Have we reached peak coffee?

The coffee industry is in the sights of environmentalists and public health campaigners

Considering the national obsession with tea, coffee has had an extraordinarily successful run in Britain. For decades, the only way has been up. Coffee shops turn over more than £9.6 billion a year, an increase of 7.3 per cent year on year. More than 95 million cups are drunk every day, up from 70 million a decade ago. By 2030, at current rates, there will be more coffee shops than pubs. Even McDonald’s recently launched an advertising campaign to encourage customers to try its flat white.

Recently, however, cracks have started to appear in the china. In January, Costa Coffee reported only the second quarterly fall in sales in its history. In April, its parent company, Whitbread, announced it would spin off the chain into a separate company. This came after a report in the autumn from Citigroup which suggested the UK coffee market was nearing saturation point.

Worse could be coming. In March, a judge in California ruled that companies, including Starbucks and Dunkin’ Donuts, would have to warn customers — possibly with ominous cigarette-style labels — that their coffee contains the carcinogen acrylamide. When California makes a public-health ruling like this, the rest of America and Europe pay attention: usually their own regulation follows soon after. Plenty is at stake if coffee becomes the new foodie villain.

During the trial, the coffee companies claimed acrylamide is naturally occurring. It is a by-product of the roasting process and is also found in roast potatoes and toast. Its effects, they argued, were outweighed by the drink’s health benefits. But the judge, Elihu Berle, was not convinced. ‘While the plaintiff offered evidence that consumption of coffee increases the risk of harm to the fetus, to infants, to children and to adults,’ he wrote, ‘…the defendants failed to satisfy their burden of proving by a preponderance of evidence that consumption of coffee confers a benefit to human health.’

Environmental concerns haven’t helped coffee’s cause. The rapidly growing market for capsule coffee, led by Nespresso, has come under repeated attacks for its poor levels of sustainability. While Nespresso offers to come and collect all empty capsules from users’ homes, many of its one-use aluminium pods go to waste.

Coffee shops are an obvious target for anti-plastic campaigners inspired by David Attenborough’s Blue Planet II and pronouncements by the Prime Minister. In January, a report published by MPs on the environmental audit committee found that the UK produces more than 30,000 tonnes of coffee cup waste each year. It called for a 25p ‘latte levy’ on all coffee in takeaway cups. Bound in polyethylene, disposable cups are not accepted by paper mills. Only 0.25 per cent of cups are recycled.

Some shops have taken action: Pret A Manger now offers a 50p discount on coffee if customers bring their own cups, while Starbucks and Costa have introduced on-site recycling bins. Reusable cups have also been gaining in popularity, despite the fact that Michael Gove, the Environment Secretary, was pictured carrying one into Downing Street. Mary Creagh, the Labour MP and chair of the committee, said producers and distributors had not done enough and the government had ‘sat on its hands’.

Yet between the ‘sugar tax’ on soft drinks, which came into force in April, and minimum alcohol pricing in Scotland, government has acquired quite a taste for regulating what we consume. Although studies have shown the health benefits of coffee, caffeine is a complex drug. The long-term effects of high levels of consumption are still being researched, and some scientists remain very concerned. Caffeine has caused trouble before: in 1916, the US government took a case against Coca-Cola to the Supreme Court and won, forcing the company to reduce its caffeine content. It is not hard to imagine tax-hungry officials drawing up plans to draw revenue from yet another popular legal drug.

Not everyone sees clouds gathering. ‘I don’t think UK consumers are too worried about what a judge thought in California,’ said Carlos Mera, a senior commodity analyst at Rabobank who specialises in coffee. ‘Coffee has been taking market share away from other drinks in the UK and it will continue to do so. People are willing to pay more and more in small speciality coffee shops. Volume is growing about 2 per cent a year, but the total revenue is increasing as customers switch to capsules [at home], where you pay much more per gram. There are ongoing concerns over waste, but the new wave of single-serve machines serve coffee without capsules, and they will come down in price.’ And for every blow suffered by the giants, more nimble independent retailers stand ready to pick up the slack. The coffee shops Sacred and The Department of Coffee and Social Affairs both make their own capsules for Nespresso machines.

Outside Monmouth Coffee in Covent Garden last week, there were few signs of a levelling off in demand for flat whites, cold-press and freshly ground beans from Kenya, Guatemala or Brazil. The queue snaked out of the door. Not one of the customers seemed worried by the recent scares. ‘Everything gives you cancer now, doesn’t it?’ said one man, clutching a post-lunch cortado.


Close