Branded coffee chops will continue to expand despite 'recent negative sentiment' towards the sector, reports market researcher Allegra Strategies.

Operators are pursuing opportunities in regional cities and affluent towns, but outlet growth will slow to a forecast rate of 14 per cent until December 2004, due to increasing competition and a drive for profits by major operators.

This cautious expansion will still propel the branded coffee bar sector, according to Allegra, including Costa Coffee, Starbucks and Pret a Manger. Total outlets are set to increase from 1,866 to over 2,600 by December 2004.

Allegra says efforts to win consumer loyalty are likely to increase in the next year as competition tightens.

Turnover in the branded coffee market reached an estimated £705.1m last year, with revenue from coffee beverages estimated at £298.6m. Within this, Allegra says revenues for coffee-focused players and food-focused players reached £377.1m and £328m respectively.

Consumers continue to rate location as the main reason for choosing a coffee shop, but are visiting more regularly, with 21.5 per cent making daily purchases.

Outside the home, UK consumers' favourite drinks are cappuccinos and lattes. Nearly 4.4 million cups of expresso-based drinks are bought each week.

Starbucks and Costa were the most recognised consumer brands and were also the UK's most visited coffee shops. Caffe Nero was voted the best in terms of coffee quality, atmosphere and environment; coffee republic was also commended for quality and atmosphere.

Pret a Manger and EAT were highly regarded for food quality and speed of service, but independent operators were the most preferred overall for service. Details: Allegra Strategies +44 (0)20 7691 8800