Costa owner Whitbread's shares slump as analysts say the end of coffee chain growth is in sight

 
Alys Key
Follow Alys
Coffee Shop Drinks Found To Contain Excessive Amounts Of Sugar
Citigroup predicted the end of growth for the big three coffee chains (Source: Getty)

Shares in Costa owner Whitbread slumped today after analyst Citigroup downgraded the firm and said the end of growth for coffee chains was in sight.

Whitbread shares dropped as much as three per cent this morning after Citi double downgraded the firm from "buy" to "sell". Whitbread was trading down 1.4 per cent at time of writing at 3,722p

‚ÄčRead more: Costa owner Whitebread has been boosted by Premier Inn

Analysts said in a note to clients that it had "debunked the coffee growth myth", and asserted that the end of expansion was in sight for Costa, Caffe Nero, Starbucks and Greggs.

Citi forecasted that there was just four or five years of structural growth left in the branded UK coffee market.

Shares in Greggs fell slightly this morning but were trading 0.5 per cent above the previous close during the afternoon.

Read more: Starbucks cuts end-of-day food prices

Caffe Nero is not listed, while Starbucks has yet to open on the New York Stock Exchange today.

Whitbread also owns the Premier Inn hotel chain, which Citi said was threatened by the encroachment of Airbnb onto the overnight stay market.

Analyst Monique Pollard said Whitbread's growth was limited to the UK, and it should invest in international growth in order to maintain expansion. But she said this strategy "carries obvious risks".

Read more: Greggs is gaining as healthy eating range helps to drive up sales

Related articles