The Times, December 2010
We have seen the rise and rise of coffee shops in the past decade, with the big chains storming through the recession, and experts predicting there will be 12,500 coffee chain outlets in the UK by the end of 2012. No longer the mug of weak instant for us. As the market has grown, so too has the competition, at both ends of the spectrum. High end, independent options with their premium and artisanal blends have proliferated. And McDonald’s has stormed into the marketplace ever since it started offering freshly ground coffee in 2007 and is now the biggest seller of coffee in the UK.
As the competition intensifies it will increasingly be fought on multiple fronts. Of course on quality, service and price, which our research confirms are the most important factors driving choice, in that order. But also increasingly on the other factors that enter the decision-making mix, from the healthiness of the options they offer to the treatment of suppliers and workers, to the availability of fair trade and organic options.
The big coffee shop chains are not oblivious to this. And nor have they been resting on their laurels. But the strategy they have adopted does have some weaknesses.
What they have done is to focus in on one issue – fair trade, and make sure their activity is plain and evident for their customers to see. This has definitely had an impact. Indeed, we have seen a ten point rise in the number thinking coffee shops such as Costa and Starbucks are doing enough to tackle social and environmental issues in the past year, now hovering around the 50% mark.
Moving forwards, however, this single issue focus from a consumer-facing perspective may leave them vulnerable on the other issues which enter the mix, particularly given the nature of their competitors. The healthiness of options is one hot spot, particularly given the enthusiasm we see for calorie information on menus. McDonald’s consumer-facing activity focuses on a whole raft of issues, including health. This has been key to its recent resurgence. And the niche players tend to put all their values centre forward as a point of difference.
The Costas and Starbucks of the world might want to take note. Fair trade coffee may have given them enough buzz to date. But whether it’s enough to sustain them into the future is altogether another question.
