David Prosser: Britain won't kick coffee
Wednesday 08 July 2009
Outlook The only surprising thing about the news yesterday that Coffee Republic has gone into administration is that the chain had managed to survive this long, given the problems it has had with its franchise expansion programme. But while the company understandably blamed the recession for its problems, the amazing reluctance of consumers to give up their expensive lattes and cappuccinos had sustained Coffee Republic, probably for longer than it deserved.
Down the high street at Whitbread-owned Costa Coffee, for example, business appears still to be booming, with the group posting sales growth even at the worst moments of the slowdown. That cash-strapped consumers are still happy to shell out upwards of £2 for a fancy coffee breaks all the rules of economic rationality, but there you are. Even Starbucks, the global giant which has run into problems with many of its international operations, hasn't seen much of a slowdown in the UK (not that this stopped founder Howard Schultz getting into a row with Lord Mandelson over the state of the British economy earlier this year).
Coffee, it seems, is the new lipstick, the consumer good that people used to continue buying even during the worst of times as a little treat to cheer them up.
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