Written by: Valerie Hazelrig
Costa Coffee – the brand we all know and love. If brothers Sergio and Bruno Costa had known what was going to happen as they poured their first cup of coffee in London, 1971, they wouldn’t have slept for days, lying awake on a buzz to rival ten espressos.
Their first coffee was sold to a small group of local caterers and delicatessens, and several years later, they opened their first coffee shop. In 1995, Costa was purchased by Whitbread, and by 2009 the 1000th store opened in Cardiff. In 2009, Costa acquired Coffee Heaven for almost £40 million, and by 2010, the firm surpassed Starbucks like a caffeine-fuelled shooting star.
In 2013, Costa is now the biggest, and fastest-growing coffee shop chain in the United Kingdom, and the brand, much like their brews, is going from strength to strength, with around 80 stores now open in the Emirates, and a further 300 around the world in 28 countries.
Now you can walk into any airport, WH Smith, Tesco, Waitrose, Pizza Hut, Beefeater pub and even hospital to smell the distinct Costa aroma wafting on the air.
But why stop there, when you can take over the self-serve industry as well? Costa Express machines are springing up in thousands of supermarkets, motorway services, universities and transport interchanges – the process may be automated, but the drinks still use the same coffee beans and fresh milk as used in Costa stores.
Tax on taste
In late 2012, the Costa name percolated through the media, thanks to protests and boycotts against Starbucks, its closest rival. The US chain Starbucks hit the headlines because of controversial tax arrangements, and as a result, Costa Coffee sales rose by 7.1%. Thanks to Starbucks’s slightly dubious book keeping, the firm only paid £8.6 million in tax, since launching in 1998 whereas in 2011 alone, Costa paid £15 million in tax; Andy Harrison, chief executive of Whitbread said, “We have been the UK’s favourite coffee shop for some time; we remain the taxman’s favourite coffee shop too.”
Thanks to Starbucks’s tax debacle, Costa enjoyed a record week, although part of the success has been attributed to the weather – cold but dry – perfect coffee shop conditions.
Still going strong
In 2011, Costa defied economic gloom, highlighting the public desire for premium coffee. Despite a downfall in discretionary spending thanks to the recession, Costa enjoyed sales figures stronger than a triple espresso, making it one of the only high street retailers to grow revenues faster than inflation. Indeed, Costa’s sales growth was almost three times as much as analysts had forecast.
A market analyst at BGC partners commented, : “I wonder if this is this another example of the ‘lipstick effect’ — during an economic crisis, consumers give themselves less costly luxuries — cheap treats. So as Britons decide not to buy a new car, they buy a Chanel lipstick (or nail varnish in my case), or a coffee?”
Part of Costa’s success is attributed to its loyalty card – purchase 20 coffees, and get one free. Around 40% of transactions are used to recruit loyalty points – with most cups of coffee costing between £2 and £3, it’s easy to see why bargain-thirsty customers keep their card handy. Costa also serves a variety of hot and cold snacks, including paninis, wraps, toasties, sandwiches, sweetbreads, and cakes. Popping in for a quick coffee becomes more like a restaurant experience, thanks to lavish and tasteful décor, cosy leather seats, free wifi, and beautifully-served cups of coffee, garnished with attractive artwork.
Costa strives to be green as well, and their beans come from Rainforest Alliance Certified Farms. Their paper cups are recyclable, and made using sustainable ink, as opposed to oil-based ink. What’s more, Costa creates hundreds of new jobs, especially for young adults, who face one of the toughest job markets in years. According to Andy Harrison of Whitbread, the 40,000-strong Whitbread workforce was among the most satisfied on the high street, whereas Starbucks has been criticised for cutting back on paid lunch breaks, sick leave, and maternity pay.
However, the Costa name has not been without controversy – in 2011, two shops opened in Bristol, without the correct planning permission. Residents of towns and villages all over the United Kingdom have protested against the proliferation of identical stores, which could perhaps could detract from the unique nature of an area. In 2012, the residents of Totnes in Devon campaigned against the opening a store and won for precisely this reason.
So whether you see Costa as a brown stain on the high street, or a vital part of the UK economy, it’s impossible not to wake up and smell the Americano : please raise your recyclable cup and toast Costa, the UK’s most successful coffee chain.