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Coffee shop revolution continues to stimulate the high street

Category : Business

The UK already has 15,000 coffee outlets and is about to get thousands more thanks to our increasingly sophisticated taste

If the Queen ever feels like popping out for a flat white or caramel frappucino she has plenty of options close to home. There are 21 coffee shops along the short stretch of Buckingham Palace Road between the palace and Victoria coach station.

The phenomenon is not unique to the Queen’s neighbourhood – coffee shops are taking over high streets up and down country. Holloway Road, north London, boasts the most at 24, followed by 23 along Gloucester Road, Bristol, according to the Local Data Company.

There are more than 5,000 branded coffee shops in town centres, retail parks, railway stations, airports and even drive-thrus along motorways across the UK, and last year they served up £2bn of coffee – double the sales recorded in 2005. Add in the independently owned coffee shops – another 5,500 – and the near 5,000 that have rapidly sprung up in outlets from corner shops to Wetherspoons pubs, and there are already well over 15,000 places to find a caffeine fix.

And experts say the march of the coffee cups is far from over. Jeffrey Young, managing director of coffee analysis firm Allegra Strategies, predicts there will be more than 7,000 branded coffee shops within the next few years and nearly 18,000 outlets including independent and non-specialist shops. The 12 pubs a week currently closing are being more than offset by coffee shop openings.

The coffee revolution began when Italian brothers Sergio and Bruno Costa opened their first shop on Vauxhall Bridge Road (a stone’s throw from Buckingham Palace) in 1978. Costa is now by far the biggest player in the market with almost 1,400 UK stores serving 450,000 coffees a day.

Andy Harrison, chief executive of Whitbread, the FTSE 100 company that bought Costa from the brothers for £20m in 1995, this week announced plans to increase the company’s estate by another 350 stores – creating 3,500 jobs – by March 2013.

Even then Harrison won’t be satisfied. He reckons there is the “potential to get to 2,000″ in the next few years. To achieve this, Harrison says, many of the shops will be within spitting distance of each other. “People really don’t want to walk very far for a coffee,” he says. “We can have them a couple of hundred yards apart on a really busy high street, then another at a retail park and another at the station.”

Despite the UK falling into a double-dip recession, consumers are increasingly prepared to pay £2.50 or more for a cup of coffee. In the 13 weeks to the end of May, Costa’s like-for-like sales jumped 8.4%. Last year Costa’s profits rose 38% to £70m.

Harrison says this has been achieved by giving coffee a classless consumer appeal. “The customer profile has massively expanded. There was a time when this was a habit of the middle classes, but now it is a mainstream activity. It has become part of people’s daily lives,” says Harrison, whose own preference is for cappuccinos “with lots of chocolate sprinkles”.

Research by Allegra Strategies found that just 16% of the population shun the coffee shop lifestyle. “It’s amazing how things have changed over such a short period,” Young says. “When we published our first report in 1999 people were saying the market was already saturated with 700 branded coffee shops – now there are 5,000 and we are forecasting there will be 7,000 in the next few years.”

As with wine, upmarket coffee consumers are increasingly snobby about the origins and preparation of their brew. “People know their beans more and more. There is a huge and growing knowledge and interest in the provenance of the bean, where and how it has been roasted, whether it has been washed or not, which sort of machine it has been ground on.”

Despite the expansion of coffee chains, the independents are growing strongly too, largely due to this snobbery. On Saturdays, queues regularly extend out the door, down the road and round the corner at Monmouth Coffee in Borough Market, near London Bridge. Monmouth, which began roasting coffee at its tiny shop in London’s Covent Garden in 1978, allows customers to taste a handful of single estate coffees before buying. “We travel extensively throughout the year, visiting the producers and cooperatives with whom we currently work and looking for interesting varietals of coffee and new farms from which to buy,” says the leaflet handed out with every purchase.

One of the strugglers in the British coffee market has been US group Starbucks, which has consistently failed to turn a profit in the UK. Run in the UK by Kris Engskov, a former aide to President Clinton, the chain is undergoing a radical image overhaul to make it appear more British. It has stripped back its garish logo, doubled the strength of espresso-based drinks and begun to ask customers their names when they order. Sales jumped by 9% the week after the change this year.

But it’s not just the coffee itself that has changed. The word barista is in growing usage for the counter staff (Britain boasts two world champions) serving a range of coffee from flat white (an antipodean version of the latte in which the steamed milk is served from the bottom of the jug) to cortado (an espresso cut with a small amount of warm milk to reduce the acidity). According to Starbucks the average barista is aged 24 and works 30 hours a week.

“It’s similar to when cooks became chefs; you don’t ever see people call anyone a cook any more,” Young says. “They [baristas] are highly trained. People used to just work in a coffee shop and do everything from wiping the floors to cashing up. Now they aspire to be a dedicated barista. Careers in coffee are now a reality.”

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