Nowadays we've all got a favorite coffee. "One shot." "Flat wide." "Mocha." "Americana." "Cappuccino." Since
the 1990s when branded coffee bars first hit the UK we've embraced
their caffeinated delights. "We can't get away from the fact that that caffeine is an
addictive product. It's something that we we crave on a daily basis. -They have
lured us away from our traditional home and changed the way we socialize.
Coffee shops created more places for people to stop, take time to snack, use their
laptops and computers, and the pub wasn't always a fashionable place to be. Three
brands dominate the fight for the coffee pound. -We have to have great product,
great stores, and great locations.
If we don't there'll be someone else that will. -I don't think Starbucks are at all
frightened of us. We are a microscopic bit on the proverbial posterior.
We didn't look at cost or Starbucks or try to mimic them at all and for better
for worse we kind of march to our own drum.
But not everyone is head over heels about the boom in big-name coffee shops.
The corporates control everything, is almost the Big Brother scenario. And one company
in particular has got itself into very hot water over tax. I'm not going to buy
Starbucks Coffee tomorrow, I think everyone should go and buy Costa. This is the inside story of the
branded coffee shop world where coffee making is an exotic art, where pricing is
an exact science. -If you really want the cheaper deal, if you really know what you're doing, you can
pay less. And where the coffee shop hot shots are raking in millions from our
love affair with coffee.
At Starbucks on Collinton Road in Edinborough,
baristas Ross, Jason and Louise have an early start. Even at this hour there's a steady
stream of bleary-eyed locals.
People tend to order lattes, cappuccinos, the stronger sort of drinks with more espresso just to sort of
boost their
day.
Starbucks has 750 stores in the UK and over 20,000 more around the world. Last
year its international takings hit a mammoth fourteen point eight billion
dollars. But has came to stress that it cares about the personal touch. -We chose Collinton Road because it's a great opportunity to work within a really good local community. They serve so many
regular customers that just come in and that's really great because they really are a part of that local community.
Usually every morning we have at least tell a good few people exactly by their name, we'll know what they're up to, know what they're up to for the weekend, it's good, we know all our customers.
Starbucks is not the only show in town.
More than 150 coffee shops grace Edinborough's streets. But here as in most places up and down the UK
Costa Coffee, Cafe Nero, and Starbucks are the main attraction. They each seem to have
what it takes to pull us in. -Customers like being in places that serve good coffee, where you can get your wife, where you can have your meetings or you can catch up on a bit of work in a rather cool way, be in a
happy and friendly ambiance. Last year we had over 6.2 million pounds to UK coffeehouses
increase of four hundred million on the previous year.
Retail sales grew by 2.6 percent last year but branded coffee sales went up
nearly four times as much. The average coffee shop customers spent over four
hundred and fifty pounds a year on their habit, and the annual bill for a really
enthusiastic drinker can be up to 2,000 pounds. -On a two coffee day, tha'ts a fiver, easily. So that's what, thirty-five
per week, that's 140 a month, so we're looking at a grand a half, two grand a year. And that's quite a bit of money. I don't
regret it for a moment! With so many big spenders amongst us there is plenty of
money to be made. Here's how the margins shake down. Take a regular cappuccino. The raw
materials, the milk, water and of course the coffee, cost about fifteen P. The cup and napkin cost another 15 pence or so. Then the
staff, the electricity, the shops themselves and of course those fixed
costs add about another 1 pound 20. Plus there's about 45 P of VAT. The average price
of a regular cappuccino is around two pounds 30. So the stores are making a
comfortable profit of around 35 pence per cup.
Not surprisingly, competition for the coffee pound is intense especially between Starbucks and Costa. Costa may not
rival Starbucks' status as a vast global enterprise but this successful British
company is top of the pile in the UK. -Costa has been by far away the most successful
player in the market with now seventeen hundred outlets across the country.
It's growing at about a hundred and fifty to two hundred stores a year which
is phenomenal success.
Almost all of the coffee Costa brews comes from its roastery in Lambert, South London.
9,000 tons of raw coffee beans are process here every year. This is the
domain of Gennaro Pelliccia, Costa's chief copy taster.
It's Gennaro's job to make sure the different types of the raw coffee beans are blended and roasted to make a standard Costa flavor. -Each individual cell we will open up, one after the other, first Brazilian and then Colombian and then some Vietnamese depending on what the composition is.
The coffee's then sent upstairs to one of the two roasters.
Once the coffee's in the roaster, it turns from the green color that we've seen to that brown color.
Costa Coffee's roastery is a very modern facility. But the history of the company goes back to a
time when decent coffee was pretty hard to track down.
Ah. That's better. Never felt like a cup of tea more in my life.
Not for nothing do we consider ourselves a nation of tea drinkers. In the postwar
years Britain's tea consumption was fifty times that of coffee and tea houses
adorned our metropolitan centres. There were coffee bars but they were the preserve
of Italian expats. -Well I was around in the fifties but very very young. But I gained
from my mother was operating as a restauranter in Soho, they were just
pockets. Pockets of Italian immigrants that wanted to bring that culture into
the UK. These Italian espresso bars in stylish Soho drew a new audience to coffee.
They became bohemian hangouts for artists and beatniks.
Do you prefer coffee?
Well truthfully speaking I do, yes.
Are you an abstract artist, may I ask?
No, not yet.
I'm glad to hear that. I'm very glad to hear that.
It was about the coffee bar and the music scene around the coffee bar, so I think it was hip to take a word
from the time,
fashionable and not so much about the quality of the coffee that was there. And
that's why it never expanded and stood pretty still like that for about twenty years.
Enter two Italian brothers with a hankering for coffee.
Costa was founded in 1971 by two brothers, Sergio and Bruno Costa, two Italian
immigrants who came over to the UK, couldn't find the taste of home here so
they decided they would set themselves up as a roasting at wholesale business.
But the Costa brothers wanted a bigger piece of the coffee action. They started to open their own cafes.
The middle classes, though, were not interested in Italian style coffee. "It gives
you that richer smoother taste!"
By now, Brits were infatuated with a totally different type of drink. In the eighties
the UK was the biggest market for instant coffee in the world.
We had heard of exotic Italian coffees, but as the Not the 9 o'clock new team showed in 1982, we
definitely didn't take them seriously.
Just to bring to back to the story, this is early 1979, 1980. So we've introduced espresso machines,
behind the bar. We're in the middle of Kon Garden, loads of construction work going on, I'm behind the counter, the guys have been sent from the buildingside to come in to order some coffees for the guys on the side.
You seen the machine, they stomped in, they said can I have five desperados please. So I said certainly sir. I gave him 5 cappuccinos. He was actually delighted. I had this vision that he'd be going back to the buildingside and saying I've got the desperados boys.
Across the pond, things were not much better. But coffee was about to get a massive makeover.
Seattle in the 1980s and 1990s was the tech capital of the world, the home of Microsoft, Nintendo, Amazon, and Beoing. And it was the birthplace of the grunge alternative rock scene, propelling bands like Nirvana to the international stage.
Into this hotbed of counterculture and innovation burst the biggest thing to hit coffee since the espresso machine. the biggest everything in the stores when she joins Starbucks in 1982 the
It came in the form of Howard Schultz.
the man who would become the godfather of modern coffee shops, the man who made Starbucks.
"In house design center. In terms of all the creative ideas, everything you see in the packaging,
it ultimately ends up in the stores.
When Schultz joined Starbucks in 1982, the company only sold beans, not cups of coffee. It was a trip to Italy that same year that changed coffee culture forever.
As he's walking along these streets in Milan he's noticing just the culture of these Italian coffee
bars and not so much the coffee as the community that they're creating and the
buzz that all hours of the day you've got people coming in and out of these shops.
Standing, having their morning or afternoon espresso and having great very animated
conversation in the streets of Milan. And he falls in love with this idea. -I raced
back from Italy with this
wonder in my eye about re-creating the Italian coffee bar in my own image and bringing it you to
America.
So convinced was he that Schultz took over the company and he opened his first
Starbucks cafe in 1987. -In the very beginning in Pipe Place in Seattle where
they began, they were very homemade, homespun business and that was the appeal.
Schultz shrewdly realized that Americans would not take to the short bitter espressos favored by Italians, so he invented a new
kind of coffee for his coffee houses. -You think about the battle for the American
coffee market. It was to try and get the younger generation away from soft drinks, Pepsi
and Coke, introduce them to coffee. So here we have a drink that's got a caffeine kick. But it's
bitter. Let's put a syrup in. Let's make it milkier. Here so now we've got the caffeine kick,
we've got the sugar content and that was driven by the Americans.
Almost overnight frankly in a city that never heard of a cappuccino or a latte, it
just goes wild. You've got queues out the door and suddenly people in Seattle are
drinking cappuccinos. That was the start of what was going to be a very big movement. Pretty soon
Starbucks cafes were opening on every street corner. Schultz wanted his stores to provide a unique
new environment, a third place.
The third place was really that place in people's lives somewhere in between work and home, giving people a place to come together, giving people a reason to come
together