Coffee shops jostle in crowded UK high streets

* Industry seeks to build frequency of customer visits

* Coffee culture here to stay

By David Brough

LONDON, April 22 (Reuters) - Innovation will be essential to prevent saturation in the crowded UK coffee shop industry, senior executives said on Thursday.

Executives attending the two-day UK Coffee Leader Summit said an improvement of the customer experience, introduction of new products such as the "flat white" coffee, and progressive customer loyalty strategies were vital to push future growth.

Britain's high streets are populated by several coffee shop chains, such as Starbucks (SBUX.O), Whitbread Plc's WTB.L. Costa Coffee and Caffe Nero, as well as independent retail outlets, as coffee drinking culture has become more mainstream.

According to Paul Ettinger, head of international food and beverage at Caffe Nero, London has 3.6 coffee shops per 10,000 people, compared with 1.8 in the UK as a whole and 2.5 in Seattle, home of Starbucks.

"That would indicate that there may be a few too many (coffee shops) in parts of London," Ettinger said.

He said he expected growth in the coffee shop sector to slow but ruled out a market decline.

"We're here to stay," he said.

John Derkach, managing director of Costa Coffee, said that on average Britons visit coffee shops around 8 times a month, and that 47 percent of UK adults visit a coffee shop each month.

"This means that about half the people don't visit coffee shops," Derkach said.

"That's a tremendous opportunity for our industry."

Derkach said the coffee shop industry needed to work on building the frequency of customer visits.

However, he said the industry needed to be more innovative to trigger growth.

"The rate of change (innovation) is nowhere near enough to keep up with a maturing industry," he said.

Starbucks, the first chain in the UK to serve the "flat white", is focused on refreshing stores to lure customers, improving the customer experience, introducing new products and providing good-quality coffees, senior executives said.

"The trend for good quality is unstoppable," said Amanda Royston, Starbucks' head of marketing in the UK and Ireland.

"Quality is something that people are willing to pay for."

U.S.-based chain Starbucks (SBUX.O) plans to open more than 50 coffee shops in the UK and Ireland in 2010, its Managing Director for the UK and Ireland, Darcy Willson-Rymer, said on Thursday. [ID:nLDE63L188]

(Reporting by David Brough. +44 (0) 7990 568064. Editing by William Hardy)