Skinny lattes at dawn!

Experts say there are now so many coffee shops, chains have to steal customers from each other to boost sales. And their weapon of choice? Ever posher coffee

REMEMBER when a takeaway coffee meant a polystyrene cup filled with a muddy puddle of scalding water flavoured by a scoop of acrid brown powder?

So profound has been the effect of Starbucks, Costa and the other High Street coffee giants on our drinking habits that it now sounds like something out of the Dark Ages.

If you turn the clock back just over a decade, there were fewer than 10,000 places where you could buy a takeaway coffee in the UK.

Now we can take our pick from more than 22,000 coffee shops with the giants racking up a total of 659 million visits a year. The industry is said to be worth £3.4 billion.

According to latest research, the average Brit spends more than £2,000 a year in coffee shops. It means that we are drinking 2.3 billion cups a year — 45 cups for every single adult in Britain.

So why did Costa, the UK’s biggest coffee shop chain, buy a giant advert last month specifically telling us how wonderful their coffee is — and how bad their rivals were, saying they served ‘cup after cup of liquid disappointment’?

After all, if things are going so brilliantly, customers hardly need convincing, do they? The reason, say industry experts, is simple. The coffee market looks as though it might actually be reaching saturation point, and the advert heralds the first skirmish in what is set to be a bloody war.

For more than a decade the big companies — Starbucks, with 898 shops in the UK, Caffe Nero with 650 and Costa with 2,326 — have found us a total pushover. That’s how hooked we have become on our daily fix.

Then, last month, investment bank Citigroup issued a grim prediction that coffee expansion is stalling.

Their analysts say just ‘ four to five years’ structural growth remain in the UK coffee market’. Sales at Costa slowed from 2.3 per cent growth last year to just 0.6 per cent in the six months to August.

Meanwhile, profits dropped 9.8 per cent to £59 million due to increased costs.

And, at the very same time, they are being beset by an army of upstart rivals — an influx of independent shops and tiny chains which are springing up all around the country.

‘ The future is all about boutique, small- scale coffee brands,’ says Jeffrey Young, founder of Allegra, the company that has analysed coffee shop trends for the past 20 years.

‘It’s extremely good news for consumers. It may not push prices down, but it will push quality up.

‘A wave of artisan shops is about to hit the UK.’

These are shops such as Gail’s Artisan Bakery. Established in Hampstead in 2005 by three friends who shared a passion for great bread and coffee, it now has more than 40 outlets, pre-tax profits of

£ 4.8 million last year and plans to expand even further.

‘Discerning young consumers are looking for very highgrade coffees, highly- skilled baristas and a choice of more exotic, interesting flavours,’ says Jeffrey Young. ‘When you have more than 2,000 outlets as Costa does, maintaining that quality is a challenge but they know it’s where they’ve got to focus.’ Costa — which boasts it still roasts the same Mocha Italia recipe introduced by company founders Sergio and Bruno Costa in 1971 — admit the appearance of these upstart rivals has affected business. Last month, the boss of Costa Coffee owner Whitbread, Alison Brittain, said coffee lovers had developed more sophisti- cated tastes and were ‘willing to spend more per cup for higher quality and innovative drinks’.

She said the change was similar to one that took place in the wine market, where UK consumers once drank ‘ Black T ower and Blue Nun ’ but could ‘now proba - bly tell the difference between a Chardonnay and a Sauvignon Blanc’.

Cyril Lave - nant, foodservice director UK at market researchers NPD Group, says: ‘Consumers can grab a coffee anywhere, so the message for the specialist coffee shops is that they must stand out to compete.

‘Coffee shop chains tend to look alike and have a similar menu and ambience. If there were no brand - ing, it would be difficult for consumers to know for sure which outlet they were in.’ Indeed the fight-back has already started.

‘Starbucks have taken a leader - ship role with their Black Label Reserve Roastery concept,’ says Jeffrey Young. ‘The idea is that your coffee shop acts like a micro brewery — the coffee is roasted on the premises while you watch, giving everything an artisan feel.’

Starbucks has already opened one in Seattle. Next year they move on to Beijing , Milan, New York and Shanghai.

The UK won’t be far behind.