23 May 2012 Last updated at 10:53 ET

Brains brewery plans to open 30 Coffee #1 shops

The company, which employs around 2,000 people, is expanding its chain of coffee shops.

Wales' largest independent brewer is planning to open about 30 coffee shops over three years as it diversifies from its traditional pub business.

Cardiff-based SA Brain bought the chain Coffee #1 last year.

It comes as new figures show Brains' sales are up nearly 4% in its pubs.

Brains believes there is potential in the coffee market and plans a chain of about 50 outlets over the next three years in south Wales and the south west of England.

The family-run brewery employs about 2,000 people.

Last year's profits are up 6% against what the company described as "a tough economic backdrop".

In autumn 2011, Brains bought Coffee #1, which comprised 15 high street shops in south Wales and the south west of England, and since then, it has opened three more.

'Americanisation'

Brains chief executive Scott Waddington said: "The research suggests that the coffee market is going to continue to grow at 5, 6, 7% for the next five years, which is pretty much what it's been doing for the last five years.

"Coffee in the UK, despite more and more places opening, still has a long way to go to catch up with more developed markets, like the US."

Equity analyst Sam Hart said Brains' decision to diversify into coffee shops was "probably partly a reflection of very tough conditions in the on-trade [bar and pub sales] beer market".

"The on-trade is under pressure from a combination of pressure on consumers' disposable incomes, rising alcohol duties and the increased availability of relatively cheap beer at the supermarket chains," he added.

Mr Hart said the growth in the coffee shop culture in the UK could be viewed as Americanisation.

"Obviously coffee has been ingrained in culture in the US for many years and this appears to be spreading to the UK and other developed markets," he said.

"Many people view coffee as an affordable luxury on which they are prepared to spend, despite pressures on their disposable incomes."