Per Harkjaer: Drink up, the coffee revolution has begun

Britain is about to be transformed, capsule by capsule. United Coffee's chief executive spills the beans to James Thompson

Even the most myopic of UK consumers could not have failed to see the huge proliferation of coffee shops, from the big chains to trendy independents, over the past decade. In British households, however, a bigger change in coffee consumption is under way which, so far, has largely been powered by Nespresso's branded premium coffee machines and capsules.

It is this market that Per Harkjaer, the chief executive of United Coffee, one of Europe's biggest independent coffee firms, now has his eyes firmly on. He says: "I am not expecting a revolution – I am already seeing a revolution. I have been in food and drink all my life but I have never seen such a change in consumption behaviour as I have seen in coffee worldwide." He adds that Nespresso started a trend which "a lot of us are going to follow".

Founded in 1818 and called Drie Mollen until a name change last March, United Coffee's UK retail customers include Waitrose and Tesco, which sell its coffee under their own brands. It also supplies coffee to quick-service restaurants, including Subway and McDonald's UK, as well as Compass in the food service market. United Coffee roasts 60,000 tonnes of coffee a year and buys 1 per cent of the world's exports.

To take the fight to Nestlé-owned Nespresso, United Coffee this week unveiled an espresso coffee capsule machine and coffee for the retail market. The company, which is based in Geneva, is targeting a pre-Christmas launch this year for the product, which it aims to sell through its retail customers in the UK, Netherlands, France, Spain, Germany and Scandinavia.

Mr Harkjaer, who was the chief executive of Findus Group for five years before joining United Coffee in September 2009, explains the scale of the opportunity in the "one-portion" market by saying that capsules account for only 20 per cent to 25 per cent of total expenditure on coffee consumed at home, in Europe as a whole. The figure for the UK is around 10 per cent lower. The one-portion market is growing by an estimated 30 per cent a year.

However, there is far more to United Coffee's strategy than premium machines. While half of the European coffee market is covered by the big multinationals, such as Kraft, Nestlé, Sara Lee and Lavazza, Mr Harkjaer says: "The other half of the market is absolutely, totally and utterly non-consolidated and our role in life is to be the leader in that part of the market." He adds it plans to do this by supplying retailers and the out-of-home market, "which is anything from McDonald's in the UK to a tapas bar in Spain".

This strategy has underpinned a recent acquisitions binge and the name change to United Coffee to help make it a "truly international group", says Mr Harkjaer.

He adds that it made 19 small acquisitions last year that were mainly local roasters in Spain. The UK has only about 30 coffee-roasting firms, but Spain has more than 200. "The acquisition strategy is to be the consolidator in the sector," says Mr Harkjaer, whose company has its own roasting plant in Dartford, Kent, and several others in Europe.

Nowadays, however, coffee companies of all sizes have to contend with record prices for coffee, which has been subject to "extreme volatility" in recent years, as hedge funds have become major traders.

For instance, the price of Arabica coffee on the New York Mercantile Exchange was trading at around 231 cents per pound this week, compared with a low of 130 cents 12 months ago.

"The price is not driven by supply and demand. Trading on the stock exchange is mostly non-physical coffee. So hedge fund involvement in commodities is very much a determining factor of where commodity prices go," says Mr Harkjaer. To prove this, he says the last harvest from Brazil was the "highest ever".

He adds: "The impact of hedge funds involvement is greater than it was. This is a change that has taken place only over the last 12 months, though it has been coming for years. Therefore, I would hate to run a little family company where you cannot predict the cost of your raw materials."

United Coffee, whose other retail customers across Europe also include Carrefour and Lidl, has been through plenty of change itself in the past few years. In January 2008, United Coffee was acquired by CapVest, the London-based private equity firm, from Gilde Buy Out Partners and AAC Capital Partners.

Then in August, United Coffee revealed it was moving its head office from the Netherlands to Geneva, although it already had a substantial presence in the Swiss city.

Mr Harkjaer says the company considered moving to London, but uncertainty over the "tax regime" and "financial environment" in the UK put it off when it made the decision a year ago.

"It looks better today. [But] in the last three to six months of the last government the outlook for the UK did not look particularly business friendly. It was the uncertainty. If you run a business like this you hate uncertainty."

Mr Harkjaer is clearer about the massive changes that have occurred in the UK, which still is an "enormous" market for instant coffee.

He puts this down to the impact of the big chains. "The UK is a European market but the professional coffee shops, such as Starbucks, Costa and Caffè Nero, have had by far a bigger success over the last 10 years. They have changed totally the perception of a good, quality cup of coffee for British consumers."

His hope is that the likely introduction of United Coffee's espresso capsule machine later this year will drive further change in the market. "Historically, the British consumer would not have had a coffee machine at home, as they would on the continent. We think that is already changing a lot with the introduction of capsules." Certainly in the coffee capsule market, Mr Harkjaer is drinking to a "revolution".

Life at Mars... and beyond

Like so many chief executives in the food and retail industry, Per Harkjaer cut his corporate teeth at the consumer giant Mars between 1987 and 1994. His last role there was as a special marketing director in the US. The Dane then joined Rémy Cointreau before taking on senior roles at Unigate and Toms Confectionery. In 2004, he took the chief executive job at Findus Group, where he first came across CapVest, the private equity firm that acquired United Coffee in 2008. Mr Harkjaer was reunited with them at United Coffee in 2009.

Chelsea and a serious handicap

When asked what they like to do when they are not at work, many chief executives mention golf and spending time with the family, and Mr Harkjaer jokes that he is no exception. For the record, his handicap is a precise 23.4. As a Chelsea fan, he is fortunate to live in leafy Oxshott, Surrey, close to the football club's training ground. He often sees many of the players on the local high street. Unsurprisingly, Mr Harkjaer likes to read business books; right now he's reading one on a Danish bank.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs People

Ashdown Group: HR Assistant (Events business) - Central Manchester - £20K

£18000 - £20000 per annum + Benefits: Ashdown Group: HR Assistant (Events busi...

Recruitment Genius: Project Engineer

Negotiable: Recruitment Genius: This privately-owned company designs and manuf...

Recruitment Genius: Human Resources Officer

£22000 - £25000 per annum: Recruitment Genius: An opportunity has arisen at th...

Ashdown Group: HR Manager - London - £40,000 + Bonus

£36000 - £40000 per annum + Bonus: Ashdown Group: HR Manager (Generalist) -Old...

Day In a Page

Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace