Converting a nation of tea drinkers to coffee will be a tough job. But it has been done before. In 1995, when UK conglomerate Whitbread bought CB Costa Brothers Coffee from Sergio and Bruno Costa, tea was the UK’s favourite hot drink. “At home, people drank instant. If you were lucky, you’d get a filter coffee or a shot from a Rombouts machine in a pub or restaurant,” said Bob Tyrrell, who did extensive market research at the time. Costa had just 41 shops then, turning over £55m. Whitbread thought the market might be worth £600m a year, and paid about £20m for Costa. Two decades later it has more than 2,000 outlets, making it the UK market leader by some distance.
Total revenue from the country’s 24,000 coffee shops and cafés is estimated by Allegra World Coffee Portal at more than £9bn. This week, Whitbread bowed to pressure from two activist investors and confirmed it would demerge Costa from its other activities — but not before it has set the company up for a big push into China, another country with a long tradition of tea-drinking. Costa aims to have total annual sales of £2.5bn by 2020, with a third of them coming from overseas. Drinking good coffee became a preoccupation of the connoisseur British consumer of the late 1990s. “It wasn’t so much keeping up with the Joneses as keeping away from them.
People wanted to consume things they could talk about,” said Mr Tyrrell. Other factors were at work, too: disposable incomes were growing, low-cost airlines meant more people were experiencing “proper” coffee in mainland Europe and workers were starting to abandon breakfast in favour of food on the go.