How I woke Ireland up to the taste of coffee

David McKernan, 42, isn’t troubled by appearances. In the early days of his ethical coffee company, Java Republic, he went nude in a local coffee bar to promote it. “My wife wouldn’t talk to me for a week,” says the Dubliner. “I hadn’t exercised in ages and the body wasn’t looking all that good.” But having taken on the two companies that controlled 90% of the Irish coffee market in 1999, he had to do everything he could to get his brand off the starting blocks.

Brought up in Lucan, West Dublin, McKernan “went to a great school called Kings Hospital, which I can’t talk about now because those two eejits (Jedward) from X Factor went there”. After school, he joined Bewley’s, the dominant coffee firm in Ireland, rising to become sales and marketing manager with a company Mercedes and a salary of IR£80,000 a year.
 
But in 1995, he travelled to San Francisco and came across Caffe Roma on Columbus Avenue. “I decided I would love to have a café and roastery just like that one day. I just thought if we did it differently and ethically it would work.” What’s more, Bewley’s and Robert Roberts had a stranglehold on the market, so there was a gap for someone to do something different.

With the Celtic Tiger beginning to roar, it seemed like a good time to start a coffee company in Ireland. So in September 1998, McKernan left his job and spent four months drawing up a business plan. The aim was to target hotels, restaurants and large companies with his freshly roasted coffee. He remortgaged his house, cashed in his pension and sold options worth IR£10,000 to fund the start-up. “Everything was on the line. If I was gone, I was gone forever. And at that stage in Ireland, going bust was not a good idea.”
 
In September 1999, he leased premises on the Kylemore road in Dublin and took on nine staff to set up a roastery. In his first four weeks, he sold just one case of coffee, costing him IR£25,000.

“I stuck to my guns. I knew it could work.”

Passionate and pushy, McKernan approached companies one by one, selling them the advantages of his coffee. “We were the first people to put the grade and the percentages on the front of the pack, and the first to put the date the coffee was roasted on. We got an enormous amount of PR, especially when we launched the first Fairtrade coffee in Ireland.” By the end of the first year, he had cornered 11% of the catering market and won over more than 240 wholesale clients, who were also impressed by his open and frank ethical credentials. Of McKernan’s profits, 11% go to communities in regions where his coffee is grown – a policy that continues today despite the recession in Ireland.

Turnover was IR£350,000 in the first year, rising to IR£1M in 2001 and €3m by 2002. Today, it’s almost €8m, even as the Irish hunker down for some very dark times ahead. As for the future, “there isn’t a business I know that’s not down 10%. Even in the good days, Ireland had too many Michelin-star restaurants that weren’t going to survive. But anyone who is still standing in two years’ time will do exceptionally well because things will come back.”

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.