Great coffee boom is not everyone's cup of tea

High streets prepare for massive expansion of takeaway chains as rival firms set out to increase their share of £500m market

The stern-faced woman in the business suit must have thought she was on New York's Upper West Side rather than in London's Canary Wharf.

The stern-faced woman in the business suit must have thought she was on New York's Upper West Side rather than in London's Canary Wharf.

"Two tall skinny lattes, a tall Americano and a tall regular cappuccino," she demanded from the assistant. The assistant did not bat an eyelid, but merely tapped the order into the till and started fixing the drinks.

Buying a cup of coffee is no longer a simple matter. Where once it was enough to ask for it black or white, maybe with a teaspoon or two of sugar, getting a fix of caffeine now requires a flourish of language worthy of a Shakespearean actor.

And it is going to get worse. Laurie Morgan, marketing director of Costa, Britain'sbiggest chain, said yesterday that "an unbelievable coffee war" had broken out between the handful of major players in the £500m coffee shop market.

Costa, the first chain to open in Britain, has plans to up the stakes by diversifying into sandwich shops that will also sell coffee. The spread of the so-called gourmet coffee shop has been one of the biggest retail phenomena of the past five years. There are around 700 branded shops across Britain, the majority in London and the South-east.

But industry insiders believe in the next two or three years there will be considerable growth in the number and geographic spread of such shops. Last year, for the first time, coffee overtook tea as the most popular drink bought outside the home.

Bobby Hashemi, co-founder and owner of Coffee Republic, said yesterday he believed Britain could sustain many more shops. "There are around 700 branded coffee shops in Britain and in the city of Milan there are 1,500," he said. "There is plenty of room for expansion. I think the market is going to grow about three times in the next handful of years."

Mr Hashemi and others recognise there is a split in the market, with London the home of the majority of shops. But all the main players are gradually opening operations in cities as diverse as Glasgow, Cardiff and Bath.

Pret A Manger, predominantly a chain of sandwich shops but one which annually sells 14 million cups of coffee, last week opened its first shop in New York. As the competition increases so there is pressure for the main players to try and outdo each other with the range of products available.

Starbucks, the American-owned chain which bought the British-owned Seattle Coffee Company two years ago, has a range of new fruit-flavoured iced teas, served with or without cream. (Its mango citrus tea with whipped cream may cost £2.75, take five minutes to prepare and look quite revolting, but actually tastes rather nice.)

And all of the major players try to promote their unique selling points. Earlier this year Aroma, owned by the burger chain McDonald's, was undercutting the market by selling a cappuccino for 99p, about two-thirds the price asked by its competitors.

But try as the players might to offer the same coffee experience that is so common in the United States, many people feel they are getting short-changed for the £1.60 or so asked for a regular latte or cappuccino. Common complaints run from slow service to drinks served lukewarm.

"I think the standards of service in the UK are catching up with those in the US," said Mr Hashemi. "But it is still a long way behind." The rise of the gourmet coffee shop is likely to put pressure on the small, independent outlets.

John Pellegrino, of the City Coffee Lounge in London's Eastcheap, said: "It hasn't affected us because we are in a good location but some of the old-fashioned sandwich shops have probably lost out to these modern companies."

This does not seem to put many people off. The City of London, perhaps the richest square mile in the world, is packed with coffee shops. On one 50-yard stretch of Cornhill there are four options for a City worker wanting a cup of coffee.

"I really came here because it was convenient," said Prajakt Samant, 26, a commercial lawyer leaving the Cornhill branch of Coffee Republic yesterday. "But I do prefer it to Starbucks because it plays less on its image."

Mr Samant, who lives in central London, believes the coffee habit is as much about fashion as a growth in desire for the drink. "It is a lifestyle thing I think. People like to grab something as they are on their way. I have no doubt that it's a con," he said.

"But I was in Seattle recently and it is certainly much more part of the culture there. London is where Seattle was maybe five or seven years ago."

Be warned: Buying a cup of coffee is not going to get any easier.