Less stars for your buck, but more Italian brio with your Joe.

20May09

While the economy has gone from bad to worse over the last year, some brands have performed stronger than ever. While tobacco and alcohol sales go up during hard times, brands such as Tesco and Costa Coffee have also been thriving.

But competition is hoting up between the coffee shop chains. Starbucks in particular have been closing stores in the UK and around the world.

Starbucks close at Fenchurch Street

Starbucks close at Fenchurch Street

Starbucks close at Golden Square

Starbucks close at Golden Square

The fight for coffee chains to succeed in the UK appears to be coalescing around the brand idea of authenticity, perceived product origin and the in-store experience. Italian-style coffee, in particular, appears in demand. The association between Milan and fine coffee in particular may be seen as a stamp of quality.

But as coffee beans aren’t Italian and the beans are commodity traded from around the world, what is making a difference to consumer choice?

The major coffee house chains typically buy beans that roast to provide a cup of coffee that scores between 82-84 on the scale from 0 – 100 used in rating coffee quality.

So, with this assumption that the base product is of fairly uniform quality. What is differentiating the performance of the various coffee shop chains – as in the UK some are stalling badly (e.g. Starbucks), whilst others continue to open more stores (e.g. Costa)?

I’d suggest four key attributes are affecting performance:

Flavour
How the coffee and food tastes – and the coffee served at Lantana off Charlotte Street in London is still the best from my point of view.

Location
Store location and the proximity of competitors makes an impact on store profit.

Brand
The authenticity, heritage, style and design image captured in the store, presentation and service from its staff and everything down to the very mug the beverage is served in.

Price
This one is interesting, because while Starbucks are failing Costa claim they offer better flavour and a better price. If price were measured in a broader mix, including traditional mom and pop coffee shops and cafes, rather than just the chains. It is possible to spend 30-50% less if you shop in an independent cafe rather than a coffee shop chain. So price is a relative point measured between the major chains.

Personally I still believe Costa serve the better coffee, compared to Starbucks, Cafe Nero and Coffee Republic. But I’m possibly influenced not just by the taste, but by my memory of the Costa pitch BBH put together whilst I was working there in 1999/2000. I believe the pitch team rightly suggested magnifying the authentic Italian heritage of the Costa chain.

Brera are a new kid on the block, compared to some of the large chains. They are clearly focusing on their win at a coffee tasting challenge last year in Milan. I look forward to trying them soon, as I can’t go a day without a good coffee.

Brera Coffee Shop at Fenchurch Street

Brera Coffee Shop at Fenchurch Street

Brera 'Best Coffee in Milan'

Brera 'Best Coffee in Milan'

ILLY

ILLY

But you can’t just drink coffee from the high street of course. So I recommend Illy as a great product for coffe at home.

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