High Street coffee war heats up

Caffe Nero is due to publish its final results today and investors will be looking for a signal on its intentions towards Coffee Republic.

When financial director Ben Price and his chief executive Gerry Ford report their results, analysts will also be expecting an update on the company’s wider acquisition programme.

Back in April this year, Caffe Nero took over the Aroma coffee chain, with the intention of converting it to the Nero brand.

This move took out one of its competitors, but the high street coffee bar business remains cut-throat, with a new bar seemingly opening up every other day.

At the time Gerry Ford said: ‘The acquisition … gives the group a quantum leap in increased scale on the high street and accelerates the expansion of our brand considerably.’

Now it appears the company has Coffee Republic in its sights – it has already built up a 10.7% ‘strategic’ investment in the troubled coffee operation. But it will have to see off other suitors such as sandwich chain Benjys, Madison and even easyGroup. This last option could prove interesting as Caffe Nero has already entered a joint venture with Stelios Haji-Ioannou’s empire.

Benjys is understood to be interested in Republic’s property portfolio, which could provide a platform from which the sandwich chain could take on rival Pret a Manger.

Last month, Nero’s Price and Ford revealed they had secured a further £7m of finance from Bank of Scotland which it expected to be sufficient to meet the chains expansion plans during the next 12 months.

At the same time, the company confirmed trading results for the year up to 31 May 2002 were ‘very encouraging’, despite the tough economic climate.