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UK: Oxfam Hopes To Stimulate Taste For Fair Trade

by Simon BowersGuardian
May 14th, 2004

The charity, backed by a loan from Glasgow-based coffee supplier Matthew Algie, yesterday said it hoped consumers' appetite for fair trade-certified coffee will attract new customers and draw others away from the mainstream chains.

"If you take Starbucks as the standard, people are looking for points of difference," said Progreso managing director Wyndham James.

Starbucks, the UK market leader which has become a bte noire for anti-globalisation campaigners, does offer some fair trade products, as do other operators including rivals Costa and Caffe Nero.

Mr James nevertheless believes that providing growers with half the retail mark-up as well as profits from coffee production will prove attractive to coffee drinkers. A Progreso double latte will cost 1.80, slightly above the average chain price of 1.76. The commodity cost of coffee is about 5p, with fair trade growers making 6p a cup.

Fair trade-certified coffee has taken off in Britain and the Netherlands, but has yet to gain popularity elsewhere. There are many producers adhering to fair trade rules who have not been granted certification because of insufficient demand.

It is thought Oxfam's coffee bar venture could prompt some of the established chains to source their coffee entirely from free trade producers. At least two leading operators are already thought to be planning such a move.

Industry insiders warned Progreso could struggle to generate profit as a small operator. "It's not like a pub, where people come in for seven or eight pints," said one source. "They sit down and have two coffees at most, and they stay for ages. Margins can be thin." Chains to have sold up or scaled back include McDonald's-backed Aroma and Coffee Republic.

Progreso, which intends to start out as a concessions business, has been in talks with a leading bookstore chain but hopes of a quick deal have faded. Progreso will not use volunteer staff, nor will it convert any charity shop sites.

Allegra Strategies, the coffee industry research specialist, insisted there was still room for more bars in Britain despite their number having increased from 500 six years ago to 2,400 today.

Coffee sales via espresso bars are forecast to reach 500m next year.





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