'I was lucky I guess, getting into coffee’, laughs Andy Simpkin, MD of Belaroma. 'I have a passion for coffee and to me, having a passion for something shows in the way you do business. That's one of the reasons we're just a little bit different at Belaroma - that sense of passion!'
Belaroma was founded in Sydney's Northern suburbs back in 1967 and quickly became one of the country's most prominent and successful coffee roasters and cafe suppliers, But by the time Andy got involved with the company, it was quite a different story for the roaster.
'I had actually tried to buy Belaroma when I first thought about getting into coffee in Australia, but the owner just wasn't interested at the time,' says Andy. 'Then in 2000, I was actually contacted by the then owner to help try and dig the business out of the slightly sticky financial situation it was in!'
Andy already has a strong background in the world of coffee, starting in the mid-80s in Indonesia. 'Did you know that coffee is the second largest traded commodity in the world after mineral oils?' he enthuses. 'It's a fascinating trade to be involved in and for me it's the green bean side of the industry that's most fascinating.'
'Coffee is much easier to trade than tea, because the bean grows over nine months. It doesn't succumb to the seasonal variations of tea, which has to be plucked every seven to 10 days. Then because it becomes a commodity, at green bean level it's much easier to trade and standardise. And the real value in coffee is that you actually roast it and blend it yourself. With tea, you might just blend it, but with coffee there's so many ways to make a difference. We can bring in, for example, Indian coffee and Kenyan coffee and Sumatran coffee and we can roast them in different ways and we can also blend them in different ways. A different roaster might have the same beans, but they'll roast and blend a completely different coffee - that's where the creativity and the passion for coffee comes in!'
 THE RIGHT BLEND FOR SUCCESS
Andy took this wealth of knowledge and went to work on Belaroma. From a struggling company with 15 employees, he built the brand that is so famous today - 35 employees and worth nearly 111 million. How did he do it?
'Apart from being passionate, you need to have integrity and respect,' muses Andy. 'I like to think that it was my love of coffee that got me into Belaroma, but it's integrity and respect that have made it successful. It's about treating my team with respect, treating our suppliers with respect, and of course, treating our customers with respect and understanding. I like to say that for a few years now we haven't actually been selling coffee, we've been selling a relationship.'
And this philosophy has proven very successful for Andy and Belaroma, which has enjoyed a remarkable retention rate of customers over the years.
'I remember reading a large American study that showed that 67 per cent of customers change suppliers because of perceived – not even real, but perceived - indifference,' he remembers. 'To me that's just a staggering figure. So how do you overcome that indifference? You respect your customers. You make sure your customers know that they are important to you. Even if you have issues with product or supply or whatever, if you have shown a strong level of goodwill in the past, your customer will tolerate a few hiccups. It's because you've shown a willingness to treat them honestly and you face up to problems when they happen. People will always respect that.'
Finally, Andy is also careful to keep a sense of perspective on how he runs his business, something he regards as a key to success.
'I belong to an organisation called The Executive Connection,' he says. ‘We're a group of l6 CEOs or MDs who meet once a month. We kick off with a professional speaker, then we discuss the issues we've been having in our own businesses. The fresh eye and opinion of people from other industries and different experiences is just amazing. It stops you getting bogged down and lets you take a step back every now and then for a new look.'
THE SHIFTING GRAINS
Of course, like any industry, coffee has trends that change the business landscape over time. Andy has worked hard to ensure that Belaroma can move with the times and continue to grow, no matter what the challenge.
'It's interesting to see the changes in cafe culture,' says Andy. 'Obviously, any differences on the consumer level will have a direct effect on how our business works. For example, it's very difficult to go and get a bad coffee in most decent sized towns now,' he laughs. 'Espresso culture has risen to the point where we make good quality coffee, and that's brilliant. I travel quite a lot and I find it difficult finding places that actually produce as good a coffee as we have in Australia. Of course, all this good coffee comes from somewhere, so we've seen a proliferation of roasters, There are now 91 in Sydney alone, with a similar number in Melbourne. I think we're looking at over 200 roasters now in Australia, which is just huge given we've only got a 20 million population. If we're not careful, we'll get to the stage where we almost have one each!'
But this growth has a counterpoint - the independent cafes of Australia are shrinking in number, something Andy finds a little depressing.
'Basically, independent cafes have been shrinking by two per cent year on year over the last four years,' he says. 'That means that the independent cafe trade has actually contracted by eight per cent. That's a dramatic number. People like their chain cafes and they're getting great quality coffee at them. There's nothing wrong with that, but it saddens me to see independent cafes as a threatened species, And worse, I don't think that that is yet clearly understood in the market. One of the things we're trying to do at Belaroma is actually work with independent cafes to help them grow their business, .If they can grow by just one kilo of coffee a week - about 130 coffees - the bottom line is about $10,000 extra a year in their back pocket. And yes, of course we benefit,' Andy laughs. 'But it's on a scale of one to 10 - it's an extra $1,000 for us, extra $10,000 for the cafe. It's not just about the money, it's about helping foster a business environment where everyone can survive. So helping independent cafes serve really great coffee and avoid extinction is mission critical for everyone, I'd hope!'
CAFE2U, 4U
Part of Belaroma's drive for new business has been the acquisition of a mobile espresso service called Cafe2U.
 'We picked up the business in 2004,' remembers Andy. 'The guy who put it together had a lot of vision, but he had around 25 vans and it was becoming a bit much for one guy to handle on his own - things were starting to crumble at the edges ! A business partner and I put together a deal and we found ourselves with a brand new way to get Belaroma coffee around Sydney.
Andy trimmed the business down, streamlining the way it ran and changing a few elements. 'Initially the Cafe2U vans were all different makes and models,' he says. 'I wanted a distinctive and consistent look for the vehicles. We talked to a few manufacturers and the Cafe2U van is now a red Mercedes Vito no matter where you see it.'
Andy also changed the franchising model and the way vans were allocated territories. 'We put together databases that modelled working, rather than residential, populations,' he says. 'With these databases we're able to model what is an optimum territory and we sell that territory to a franchisee along with the van. It's their territory alone and no other Cafe2U franchisee can trade inside there without the permission of the owner of that franchise. So, for example, we know how many people might be working on a particular industrial estate and the new franchise model is based on our van going into an industrial estate or an office park, between seven in the morning and two in the afternoon, and servicing those businesses there. Essentially, we've made Cafe2U's purpose to deliver great quality espresso coffee and complementary items to non-traditional locations. We've spent a lot of time and money to get this just right and I think this is one of the big differentiators for Cafe2U - we understand the business.' |
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