Starbucks' tax avoidance hasn't boosted our business, says Costa Coffee

Finance director of rival coffee chain's parent company, Whitbread, says tax row is likely to have damaged all big brands

Chris Rogers, the incoming boss of Costa Coffee, has said the chain is yet to see any firm evidence of customers defecting from its chief rival, Starbucks, in the wake of damaging tax avoidance allegations.

Last week it emerged that years of aggressive tax engineering had left the US group paying minimal tax in the UK for 14 years.

Rogers, who next month shifts from his current role as finance director of Costa's parent group, Whitbread, suggested the furore had, if anything, been bad for all corporations with well-known brands. "If I was to be honest with you all this noise around Starbucks probably isn't good for big-branded businesses full stop."

Asked about repeated calls from tax campaigners and politicians for a Starbucks boycott, Rogers said there was no evidence yet of a significant shift. "Some days are up some days are down. Current trading remains pretty solid. I know Margaret Hodge [the chair of parliament's public accounts committee] did a fantastic job on Newsnight for us … but I'm not sure we can see that in the numbers.

Outraged at the findings of a Reuters investigation that showed Starbucks had paid £8.6m of corporation tax on sales of more than £3bn since 1998, Hodge last week told Newsnight presenter Kirsty Wark: "I'm not going to buy Starbucks tomorrow, I think everybody should go and buy Costa."

Even before the flurry of coverage around the Starbucks brand, said Rogers, Costa had been "well ahead" of its American rival according to a UK brand preference study conducted by YouGov.

Asked a series of questions about tax arrangements at Costa and across the wider Whitbread group, Rogers said: "We are paying our full whack on UK corporation tax. We make losses overseas. We're not in a position where we're thinking cleverly about doing things like that. The brand isn't held in Switzerland or anything like that."

Whitbread reported a 10.6% rise in underlying pretax profit for the six months to 30 August, to £193.4mTurnover was up 14.2% to £1.02bn.

The group benefited from the £13.5m unwinding of part of a series of provisions relating to disposals made as long ago as 2004. Underlying profit at Costa was up 29.9% to £36.1m.

Rogers said he expected the group's general trading environment, already described as "tough", to deteriorate slightly. However, he reiterated his view that strong, well-invested brands such as Costa and the group's hotel brand, Premier Inn, were likely to outperform competition should conditions worsen.


Simon Bowers

The GuardianTramp

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