Revolution Brewing
It is teatime on a summer afternoon, and Philip Lazenby, an accountant from Yorkshire, has just met up with a mate for a good, rich cup of coffee.
Actually, it’s an iced latte. Following the lead of his coffee-wise friend, Lazenby selected it from a menu of fancy espresso drinks he had never seen before that are served with a smile at the American-style Seattle Coffee Co.
“Where I come from, we don’t have coffee shops like this,” Lazenby said, eyeing the indigo and gold walls and the array of flavored coffees they advertised. “Seattle is ‘Frasier’ country, isn’t it? They’re always going out for strange coffees.”
Coffee is no stranger to London these days. Once-exotic java drinks are becoming familiar to the British palate at coffeehouses and espresso bars that are sprouting almost as fast as they can be counted in London and, increasingly, in cities throughout Britain. Britain’s economic boom, the move toward an integrated Europe and the arrival of a few American entrepreneurs all are feeding the coffee craze, market experts say.
Ally Svenson, who opened the first Seattle Coffee bar with her husband, Scott, three years ago, says retail outlets now number “63 or 64--I lose count”--in the chain they sold to Starbucks Coffee Co. this spring for stock worth about $85 million.
They will open a couple dozen more coffee bars under the Starbucks name this year and gradually convert their existing coffeehouses to Starbucks outlets.
Competitor Costa Coffee, with about 90 stores, expects to open 40 more by next February. Coffee Republic, with 20 espresso bars, went public in March to raise $14 million for expansion to 35 by next spring.
“There are about 250 espresso bars around the U.K. now, and we think the market is ripe for about 1,500,” said Bobby Hashemi, who started Coffee Republic with his sister, Sahar, in 1995.
Selling tea-drinking Britons on coffee has been a lot easier than even these entrepreneurs expected because Britons already drink coffee--instant. About 90% of the coffee consumed in Britain is instant, the reverse of countries such as the United States and France, where people drink it fresh-brewed.
“We haven’t had to convince anyone to switch from tea to coffee,” Hashemi said. “All we’re doing is upgrading their coffee experience.”
In other words, give them better coffee and, hopefully, they will develop a taste for more of it. Britons drink about 5 1/2 pounds of coffee per capita per year, or less than half as much as the French, Hashemi said. “There is a huge potential to expand their taste in coffee.”
In fact, Britons were coffee drinkers before they ever adopted tea as a national beverage. The first London coffeehouse was established in the 1650s, before such places became popular in the United States, and there were 2,000 coffeehouses in London by the turn of the 18th century. Seen as a substitute for alehouses, they flourished as political, literary and business hubs until the late 1800s, when tea-drinking, promoted by the East India Co., became more fashionable.
During World War II, American GIs invited to British homes for weekend meals often showed up with gifts of coffee rations, unaware that their hosts had no experience with coffee and no coffeepot. In the 1950s, companies such as Nestle mass-marketed instant coffee, which became popular among the British public.
Now Seattle Coffee and the others are making fresh-brewed coffee fashionable again, particularly among Britain’s young, upwardly mobile set.
“People are drinking better-quality coffee,” said Martin Wattam of the International Coffee Organization in London. “So far, this is pretty focused on London, and it is gradually spreading out to most major cities. I guess it will take a couple of years more before it takes hold of the market overall.”
Some attribute the cafe craze to a continental influence. A united Europe is bringing French-style patisseries and Italian cafes to London, which has seen a proliferation of sidewalk tables. Feel-good Britons are out of their houses, outdoors and acting more like their southern neighbors.
Costa Coffee, founded in 1978 by two brothers from Parma, Italy, tries to appeal to European tastes with its dark wood and brass cafes and “an Italian [employee] in every shop,” according to marketing manager Barry Clarke. He calls instant coffee “powdered rubbish” and says he would never serve it at Costa Coffee, where drinks tend toward Italian-style espresso and cappuccino served in porcelain cups instead of paper, and away from the frothy, flavored American drinks.
Some Britons are dismissive of American gourmet espressos.
“I don’t share the optimism about the expansion of coffee drinking in Britain,” said Edward Bramah, founder and director of the Bramah Tea & Coffee Museum in London.
“People should go back in time and see what the standards were--the quality of tea and coffee is not the same as it was 40 years ago. The market is not educated. People will drink some milky drink and call it coffee,” Bramah said. “To make a really good cup of coffee, you need a light roast to get all the flavor out of it. The Arabs knew how to make it.”
Nonetheless, America and Americans have had a definite impact on the British coffee bar scene. Britons travel to America, where they taste the likes of Peet’s and Starbucks. And two of Britain’s chains were founded by Americans and reflect American tastes.
“Ours is a marriage of the best of the U.S.--the wide choice of coffees, the quality and customer service--with the environment we feel Europeans are comfortable in, the buzzy, high-energy spirit of a Milano espresso bar,” said Coffee Republic’s Hashemi, 34, a former investment banker from New York.
The Svensons, who moved to London from Seattle to take jobs in investment banking and marketing nine years ago, said they founded their Seattle Coffee Co. out of self-preservation--they were dying for the kind of latte they had grown accustomed to in Starbucks’ hometown.
They kept expecting someone to fill the void, but when no one did, Ally Svenson quit her job to research the coffee business.
They telephoned Starbucks about starting up here but found that Britain was not the company’s international priority at the time. So they founded their own “Seattle-style” coffee company with an initial investment of about $170,000.
Their first coffee bar opened in Covent Garden in April 1995. “It was the hottest summer in years, we had no air conditioning, no way to install temporary units--everything was wrong, but it worked in two seconds,” Svenson said.
Clearly modeled after Starbucks, Seattle Coffee Co. stores offer a range of options that Britons were not used to seeing: short, tall and grande drinks, regular or low-fat milk, regular or decaf coffee and a variety of flavors.
Svenson said the merger with Starbucks was natural. “We knew that we would either have to go head to head or join forces with them, and we feel it is more fun to do it together. We feel like we’ve been keeping the streets warm for them,” she said.
Hashemi of Coffee Republic sees Starbucks’ arrival as a positive development, saying, “It takes someone with the wherewithal of Starbucks to educate the public. It will expand the market.”
