Strong As Death, Sweet As Love

The franchise that popularised a coffee culture in the US, is now being accused of bastardising an age old tradition.

Chris Buchanan
Money Web
June 06, 2007

Premium coffee culture, that of the espresso, cappuccino, latté, macchiato and ristretto evolved in Europe through the invention of the piston driven espresso machine by Achille Gaggia in 1948. Until then coffee was savoured as a percolated or filtered brew in Europe and the US, and a boiled brew in the Arabic world where it is said to have been popularised in the 10th century.

In 1971 Starbucks opened it first coffee house in Seattle, but it wasn't until Howard Shultz joined the company in 1981 that the right formula was achieved after intense scrutiny of the European espresso bar culture. What followed was a cult-like coffee explosion in the states. In 1990 the US overtook Germany as the biggest single importer of coffee and today imports double that of second place Germany. At fiscal year end 2006 Starbucks had 12440 stores worldwide. Operating income for 2006 was 894 million US dollars on an 11.5 percent operating margin. Seventy nine percent of the revenue is generated in the US.

It is estimated that 1,4bn cups of coffee are served up around the world every day and that world consumption of coffee amounts to 4,6 kilos per person per annum. The Finns are the biggest caffeine addicts at 11,4 kg per head, followed by the Norwegians at 10,4 kg per person.

The International Coffee Organisation puts annual production at 123m bags of a standard 60 kg each. Coffee prices held and average of US200c a kilo in 2006 - that's US$14,8bn before it's been roasted.

In a South African scenario, a kilogram of blended and roasted coffee costs about R85. A good espresso uses ten grams at a cost to consumer of seven rand. The mark-up is good but it's a volume business because of the low price and that's where the Starbucks' of the world hold sway. And that's the reason why it's not about to enter the SA market with only about a million South Africans drinking the premium variety.

Current SA players are the Famous Brands Group, covering the Brazilian and House of Coffees brands. Head of the Coffee division Manoli Vardas says it represents 54 stores nationwide. Mugg & Bean has over 70 stores, and then there are other franchises such as Europa and its Fego outlets comprising over 30 stores and the latest ‘happening' coffee outlets of Vida e Caffé with its 14 outlets.

The closest SA has come to Starbucks is Seattle Coffee Co that could be found at many Exclusive Books stores and is now more of a corporate park niched outlet.

In SA we ask when Starbucks will come to our shores but the consequences of its presence must be measured. It's been accused of coffee imperialism, going so far as to claim copyright royalties on Sidamo coffee that is produced in Ethiopia by the poorest of the world's coffee growers.

Websites such as http://www.delocator.net/ assist in finding non-Starbucks or franchised coffee outlets in your area and http://www.ihatestarbucks.com/ speaks for itself. The Europeans detest Starbucks as a franchise that has desecrated a European espresso culture with its ‘double mint mocha decaf skim latté' abhorration of a fine art and tradition. A coffee sold at Starbucks for two US dollars, puts two US cents into the pocket of the grower.

It might be worth remembering the old Turkish proverb - Coffee should be black as hell, strong as death, sweet as love.