It's a balmy Tuesday evening in Totnes, the small Devon town that sits just below the south-western tip of the M5. Outside the Methodist church hall, a hand-drawn notice simply says "Adios Costa". Inside, around 45 people are having an animated discussion about the imminent arrival of the ever-expanding coffee chain. There is a lot of talk about a failure of democracy, and the emptiness of what politicians call "Localism" – but, more interestingly, an emphasis on what might happen when the town's newest arrival actually opens its doors.

"The idea is to be prepared," says one of the people behind tonight's gathering, with some excitement. "So that when they get here, things are organised."

One man suggests regularly visiting Costa, ordering tap water, and then drinking it very slowly. A woman offers to paste up anti-Costa posters on the chain's windows, doggedly replacing them whenever they're removed. A couple of people who live across the street from Costa's proposed new outlet say they'll hang protest banners and there is a warmly received proposal of an official day of mourning, "because we've lost our democracy". And on it goes: how about a debate in parliament? Or a vote of no confidence in the local council? Or a simple boycott?

Welcome, then, to another chapter in the ongoing battle between places that pride themselves on their local character, and the great stomping boot of multinational capitalism. That it is happening in Totnes (population: 7,500) is hardly surprising: long renowned as a byword for sustainable living and imaginative local politics, it also the home of the Transition Towns movement, focused not just on the way that people and places use fossil fuels, but how to make local economies more resilient by encouraging independent business, and fighting the kind of big interests that tend to take out more than they put in. Their most famous innovation is the Totnes Pound, a home-grown currency that is accepted by more than 70 local businesses.

Totnes's local economy looks to be in reasonable health, which is surely down to the fact that it is about as far from being what we now call a "clone town" as could be imagined. The local record shop, Drift, is mind-bogglingly great: the kind of place that you'd think was amazing if you found it in New York. The quality and diversity of restaurants is amazing. Most pertinently, the town has 42 independently run outlets that serve coffee, and – so far – not a single branch of any of the big caffeine-selling multiples.

Anti-Costa campaigner, Frances Northrop Photograph: SWNS.com

Now, though, Costa – whose most visible slogan remains "Saving the world from mediocre coffee" – is on its way, as part of programme of expansion that will look either worryingly aggressive or admirably ambitious, depending on your point of view. Certainly, it seems to be bucking the prevailing trend of our flatlining economy, opening scores of new outlets while independent coffee shops are truly feeling the pinch.

A fully owned subsidiary of the food and hospitality conglomerate Whitbread, it currently operates 1,400 British outlets, and recently announced plans for 350 more. Thanks also to a snowballing presence in petrol stations, pubs and motorway services, its logo is becoming inescapable, which is exactly the point: the chief executive, Andy Harrison, has talked about increasing the number of branches to 2,000, and thus making them ubiquitous. "People really don't want to walk very far for a coffee," he has said. "We can have them a couple of hundred yards apart on a really busy high street, then another at a retail park and another at the station."

The fact that Starbucks remains synonymous with the more rapacious aspects of modern business seems to have blinded people to what Costa is doing. But as proved by similar battles in the West Country seaside town of Burnham-on-Sea, Bishops Waltham in Hampshire and the Suffolk resort of Southwold, it is Costa that may soon turn into the biggest signifier – in the UK, at least – for the tensions between local communities and big chains.

In Southwold, in fact, Tuesday night saw a successful appeal by Costa against a previous planning decision that had stopped them opening there, greeted with such fury that 100 people were ordered to leave that night's planning hearing. Such, say anti-Costa campaigners, are the same basic outlines as you see in battles against the big supermarkets: passionate locals who fear the places where they live being laid waste, a massive corporation that wants to expand – and local politicians who tend to run scared, because of the prohibitive costs of locking horns with such huge companies.

The Totnes story goes something like this. In February 2010, a local wholefood business called Greenlife moved out of the High Street, to new premises on the town's market square. There were initial rumblings about the site being taken by Oxfam, before a new landlord called London and Western Holdings bought the shop, and it was eventually announced that Costa would be moving in, and opening a 70-seat cafe, in a part of town that regularly swarms with visitors.

This, presumably is why they want a piece of the action. "The bottom of the hill is where most of the tourists arrive," says Frances Northrop, the manager of Transition Town Totnes (or TTT), and one of the prime movers in the anti-Costa campaign. "They come in on the river, or by train, or into the car park there. So they'll come straight in, and they'll see a Costa Coffee. And if people are in a new place, a lot of people think: 'I'm not going to try the unknown – I'm going to go somewhere that I recognise.'"

In response to unconfirmed rumours that Costa would be moving in, Northrop and scores of people with similar convictions got to work, bigging up Totnes's cafe society. In May, there was a coffee festival, which offered prizes for baristas, the places where they work, and the slippery discipline of "coffee art" (putting images in the froth). Those opposed to the arrival of a chain pasted up posters modelled on the publicity material for the movie of Irvine Welsh's Trainspotting, recast as "Clonespotting". Meanwhile, a petition against the arrival of any big coffee business was in circulation, and quickly amassed 5,749 signatures – 75% of which, say the anti-Costa camp, came from people from Totnes, or its surrounding areas.

In time, the town council voted in support of the campaign, along with all of Totnes's district councillors. The local MP is Sarah Wollaston, the non-conformist Tory most renowned for her opposition to Andrew Lansley's changes to the NHS – and she is in full accord. "The strength of feeling on this issue has been evident and it is not too late for Costa to look at local opinion and decide to take their business elsewhere," she recently said. Plenty of locals say the Costa controversy is proof of one of the serial disappointments associated with the coalition government: there has been no end of Westminster noise about "localism" – but on the ground, the blanding-out of our towns, villages and cities seems to be accelerating, against local opposition.

What was soon named the No To Costa campaign zeroed in on the legal obligation to consider planning applications on the basis of what they will do to a town's "vibrancy and vitality", and claimed that if Costa got what they wanted, Totnes would suffer. But on 1 August, the planning committee of South Hams district council approved Costa's plans by 17 votes to six. As Costa's local opponents endlessly point out, only four of the councillors who voted actually represent the town.

"It wasn't just about the fact that we didn't want a large chain, or not damaging our pretty market town – it's actually that they're like Tesco," says Northrop. "They're an aggressive, extractive industry. We've got 42 coffee outlets, all independently owned, a lot of which are struggling, like anywhere else – and if you bring in a retail unit with the buying power and familiarity of Costa, which is the size of three coffee shops, you're damaging not only those independent businesses, who might go out of business, but their supply chains: growers, producers, drinks suppliers."

Campaigner Matteo Lamaro of the Curator cafe. Photograph: SWNS.com

When I contact it for its take on the Totnes story, a Costa spokeswoman tells me: "Totnes is a thriving tourist town and we appreciate that it has a strong reputation for supporting independent retailers." She says the company "would like to reassure the people of Totnes that Costa won't be a threat to the dozens of coffee shops that are already there, but will aim to complement the local offering and support the local community."

She concedes that "it's disappointing that there is so much objection", but says that "we simply want to add to the vibrancy of the town and support the local community." Costa, she claims, will boost the town's character "by adding vibrancy, complementing what Totnes currently offers."

When I ask her for a response on the question of local supply chains, her reply runs thus: "Costa coffee prides itself in using numerous suppliers, large and small, across the UK to produce the products it sells within its stores. For example, we work with a family run bakery to produce our cakes, with dedicated dairy farmers for our milk and use British meat in our savoury lines. At a time when many businesses are closing, we are one of the success stories of British business, creating jobs right across the UK."

I spend nine hours in Totnes, sped on my way by the borderline anxious buzz that comes from endless cups of coffee, served by people who are, not entirely surprisingly, worried by the prospect of Costa's arrival. Their stories tend to have a great deal in common: a good deal of the town's cafe-owners are people new to the trade, who have said goodbye to regular jobs, or time spent abroad, and staked their livelihoods on Totnes's unique culture.

At the freshly opened Curator cafe, I meet 38-year-old Matteo Lamaro, a native of Ancona in eastern Italy, who moved here after a long spell as youth worker in central London. Lamaro's cafe looks posh, but is way cheaper than the multiples: a regular cappuccino is £2, and a slice of his delicious marble cake comes in at £1.50: at Costa, the equivalent prices are £2.45 each.

"Costa will affect the ambience Totnes has," he says. "This is an independent kind of place, offering something different from … normality."

And will its arrival affect his trade? "It depends on the tourists. Costa is a known place, isn't it, isn't it? So if they want a coffee somewhere they know, rather than a place that actually offers good coffee … that's the main risk."

At the top of the town, the bustling Green cafe takes its name from 46-year-old Ivan Green, who moved here with his family after living in southern Brittany. They live above the business, and he rises at 5am each day to bake 90% of the bread, cakes and pies that are on sale. He is already preparing for the malign effects of Costa's opening, having done up the flat that sits behind the cafe, and rented it out. "The problem I have with the multinationals," he says, "is that it's just not fair competition." The more he talks, the more outraged he sounds: like a lot of locals, he says that one of his big fears is Costa serving notice that Totnes is ready to be colonised, and sparking the arrival of Caffe Nero, Subway and all the rest.

Over the road, Martin Turner, 42, runs the Tangerine Tree café. He's been in Totnes for four and a half years, having run the catering department at the HQ of the Met Office, in Exeter. "It'll have an effect on footfall coming up through the town," he says. "We've got a lot of loyal customers, but it could stop people coming up here: 70 is a lot of seats. The other thing is, it could put rents up. So we'll definitely notice it."

I hear the same sentiments at the Fat Lemons cafe – which is Totnes incarnate, purveying vegetarian and gluten-free food, with artwork from the Who's Quadrophenia hanging on the wall in the gents – and Olsen, a Scandinavian-themed place run by a half-Danish local called Karl Rasmussen, who offers such treats as home-cured gravlax ("with pickled beetroot, salad, Swedish crispbread and dill and mustard dressing"), and octopus, potato and watercress salad.

Two of his regulars are sitting just in front of the counter. "We've got 42 coffee places," says Ann Rutherford, 71. "Why do we need a 43rd?"

"A coffee shop is where people meet," says 64-year-old Diana Cusack. "We don't need Costa to give us a place to meet. We've got a surfeit of places in Totnes where people meet to talk. We're a talking town."

They both say they'll go nowhere near Costa, but say they worry about its appeal to the town's youth, who might be drawn in by the prospect of "two milkshakes and free Wi-Fi".

By way of walking off the effects of so much coffee, I decide to do a few unscientific vox pops – which is when I meet some of the people I've just been talking about. They're killing time in the market square and their lives, they tell me, are split between education, gap years and low-end jobs. On the face of it, they are the kind of people that Costa and their ilk specialise in attracting.

Round here, though, it doesn't seem to be working. "I think it's pretty bad," says Jesse Tighe, 18. "We don't really need these chains."

"If you want to come to Totnes," reckons 18-year-old Finnegan Travers, "you come to the independent places, don't you?"

What words, I wonder, do they associate with Costa Coffee?

"Shit," says one voice. "Corporate," offers another. "McDonald's," reckons a third.

"We're speaking for every young person here, I promise you. And older people," says Tighe. He glances up the street, towards a pub-cum-music-venue-cum-cafe called the Barrel House, and down towards the premises where Costa will soon pitch up. "No one in Totnes wants this, do they?"