How I woke Ireland up to the taste of coffee

In 1998, David McKernan left his job, remortgaged his house, and cashed in his pension to fund his start-up coffee company, Java Republic. Now he's turning over €8m.

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 caf 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.

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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."

Jody Clarke

Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.