British Coffee Palates Evolve, Says Caffe Nero CEO
Gerry Ford, Chief Executive of Caffe Nero, asserts that British consumers have cultivated a more sophisticated appreciation for coffee.
Reflecting on the establishment of the coffee chain 28 years prior, Ford noted, “British individuals primarily consumed instant coffee.”
“Espresso was largely unfamiliar to many; domestic espresso machines were uncommon. As early entrants into the market, we encountered considerable challenges,” he explained.
The American-born entrepreneur drew a parallel to wine consumption, stating, “It’s somewhat comparable to wines. Previously, beverages like Blue Nun or Mateus Rosé were prevalent in Britain. Now, supermarkets offer an extensive selection of Riojas and Rieslings.”
Single-Origin Coffee: Catering to Refined Tastes
Ford, 67, is addressing this elevated consumer taste by introducing ‘single origin’ coffee, currently sourced from Finca La Arboleda in Colombia. Unlike blends comprising beans from diverse global locations, single-origin coffee originates from a single farm’s harvest. The La Arboleda farm has remained under the same family’s stewardship since the 1950s.
Upcoming single-origin offerings will feature beans from Brazil, followed by a Kenyan variety in autumn.
Premium Beans and Farmer Relationships
“These options carry a slightly higher cost due to the acquisition of superior quality beans,” Ford stated. “We maintain relationships with coffee producers, sometimes procuring entire harvests from specific areas to secure favorable pricing.”
Caffe Nero’s Expansion and UK Market Performance
Caffe Nero has transitioned from a nascent enterprise to become the largest independent coffeehouse chain in Europe. It now operates 1,100 locations across 11 countries, including 700 in the UK. UK sales for the first half of the preceding year demonstrated an 11.4 percent increase, reaching £185.4 million, with record sales achieved during the Christmas period. The prevailing cost-of-living challenges seemingly have not diminished consumer propensity to spend £3.65 on a latte or £3.30 on a cortado.
“It represents a small indulgence in potentially challenging circumstances, amidst governmental transitions and widespread uncertainty. It’s a comforting ritual and routine,” Ford elaborated.
“In a landscape with limited options for leisure spending within the £2.50 to £5 range for an extended stay, it remains a valuable proposition, particularly given current inflationary pressures,” he added.
Coffee Commodity Market and Pricing Strategy
Ford acknowledged that coffee prices are currently “exceptionally elevated” on the commodity market. He attributed this to weather-related production impacts and broader “global uncertainty influencing commodity prices.”
Caffe Nero’s current approach involves monitoring the sustained nature of these price increases. The company hopes to avoid price hikes for consumers. “Should prices remain elevated, adjustments will become necessary. The future trajectory remains uncertain at this juncture,” Ford explained.
US Market and Expansion Plans
Addressing global uncertainty, Ford, as an American citizen, confirmed his participation in the US presidential election, though he refrained from disclosing his voting preference concerning Donald Trump, whom he has not personally encountered.
Caffe Nero’s US presence encompasses 43 outlets, all situated on the East Coast. Ford observed “a sense of unease and ambiguity” within the US market, particularly regarding potential tariff implications.
However, he indicated that this uncertainty is not impeding US expansion plans. “Our trading performance remains robust. We recently inaugurated a Boston location and have another under construction in Rhode Island.”
The company is actively pursuing its growth strategy of approximately 90 annual store openings, evenly distributed between the UK and international markets.
Turkish Market and Global Presence
Turkey, despite its history of political volatility under President Erdogan, represents Caffe Nero’s second-largest market after the UK, with approximately 112 stores. Ford commented, “While Turkish tea, a reddish and palatable beverage, is the national drink, espresso-based coffee is favored by a majority of individuals under 40.”
Employment and Government Policy
Caffe Nero’s UK workforce exceeds 7,000 employees, predominantly under the age of 30.
Ford advocated for Chancellor Rachel Reeves to incentivize businesses to employ younger demographics. “Providing opportunities for young individuals is crucial for optimizing national productivity. I strongly support policies that encourage job creation,” he asserted.
He highlighted Caffe Nero’s internal “progression system,” wherein young recruits begin as baristas and are encouraged to advance to management roles. “Approximately 85-90 percent of our store managers have emerged through this internal pipeline. It essentially functions as a small business management training program,” he elaborated.
Addressing youth disengagement from employment, education, or training represents a “significant opportunity” for businesses like Caffe Nero, he stated. “We celebrate employee promotions to store manager. These are invariably internal promotions, a testament to the program’s efficacy. The Government should foster an environment that empowers smaller businesses to engage young employees.”
Ford suggested that recent fiscal measures introduced by Reeves, including National Insurance Contribution increases, “could have adopted a more pro-business stance.” He noted that many critics might consider this a considerable understatement.