Costa aims to stir up debate

Costa coffee is fighting its corner in an attempt to get more customers drinking its frothy coffee as people cut their spending on non-essential items.

The chain is using bold advertising tactics in an attempt to steer coffee drinkers away from its rivals. In its first national campaign, it claims the majority of coffee drinkers prefer the taste of its cappuccino, with a provocative slogan stating: “Sorry Starbucks, the people have voted”.

But with more people choosing to brew their blend at home or buy their takeaway from cheaper independent cafe is Costa right to attack its large-scale competitors?The chain has chosen to emphasise the quality of its product over price, based on insights from independent research it commissioned, which has led the brand to emphasise “education” and “agitation” in its marketing.

Jim Slater, marketing director at Costa, explains: “Most coffee drinkers believe that all coffee is the same. We want to destroy that myth.”

In the spirit of “education”, Costa is highlighting online video pieces from its managing director, to in-store point-of-sale material to talk about the provenance of the coffee. For “agitation”, the company is telling people it makes better coffee than other chains.

Starbucks is fighting back, however, with its own campaign telling consumers that its coffee isn’t as expensive as they might think. It has also launched an instant coffee brand – Via – which is being test marketed in some outlets.

Slater claims that talking about quality will distinguish his brand far more than talking about price. “Consumers are becoming more discerning,” he says. “This is fantastic news for us because there isn’t any significant price difference between the coffee chains, meaning quality is becoming a more important discriminator.”

Comparative marketing is already common in the supermarket sector, but Costa’s Slater denies the coffee sector, which usually promotes an upmarket, cosy image, will descend into tit-for-tat slanging. He claims that more ad noise from the chains is likely to get people talking about coffee, which is a positive result for everyone. This may also keep people buying chain-shop coffee rather than trading down to home-made versions.

“Any discussion around product is fantastic news for us,” admits Slater. “We are happy to stimulate a debate on product because it is Costa’s point of difference.”

Starbucks does not appear to have responded to this salvo, but chief executive Howard Schultz says the company wants to make sure it is the company putting out messages about its brand, rather than letting rivals do so. “We’ve been silent about these issues, but I can assure you we’re not going to be silent for too long,” he says.

Costa’s advertising seems to have had the desired effect, getting people talking online. The buzz around the brand has reached its highest level in six months, according to the YouGov BrandIndex. But Mintel cautions that the growth of the coffee shop industry is slowing as consumers cut back.

While Costa’s sales grew by 25.6% to 123.2m, Mintel’s research claims: “There are growing signs that the economic downturn is beginning to affect Costa’s business – at the end of the third quarter of 2008/09, sales growth had slipped to 22.6%, largely driven by new store openings.”

Costa is still steaming forward with store openings with an aim of 1,050 by 2012, split into 700 company-owned stores and 350 franchised sites. But the Mintel report notes: “It seems likely that this may mean it will have to moderate its outlets target.”

Like many brands in the present economic climate, Costa is ramping up its PR activity to help push its name out into the public domain. One high-profile story that made headlines recently was that of Costa’s chief coffee taster Gennaro Pelliccia insuring his tongue for 10m.

This, says Slater, is part of the overall education side of the marketing strategy to reinforce the quality of its product.

The strategy of agitation and education will continue throughout 2009, as Slater believes this is the strongest way to boost the brand during the recession. “We need to have a confident punchy campaign to agitate people into talking about coffee,” he enthuses, with the aim “to get more people buying Costa, more of the time.”