Taking mocha to Moscow

1434p +10p

N Rock

104.4p -5.1p

FOR those who find ordering a coffee at a laptop-and-chilled-lifestyle venue intimidating, it is about to get worse if you go on holiday to Russia.

"I'll have a skinny latte and easy on the whatever-ski", sort-of-thing.

The Costa Coffee chain, owned by Whitbread, obviously sees abroad as the next domain to conquer, having already pitched camp with rivals Starbucks and Caffe Nero in virtually every British high street or shopping centre.

Whitbread, which put out a trading update yesterday, said it had opened another 93 sites overseas in the past year, taking the group estate to comfortably over 900.

Costa's parent said that it had set up a 50/50 joint venture with Rosinter Restaurants to open more than 200 stores in Russia in the next five years.

Whitbread's initial investment will be 10 million and its first store will open in Pushkin Square in Moscow early in 2008.

Costa's sales rose over 6 per cent in the 39 weeks to end-November, said Whitbread, but it is the group's budget hotels business that is taking up the slack as the economic downturn eats into sales at its Beefeater and Brewers Fayre restaurant chains.

You know things look uncertain in the corporate world when businessmen stop booking in Hiltons, InterContinentals etc. and downsize to the Holiday Inn.

It is really serious when they hit the budget hotel circuit, but that is working wonders for Whitbread's Premier Inn chain.

As a result its sales jumped nearly 11 per cent in the period, as restaurant sales could only tread water. With new site openings included, that rise was 15 per cent.

Alan Parker, Whitbread's chief executive, says an increase in corporate custom in the new straitened economic circumstances has been noticeable.

It has helped what was already a decent occupancy rate - a key metric for the hotels industry - edge up 0.5 per cent to 82.7 per cent at Premier Inn.

If this trading down in the corporate world continues it will be good news for Whitbread as Premier accounted for nearly three-quarters of its first-half profits.

If money-conscious shoppers also rein in their spending at Costa Coffee branches in Britain's high streets and malls this Christmas, Whitbread will have even more reason to be grateful for its most defensive sector.

THE Financial Services Authority may protest too much about criticisms of its handling of the Northern Rock disaster. Yes, as chief executive, Hector Sants told Westminster's finest sound-biters at the all-party Treasury committee yesterday that the financial regulator did warn the industry publicly on more than one occasion earlier this year that they might be getting in over their head with exotic financial credit derivatives.

Collateralised debt obligations, SIV-lites etc, that way liquidity problems might lie, the FSA warned. And, as we now see, the recondite lending came home to roost.

But the regulator is responsible for the supervision of individual banks, not just the general health of financial markets.

When the FSA saw one bank in particular, Northern Rock, had an overwhelming reliance on wholesale financial markets for funding, why did it not see fit to point out the general potential problem in more highly specific terms?

It looks like the regulator did not follow through the abstract to the particular, feeling its work was done by flagging up a generic potential difficulty without following it through on the ground with Northern.

Sants was right to tell MPs yesterday that the FSA cannot force banks to be more prudent as it would otherwise be controlling markets itself.

But to suggest that the onus fell squarely on the banks and exonerated the regulator after those general warnings is being too kind to the FSA (and also the Christmas decoration non-executives on the Northern board who seemed to go along for the wholesale markets ride with ousted chief executive Adam Applegarth without looking at how the price on the meter was spiralling).

Given the embarrassing ramification of the run on Northern Rock for Britain's global financial reputation, and the smell of cordite from burning shareholder wallets, the defence of you can lead a horse to water but can't make it drink is not really a very ambitious template for Britain's top financial regulator.