British soak up coffee culture

It’s hard to believe, but there it is. Britain has become a nation of coffee drinkers. As sales of ground coffee soar and coffee bars spring up all over the South-east, tea looks an increasingly endangered species.

The public’s growing enthusiasm for cappuccino, expresso and latte is probably a direct result of increased foreign travel over the past 25 years – in other words, its exposure to a decent cup of coffee. But, more importantly, the burgeoning coffee shop phenomenon chimes in perfectly with other social trends of the Nineties: the tendency to graze rather than take formal meals, the increasing number of women in full-time work and the decline of the pub.

Certainly the brewers themselves have been quick to spot its commercial opportunities. Whitbread moved in first and snapped up the Costa Coffee chain for 25m in 1995. And last week, Scottish & Newcastle announced it was investing 21m in expanding it city-centre Rat & Parrot pub chain, which will feature a coffee-bar atmosphere. The significance? To an extent coffee bars can offset declining pub numbers; women find them a more convivial (or less intimidating) environment; they cost a lot less than restaurants to fit out and maintain; and office workers like the convenience aspect.

There are other advantages in the convenience formula. Like premium pricing. Here, Pret A Manger has shown the way by rebranding the scruffy sandwich shop as an outlet which provides consistent, quality products combined with efficient service – for which it can charge well over the odds.

But the smart steel-and-chrome metropolitan retail formula has two obvious problems. One is precisely the fact that it is restricted to city centres, largely in the South-east. While the likes of Whitbread are doing their best to roll the concept out nationally, its ultimate marketing potential may lie elsewhere.

That is certainly the belief of Starbucks, the US coffee house chain which last week acquired the Seattle Coffee Company in a 49m deal. Starbucks intends to rebrand Seattle in its own image, but its ambitions run far beyond creating a simple toe-hold in the UK.

According to chief executive Ally Svenson: ‘There are huge opportunities… for example, we can go into bookshops, we can do kiosks at airports or we can go into huge cafés.’ Starbucks will also attempt to merchandise its fresh coffee brand as a supermarket product. Costa already does so, through Sainsbury’s, and is collaborating with BA’s low-cost airline Go in providing in-flight catering.

The other problem is that the coffee shop phenomenon will lose its froth. At the moment, consumers are unfazed by the idea of paying high prices because of the carefree economic environment. What happens if we move into recession? Or, perish the thought, consumers lose interest and return to drinking tea?

Cover Story, page 28

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