Lord Mandelson attacks Starbucks boss for talking down UK economy

by Staff, Brand Republic 18-Feb-09, 09:50

NEW YORK - Business secretary Peter Mandelson has engaged in a four-letter rant about the chief executive of Starbucks for criticising the state of the UK economy, as the coffee chain prepares to launch its Via Ready Brew instant coffee brand.

Howard Schultz, whose company is to cut 6,700 of its 167,000 staff and shut 300 of its underperforming outlets after announcing 69% drop in profits during the first quarter, described the UK economy as "in a spiral" while talking on US business channel CNBC.

An angry Lord Mandelson, who appeared on the channel an hour after Schultz, retorted: "The UK is not spiralling, although I have noticed that Starbucks is in a great deal of trouble.

"But that may be because of their overexposure given the state of the market. So please do not project Starbucks onto the UK economy as a whole."

Lord Mandelson's language was more forthright at a later diplomatic reception. He said: "Why should I have that guy running down the country? Who the fuck is he? How the hell are they [Starbucks] doing?"

Schultz, who had been asked by CNBC interviewer Maria Bartiromo about the launch of Via Ready Brew, had said: "Concern for us is Western Europe and specifically the UK. The UK is in a spiral."

Spiral or not, Starbucks' Via Ready Brew will be available from selected London shops from March 25. It will be pre-portioned into packets of three sachets or in boxes of 12 and priced at £1.20 and £3.95 respectively.

The launch of an instant variant follows a move last summer to offer US diner-style free refills at its UK outlets in response to belt-tightening consumers and the economic downturn. The company says it has been working on the product for more than 20 years and describes the instant coffee as a "breakthrough".

Schultz said that people being served the coffee could not tell the difference between instant and fresh brewed.

The instant coffee market is worth around $17bn globally -- Starbucks said its new product offers the struggling firm a significant opportunity.

In the UK the opportunity is particularly large. Instant coffee accounts for 81% of all coffee sales.