In a nutshell

The coffee upstarts aiming to balance high-street appeal and localism during mass expansion

The Coffee Upstarts

Starbucks has been one of the rare high street success stories of the last decade, but Third City Partner Mark Lowe says its changing fortunes tell us a lot the uneasy relationship between brands and sub-cultures

When Starbucks bought the Seattle Coffee Company in 1998 and started to build its brand in the UK, it was on the heritage of specialty coffee and folksy localism. Then Naomi Klein took aim in her bestseller No Logo, Starbucks image turned from cottage industry to big business and its core audience gradually drifted away.

For the owners, this didn’t much matter. Britons hadn’t tasted half-decent coffee before and the brand became a retail phenomenon; since then, it has sold £3 billion worth of coffee and opened 800 shops in the UK. But more recently, there’s a hint that a few upstarts could make Starbucks pay for drifting away from its roots.

Before I talk about them, it seems appropriate to say something about niche marketing, which is in the DNA of a brand like Starbucks. This technique involves concentrating all your efforts on a specific and well-defined segment of the population; if that niche is suitably forward thinking, you can track its tastes and aspirations into the mainstream and cash in.

In Starbucks’ case, the niche was the hipsters and coffee-snobs of America’s West Coast. Like many sub-cultures, this group was and remains instinctively anti-corporate, so they stuck together only long enough for Starbucks to achieve mainstream success, at which point the love affair ended.

Since then, Starbucks has been keen to re-connect with this community, with experiments like launching unbranded stores and alignment with leftish causes like the fair trade movement. But sometimes, these efforts can fall on deaf ears; as one coffee snob recently put it to me: “A chain’s a chain, they’ve all got their own schtick”.

Enter the upstarts – a clutch of new brands convinced that Starbucks and its major rivals have had their day. Interestingly, many of these new brands come not from the US but from New Zealand and Australia, which can lay claim to being the ground zero of contemporary coffee culture.

Not all of them have the clout or desire to take on Starbucks. For instance, two Kiwi companies Allpress and Sacred are competing with homegrown brands like Monmouth for London’s hardcore coffee snobs. But others have bigger ambitions.

Most interesting among them is Harris & Hoole, which has been (quietly) backed by Tesco. The brand is aiming to pick up where Starbucks left off, offering an experience that is authentically local and a product that is superior to high street coffee.

Of course, balancing localism with mass expansion is no easy task, as H&H Australian founder seemed to acknowledge in a recent interview.

“A lot of customers who go to Starbucks or Costa Coffee value the convenience of being on the high street. What people like about local independent shops is when you enter, staff greet you by your first name and they know what you like. To an extent, we want to give our customers a bit of both.”

This article originally appeared at the Drum