Espresso Warehouse - Newsletter 7

Espresso Warehouse Newsletter - Issue 7

Europe - who's learning from whom?

It's been a very European winter for me and thankfully not one of discontent. I have spent a lot of time exploring, visiting and talking to many of the major players in the European coffee market over the last six months. The latest instalment of the EW newsletter will focus on the question of whether we are in a position to teach our European coffee counterparts our coffee culture - or whether we should be learning from them.

The mini European tour started with the late summer visit to Arnhem which was covered in my last newsletter and has finished with my most recent and fleeting visit to Brussels, and includes a week at the SIC Milan show and a further Dutch visit to the Hotlecava show in Amsterdam early January.

European coffee culture as it stands.

While we may have been a nation of tea drinkers, our continental cousins were knocking back espresso and cappuccino in vast quantities, a culture which has remained relatively unchanged on the continent with coffee culture imbedded with bar culture. The leisurely pursuit of a calming cappuccino could easily be accompanied with an alcoholic beverage and a decent and regional food offering.

Not for Europeans is coffee in a paper or Styrofoam cup. Crockery was and still is the order of the day. The latest Dutch top 100 cafés (published by Horeca) cover what we effectively know as bars or pubs with some pseudo Irish pubs appearing on the list. Nothing wrong with this but it goes to enforce the point that what we know as cafes is not the same as what our European friends think of.

Cafe culture
European coffee culture as it stands.

In Belgium if you want the US/UK equivalent of a latte you need to ask for a Café Verteck otherwise known as a 'wrong' coffee. The wrong element is derived from there being more milk than coffee in the drink - a great example of how not to sell a drink. Imagine going into a UK coffee bar and asking for a 'wrong' coffee and keeping a straight face!

Switch back to the UK where we know a café as an espresso bar not serving alcohol but serving an ever increasing food range in a desperate attempt to make money. One of the last sectors to serve decent coffee in the UK is what the continentals know as bars, with JD Weatherspoon, who are pretty much everywhere, coming in line over the last few years with the 'more coffee for your bucks' campaign. The pot of filter coffee stewing on the ubiquitous hot plate has not been consigned to the bin as yet but the day is hopefully nigh.

Where our coffee culture came from

It's been well documented in the recent past that our coffee culture is a merge of the US razzmatazz toned down with the continental comfort and bar/café style. Before the early nineties we did not have a coffee culture as such. Yes Bar Italia and other places existed long before the Italians were lured to the Premiership by the money but these were haunted by hard core continentals, some coffee purists and the adventurous macho male who thought downing a doppio espresso helped the hair on their chest grow.

This started to change with the arrival and pretty rapid expansion of the Seattle Coffee Company and the Svensons who must have had an amazing crystal ball to sell out to Starbucks when they did for so much money. The Seattle Coffee Company became very close to the heart of many of us who loved the lattes and the nice relaxed style. Several other chains that started around that time still survive, including Costa Coffee, Caffe Nero and Coffee Republic (rapidly becoming Republic Deli).

Gone and forgotten by most of the public!

Coffee Republic - morphing into Republic Deli!

The passing of Seattle Coffee Company heralded a significant change in the arrival of Starbucks who rapidly wiped out the Seattle brand and expanded the chain to now well over 300 stores. Probably the most significant change to our culture was the introduction of an even greater variety of flavoured syrups, frappuccinos, Zen tea and Chai. A chocolate orange mocha, unthought-of never mind unheard-of ten years ago, has now become Valencia mocha available with whipped cream in a variety of sizes to make the obesity campaigners moan. When I got a call from a significant customer in November looking for eggnog flavour syrup to make eggnog lattes for Christmas I knew we had come a long way - and before you ask, eggnog flavour syrup is not working its way through our new product development process as yet.

The feeding frenzy that ensued in the late nineties with the various chains falling over each other to expand and gazump each other in the scramble for sites was ultimately the financial downfall of some. The feeling that first to market or second or third would win you a unique and valuable position as was the case in London looks a little absurd on reflection but not many of us said it back then.

What's been happening in Europe recently?
Many small chains have been cropping up in Europe from Columbus Café in France to Coffee Mania in Russia. Columbus have grown to almost 40 outlets in France and Belgium, many of them in Fnac music stores, since 1994. Columbus, mentioned in previous dispatches, were a welcome sight when I visited Paris last year and was looking for a morning macchiato rather than a Robusta laden local espresso. With Starbucks opening their first French outlet on Avenue L'Opera mid January, and their second before the month end, I am sure that they will get a timely boost to their business and maybe even become a target of the acquisition hungry green giant.

I had the pleasure to meet Coffee Mania on our stand at the SIC show in Milan and was amazed to hear that paper cups are still not accepted in the Russian market, even in their store in the US consulate. However they are growing along with other local chains like Zen coffee. Grand Café Cappuccino in Majorca have a chain of high end table service cafes that serve traditional cappuccinos and iced coffee together with a substantial sandwich range. Take out is non existent and the style is more reminiscent of traditional European grand cafes but with a more youthful feel.

Columbus café - continental Europe's answer to Starbucks!

Coffee Mania -spreading their wings in Moscow!

Coffee Heaven in Poland, who were founded by a UK company, started rolling out in 2000 and now have more than a dozen stores branching out of Poland into the Czech Republic. The founders felt that Eastern Europe was virgin territory and offered better returns than the UK. They seem to be doing well and with Poland and a raft of other Eastern European countries coming into the EU this year tourism and the economy should pick up. Competition is growing for them as some Polish immigrants, who discovered coffee culture in the UK, are now returning home and establishing their own ventures. One such venture is Café Mondo which was opened by Katarzyna Rutkowska-Parkes in Warsaw last year. Kasia, a regular contact and customer of ours, found many challenges in setting up her venture in her native land - from sourcing good coffee to having to tweak the menu to offer more of a food slant to meet the needs of locals.

The trend we are seeing happening here is what happened in the UK in the early nineties with the Svensons and Hasminis taking US coffee culture to the UK. Now Eastern Europeans working in the UK are taking the style and culture to their homelands.

Lino Albertini is presenting at the SCAE Rimini conference on Coffee Shops - An Italian Experience. Lino's outlets (see below) are far removed from our perception of Italian coffee bars combining smart design, machine front of counter and many flavoured syrups and other innovative drinks. Is this the future?

What can Europe learn from us then?
A lot really. The European coffee industry is waking up to the supposed threat of Starbucks. At the recent SIC show in Milan there was a seminar on how they should change to cope with the new US giant entering their market. This is a big change from a few years ago when naivety raged. At the forthcoming SCAE sponsored show in Rimini, Lino Albertini is giving a talk on 'Coffee Shops - An Italian Experience' and Lino's stores are far from the traditional Italian experience!. Couple this with a round table discussion entitled - 'Will modern café bars such as Starbucks eventually replace the traditional café bar' and you can see the sea of change - pardon the pun.

In the UK we have learned to adapt to the chains. They have educated the population at large to the taste of fresh coffee to the extent that Nestle are worried. The purists may say that what is drunk at large is milky buckets but this isn't the whole truth . The competition of the chains have made everyone sharpen up their act from roasters to ancillary suppliers like us to retailers. The head in the sand approach just won't work here.

Lino Albertini coffee bar in the Centro Commerciale Fiordaliso - Milan. Is this the future?

Old Espresso Warehouse stand
Our modest stand in Milan that stood out in a sea of coffee roasters and machine manufacturers!

Some independent stores are thriving despite chains opening up 5 stores within 500 metres. A mix of great hand made coffee, well trained staff and an environment that expresses the owner's personality rather than a chain operator are some of the keys to success. The mistakes made by many chains and independents alike in paying too much for prime sites and not having the right product mix in terms of food and coffee should not be made by our European entrepreneurs.

Themes such as coffee freshness that have been embraced by the Australian and New Zealand markets are beginning to play a more important role here and will also in Europe as the market develops. This last issue will scare the hell out of the major international roasters and chains that mass roast and distribute their beans from central European and Italian plants, often giving shelf life in years as opposed to weeks or months. The growth of iced blended drinks and new products specifically developed for the café bar sector that drive spend and margin, and do not attract price comparison by being available in mainstream retail, will become increasingly important.

At the SIC show in Milan we were blitzed at our stand with over 250 recorded enquiries from over 50 countries. The most requested cup printing item from the Italians was the 4oz take out cup. Those of you out there who have ever ordered 4oz printed cups in quantity should now go and see how many you have left after several years - to make the point not a big seller!

The interest from continental Europe, Eastern Europe, Middle East and Far East was primarily for our hardware, training materials, organic teas, chocolate and blended drinks. The response level leads to me to conclude that the coffee industry in Europe is gearing up for a change and the arrival of the green giant. What is driving this change is the increased travel of younger Europeans who are asking for innovative beverages to be available at their local café.

Pastry to die for in Milan!

What the European model will end up as it's too early to tell. The current combination of café with alcohol could evolve into slick high street espresso bars and there will be a greater emergence of innovative drinks in existing outlets. To go culture will take time and while it may not develop as quickly as the UK market did it will happen. The UK market has ballooned to over 8 million cups a week so if the continental European market takes off the volume will be huge.

As ever the views expressed are our own and we welcome alternative perspectives on the growth and trends of coffee culture in continental Europe!

Until next time!

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