Wednesday 25 April 2018

Top of the retail coffee market indicator?







So reading the tea leaves so to speak , Whitbread has been forced by activist investors on its shareholder register to spin-off its Costa Coffee business into a separate entity.


The Activist investors think this ill result in extra shareholder value and allow Whitbread to concentrate on its Premier Inn hotels business.


Both businesses are well run and have been very successful, in fact Whitbread in its markets is a super business and has been for many years. Well managed and targeted, with no airs and graces at its Luton HQ that is for sure.


However, noting in the UK as we did here last week, with the massive preponderance of coffee shops on the high street due to rapid changes in the retail market, surely this is a great top of the market indicator!


Globally, the growth for Costa with its awful 'machines' that you find even in France at motorway service stations, may well be a big opportunity. China is a key target for them (this rarely works out well for UK Companies - its another sign of exuberance and arrogance) and so perhaps there is a lot to this business.


But in the UK surely not with the abundance of competition to sell hot coffee to everyone, everywhere.


(My one reservation is I am typing this with a Costa Coffee sat next to me on my desk which I feel is somewhat undermining my prose....)

10 comments:

  1. dearieme11:26 am

    A Costa coffee on your desk? For shame! I used to keep a small cafetière in my office and buy decent ground coffee from a local market stall. That's the way to do it!

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  2. I don't drink coffee. Only tea.

    This did once actually exclude me from applying for a management post at Starbucks.

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  3. Sebastian Weetabix1:24 pm

    You see quite a few Costa coffees in China. I had a cappuccino from them in Hongqiao railway station a few weeks back. It seemed popular.

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  4. Lavazza instant is good and I carry a Stanley flask. I've saved literally thousands.

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  5. dearieme8:57 pm

    You've saved thousands of flasks? To what end?

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  6. I realized a few weeks ago that PG Tips does, in fact, taste like a puddle and have invested in a tea pot with an infuser thingymebob in it. Tres delish. I tend to avoid coffee due to hammering it through the 2010 election run-up. Working in Leeds is perhaps not ideal for coffee lovers as you could have the finest beans known to humanity yet the water tastes like shit. Good luck to Whitbread though - longer term investors must be laughing their heads off.

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  7. For 30 years I bulk-bought the cheapest French Robusta ground coffee from Calais hypermerkets and drank a cafetiere full each morning. I was lucky here in Austria to find a local equivalent - a Spar 'S-budget' brand with not a gramme of Arabica in the mix. I prefer, you see, a coarse, unperfumed, caffeine hit to get the day started. And paying more than €4.38 a kilo (yes, a kilo, not a 250g pack) is spendthrift.

    But everyone here is a Barista. My young guests always refused, after the first time, further offers of coffee. "Gas" said one, rubbing his stomach. I hadn't realised until it was explained to me the fart-propagating properties of Robusta if brewed in a cafetiere or dribbled through an espresso machine for more than the initial outflow. I switched to 100% Arabica for a week not quite convinced until gas free after two days and it's true; thirty years of unexplained high pressure farting suddenly has an explanation.

    I'm back on the Robusta now. I've so used to the farting it doesn't bother me any more, and the improved taste of coarse, cheap coffee is worth it.

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  8. There was only one good thing to come out of Whitbread and that was Trophy Bitter

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  9. A Barista is a craftsman (oops ! *person*) or so the adverts tell us. In fact the government tells us so too. The role now counts as an apprenticeship.

    Yet I learned to make a darned decent coffee (better than all chain outlets) in five minutes of self teaching with a £30 perculator and a £50 frother.

    I once farted in Diana Keen's kitchen having had a coffee there. It was neglect rather than gas - or maybe it was gas (I was trying so hard to hold in a belch I let one off.)

    Luckily the lady herself wasn't present, just her mother !

    @ Dearieme - You only need ONE Stanley flask, though they are not as good as the original US made ones. (Thermos is best and most stylish)

    I wager that flasks are about to become the new fashion and the discovery of how great home brew coffee is. The appeal will be:

    - virtuous (no wasteful and damaging cups/lids)

    - flask envy

    - craft envy

    - "I'm so frugal and clever" (the middle-class Lidl effect)

    Trust me. Coffee shops are finished. Only those with nice sit-in expriences and placed well to suffer low trade will survive.



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  10. Anonymous10:17 am

    I see Poundworld and Prezzo are in trouble. Both PE-owned.

    I understand the upside of PE - namely 10% tax rates via entrepreneurs relief. Sell to a greater fool and you could retire - if you didn't want even more.

    What are the downsides? I assume not massive as the PE guys will also be taking hefty salaries? Where do the loans come from, private investors or banks?

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