January 8, 2013 / 8:31 PM / 5 years ago

Tesco defends investment in artisan coffee chain

LONDON (Reuters) - Tesco, the world’s third biggest retailer by revenue, defended its investment in a UK coffee chain on Tuesday following criticism from shoppers who said they had felt lied to after visiting what they thought was an independent business.

A customer leaves a Tesco store in Hammersmith, west London October 3, 2012. REUTERS/Paul Hackett

Harris+Hoole, which operates 10 coffee shops across London and southeast England, is 49 percent owned by Tesco. The Guardian newspaper reported this month that customers had felt duped after finding out about its investment.

“We invested in Harris+Hoole after meeting entrepreneur Nick Tolley and his siblings Andrew and Laura, who are passionate about great coffee,” Tesco’s chief executive Phil Clarke said in a blog post on the company’s website.

“We like backing great brands, helping them to grow and to realise their potential,” he said. “Some people have asked why it’s not branded Tesco. The H+H brand is part of its value - its distinctiveness and appeal.”

Clarke said that Tesco had previously invested in other small businesses, and would look at putting Harris+Hoole branches in its stores once the Tolleys were ready.

Artisan coffee shops, which tend to be small, independent businesses, are becoming increasing popular in the UK as alternative drink spots to cafes managed by larger, corporate rivals such as Starbucks and Costa Coffee.

Reporting by Brenda Goh; Editing by Kevin Liffey

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