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Last Updated: Thursday, 13 May, 2004, 00:48 GMT 01:48 UK
Oxfam to open coffee shops
By Tom Geoghegan
BBC News Online

Oxfam is to launch a chain of fair trade coffee shops in what it says is a UK first. But how does a brand associated with charity hope to survive the cut and thrust of fierce competition?

Coffee grower in Honduras
Honduran farmers hope to benefit
Like David facing Goliath, Oxfam versus Starbucks does not seem like a fair fight, but the charity says it has something different to help it survive.

It hopes its emphasis on fair trade - which guarantees a fair price to producers - will give it a niche in the coffee shop market.

The sight of Oxfam cafes, which will be called Progreso and will also sell fair trade cakes and biscuits, may not be too far away.

On Thursday, there will be one at a central London Oxfam branch for one day only.

By the end of the year, Oxfam hopes to have three, possibly in London and Glasgow. This will rise to 20 by 2007.

So even though Oxfam says it has no intention of challenging the multinationals, coffee drinkers in some areas will have to make a choice.

The old image of being a retailer of second-hand jumpers is disappearing rapidly
Richard Davies
BANC, on behalf of Oxfam

The idea came about from the charity campaigning in the developing world and relationships it struck up with people growing coffee.

For years it has lobbied governments and corporations about giving coffee farmers a fair price.

Eighteen months ago, a coffee co-operative in the Honduras, called La Central, came up with the concept of having fair trade outlets in the UK selling their coffee.

Oxfam teamed up with independent Scottish coffee roaster Matthew Algie, a fair trade firm which sells to retailers.

"Coffee growers will win three times with Progreso. They'll be selling their coffee at a fair trade price; they'll share directly in the profits and will also showcase their coffee in the UK," said Chris Coe, Oxfam's Trading Director and one of the originators of the Progreso concept.

Booming sales

The next step is to target potential sites such as bookshops to avoid the annual 200,000 bill of having their own premises.

Richard Davies of BANC public relations, which represents Oxfam, said: "Fair trade coffee is going through the roof, both through trade and flying off supermarket shelves.

Progreso coffee
The three co-operatives used are in Honduras, Ethiopia and Indonesia
They get 25% of profits, a trust for wider growing community gets 25% and Oxfam 50%
Coffee growers have seen prices slump by 70% since 1997, despite the increased price of a cappuccino
Fair trade market in the UK is worth 100m, including fruit, veg, chocolate and wine
Supermarkets reported a 42% increase in fair trade coffee sales in 2003
Coffee shops enjoyed a 67% increase in that time
*figures from Oxfam
"Because we're offering fair trade, we believe that's a niche in the market and if we're careful and keep our costs down, it can be profitable.

"But we're not going in to elbow out those already established in the market."

Some experts say that just treading water may be over-ambitious.

Retail analyst Richard Ratner of Seymour Pierce said: "I think they would be lucky to survive but I could be wrong.

"If you look at the records of coffee shops and the profitability of coffee shops, this seems a rather silly thing to do, unless they think the Oxfam name could bring the customers rolling in."

But Oxfam insists it has the business experience and is no pushover in the High Street.

"We have 753 stores, including 60 bookshops and specialist music shops. So the old image of being a retailer of second-hand jumpers is disappearing rapidly. This is a different market and we're targeting people who don't usually use our shops."

It will have no shortage of supporters cheering it on as the British appetite for fair trade products increases.

Lucy Michaels, of Corporate Watch, which undertakes research on large firms, said: "I think it's a great initiative to get fair trade on to the high streets and raise public consciousness about the issue."

The fair trade market, now worth 100m, hotted up further when Tesco launched a range of products earlier this year; Starbucks customers can also buy fair trade coffee.

In the past, the "ethical" coffee has been accused of lacking quality, but Oxfam staff claim the Progreso cuppa passes that particular test with flying colours.

The BBC's Evan Davies
"[Oxfam] is a great brand name for people who feel guilty about drinking coffee"

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