Profile: Sir Charlie Mayfield

John Lewis Partnership Chairman

Does it matter who owns a brand?

Harris & Hoole, a small chain of coffee shops in London and the South East, has been exposed. The Guardian has revealed, the not-so-secret secret, that H&H is in fact part owned by Tesco - and people aren’t happy about it.

Rosie

It raises an interesting debate around whether ownership matters to a brand or if the strength of a brand supersedes its financial backers.

Is Harris & Hoole a quirky chain of coffee shops that offers speciality blends and good quality food? Or is it an arm of multinational conglomerate Tesco deliberately duping customers?

I’d say Harris & Hoole is a brand, marketing and British business triumph rather than a wolf dressed in sheep’s clothing.

In Harris & Hoole, named after characters in the 1664 diary of Samuel Pepys’, its founders have created a strong brand identity, a good proposition and have an established customer base. The identity of its financiers has no impact on that and it would be a crying shame if the success of a fledgling British brand and business were damaged by misplaced principles.

The brand’s website says its story began as the “brainchild” of three siblings, whose vision it was to “bring great tasting speciality coffee to the high street”.

It continues: “To provide the high street with fantastic coffee takes investment and backing, and few people know the high street better than Tesco - who have made a non-controlling investment in the new business to allow the Tolleys to realise their dream.”

Many seem furious about the revelation that Harris & Hoole is not the wholly independent chain they thought. The fact is it’s no secret and I say good for them for finding financial backing to grow their chain into a thriving business.

Tesco is not the full owner. It holds a 49 per cent share - that’s non-controlling - and it has no input on how the business is run, how it promotes itself or the brand.

Harris & Hoole has 10 stores. With Tesco’s backing it has the potential to grow that number. Without, it would be, like many other independents, facing a very uncertain future indeed and its customers would find themselves having to find somewhere else to scoff coffee and cake.

Would it be any different if Nick, Andrew and Laura Tolley the founders of the chain sought financial backing from a private equity firm or an angel investor?

In Silicon Valley, established tech firms make investments in smaller startups all the time. It’s how the industry works and how startups become successful businesses.

Pret a Manger used to be part-owned by McDonald’s. Innocent is part-owned by Coca-Cola. So what? Small business need financial investment to grow and become successful and Tesco is as good a place as any to seek that investment.

It also gives Tesco an alternative growth driver beyond the reach of its supermarket business.

Tesco suffers an image problem and trust in businesses has been damaged recently but there should be more positive recognition for a giant British firm with interests all around the world giving something back by investing in a British business.

Readers' comments (5)

  • I agree that it shouldn't matter who the investor in a business is - especially if they have a non-controlling share and have no input in the running of the business. But you can't ignore that such things matter to the consumer. I think when it comes to branding, your associates say a lot about you – for example (ideally) a world peace organisation would not want to be funded by a firearms company because no-one would then take the organisation and its values seriously. H+H are sending out mixed messages to the consumer. After all, Tesco doesn't resonate with the values that H+H are trying to display such as "artisan" or "speciality grade". If Tesco doesn’t fit H+H, will H+H have to fit Tesco i.e. become a large corporate chain?

    Consumers aren't going to be comfortable with the fact that Tesco have such a large share in the company - and I don't know who’s more naive...us or them? Can Tesco really be expected to have up to 49% share (which is still a significant amount) and not have ANY influence at all on how the business is run? I think Tesco needs to realise that there are a lot of consumers out there who are sick of it. If wants to give it’s a image a overhaul and to be seen as a successful British business that reinvests in Britain, there are other ways to go about it. Because at the moment it just seems as if Tesco wants to jump on all the bandwagons and have its finger in everyone’s pie – it certainly doesn’t need “an alternative growth driver”. And I think that this is the REAL issue that consumers have.

    But I do hope that H+H don't suffer as a result of this as we are in need of successful British businesses. I certainly don't blame H+H for agreeing to have the backing of Tesco - being able to have access to Tesco's vast resources is something that many small businesses can only dream of. And in the current climate, such backing is hard to come by. And this is why I don’t have any doubts about the sincerity of H+H’s values but I do feel that they didn’t consider that their credibility as a premium independent, local community coffee shop will be undermined by the type of consumers that they attract – the exact same consumers who trying to get away from Tesco! And if that’s not the type of consumer that H+H want to attract, well they need to change their brand altogether.

    On another (related) note, – oh my god, not another coffee shop! Groan. I’m sick of coffee and its chains and I don’t even drink the stuff!

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  • Fascinating debate. Of course, there's a small set who do care, and there's a lot who don't. For H&H, it’s challenging because their audience are probably majority Guardian readers, who do care and who don’t like Tesco. Tough position.
    But what’s really interesting is where this debate goes from here. If you think of food as a proxy, then transparency can add value – who’s working for this business and what’s their story. Will who the business works for ever matter to the majority? I believe it will in the right category at the right moment in time. The marketers job is to spot that and capture the value for the brand. When sales of ethical goods are at an all time high in this economic climate, I don't think there's a better time than now, do you?

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  • Well done to those three people for getting Tesco on board!

    This will be news for a week, and it will be forgotten, so who cares...

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  • This reminds me of the debate around Teapigs and their connection to Tata (who own Tetley). I know from a piece I wrote on this on http://thefoodiegifthunter.co.uk that many people did feel cheated that it wasn't quite what it seemed to be and was being less than transparent. Certainly less transparent than H&H seem to have been. For those that care, it will be an issue. For those that don't, well, I guess no different than supporting Starbucks.

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  • Personally I like Starbucks (yes guilty of tax evasion as many companies are guilty of but not named and shamed like Starbucks was) and caffe nero, but after all it remains solely a coffee trader. Costa has grown and killed off most independents! Why? Because they are everywhere including express outlets here there and everywhere, yet people forget they are owned by Whitbread Beefeater, Brewers Fayre Table Table and Taybarns. I have more interest in companies sticking to their core product. Please Tesco keep to food because you're killing off the high street. Although I rather see these coffee shops within Tesco ONLY and to keep Costa to the high street.

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