Whitbread

File photo dated 22/02/13 of mugs in a Costa coffee shop, as Whitbread said it had rolled out its new
File photo dated 22/02/13 of mugs in a Costa coffee shop, as Whitbread said it had rolled out its new "cold brew" and cooler drinks in time for this month's heatwave, but revealed a further slowdown in sales growth at its coffee shops. PRESS ASSOCIATION Photo. Issue date: Wednesday June 21, 2017. The group said like-for-like Costa sales grew by 1.1% in the first quarter to June 1, down from 2% growth in the previous year. See PA story CITY Whitbread. Photo credit should read: Joe Giddens/PA Wire

Holly Williams

Costa Coffee owner Whitbread said it had rolled out its new "cold brew" and cooler drinks in time for this month's heatwave, but revealed a further slowdown in sales growth at its coffee shops.

The group said like-for-like Costa sales grew by 1.1pc in the first quarter to June 1, down from 2pc growth in the previous year.

Whitbread saw a stronger performance in its Premier Inn hotel chain, where comparable sales rose 4.7pc, which helped overall group sales lift by 2.9pc in the quarter.

Alison Brittain, chief executive of Whitbread, said the group had seen a "good start to the year".

She said the firm was "focused" on its plans at Costa, rolling out the "cold brew" in more than 200 stores, while its latest summer Frostino and cooler drinks went on sale this month just as temperatures have soared.

Whitbread warned in April over tougher consumer conditions for its new financial year, while its Costa chain is fighting back against competition from artisan cafes.

Costa launched its new breakfast range towards the end of its first quarter and more food ranges are planned over the coming months.

The group is looking to overcome tougher trading with more expensive finer coffee concepts, while also expanding rapidly overseas and installing more Costa Express machines, with a net 300 opened during its first quarter alone.

Whitbread also continued adding a raft of Premier Inn rooms, with more than another 1,000 rooms since March in the UK.

It plans to open around 4,200 hotel rooms, 230-250 Costa coffee shops and install around 1,250 Costa Express machines this financial year.

Shares in Whitbread rose 5pc after the update as Ms Brittain said she has "confidence that we will make further good progress this year".

But Neil Wilson, at ETX Capital, said: "In a heatwave a hot coffee doesn't quite hit the spot, so Costa-owner Whitbread will be hoping its Cold Brew and Frostino products will catch on.

"They will need to - like-for-like sales growth at Costa continued their slow decline as the nation switches to a wider array of pricier artisan coffees."

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