Putney Firm Takes On Coffee 'Big Boys'

CaféPod is focused on becoming everyone’s cup of coffee

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Directors Peter Grainger, Brent Hadfield, Philip Banfield and Kate Peers are thrilled at the success of the company, which has offices in Putney and was set up in March, 2011. Their motivation was to challenge Nespresso, the giant of the coffee machine world, by producing a quality coffee capsule which is compatible with the machines, but sells widely at supermarkets, instead of only at select outlets.

As with all the best business ventures, it evolved from a simple idea one of the four had on holiday. It was while Peter was on a ‘gap year’ break from his high-pressure career in the financial markets that a chance meeting gave him the inspiration for a brilliant new venture which has taken on the big boys of the food world.

The London ex-City worker, who lives in Putney, was in his early 30s and on the final day of a 12-month career break from his job at a hedge fund in the City in 2010 and visited a coffee shop in South Africa to buy supplies for a friend he’d been staying with. A chance conversation with the business owner triggered an idea which stayed with him on his flight back to London and his return to the office.

The result was a company called CaféPod, which has challenged the giants of the coffee machine business, while bringing good quality coffee into people’s homes at a reasonable price.
Peter explained how the business idea came about:
“I was on the last day of my 12-month travels and had been staying with a friend in Cape Town, so went into a specialist shop to buy some supplies for his home coffee maker. The owner told me he was selling pods that were compatible with Nespresso machines and I suddenly realised there was a gap in the market in the UK.

“The longer I thought about it, I knew it was a venture worth trying and I shared my idea with my friend and colleague Brent Hadfield when I returned to work. He was equally enthusiastic and we decided to give it a go.”

These discussions took place against the backdrop of a legal challenge in the courts between Nespresso – part of the world’s largest food company - and a number of European companies which were proposing to produce coffee pods compatible with Nespresso machines, breaking the monopoly the original company had in the industry.

Peter describes how “the ball started rolling and gained momentum”, with the first pods produced for Waitrose supermarkets in August 2012. He adds: “We grasped an opportunity and had the vision to see it through”.

That vision involved approaching a number of quality coffee roasters in the UK and partnering with one which shared the CaféPod directors’ enthusiasm and ambition to provide quality coffee at a competitive price in a large number of outlets. Previously, Nespresso machine owners had been able to obtain their supplies only online, or at a handful of select “boutique” stores across the country. Since the introduction of CaféPod technology last summer, the number of outlets has increased hugely to almost 250 branches of Waitrose. The pods, the only Nespresso-compatible capsules on sale in supermarkets across the UK, are also now available online at Amazon and Ocado and at some speciality food shops.

Peter is understandably still on a high from the runaway success of the business. His enthusiasm percolates through his colleagues, who share the vision, although they are quick to remind themselves that it’s still early days.

Brent, 30, who lives in Wimbledon, recalls how he first heard of the project when Peter returned to the office from his travels. “He was buzzing with the idea of taking on the big boys in the coffee capsule business and his enthusiasm was infectious. I was burning out from silly hours working in the financial markets and I was ready for a new challenge. I signed up almost immediately. I could see that the risk of challenging Nespresso was decreasing as the court cases developed and we persuaded family and friends to invest in the scheme.

Brent said:
“Our first thought was to buy coffee supplies and find someone to make the pods, but it was suggested we should invest in a machine to create them ourselves. It proved a brilliant idea.”

CafePod directors Peter Grainger, Philip Banfield, Brent Hadfield and Kate Peers

The directors knew the finance markets well, but admitted they were newcomers to the coffee and retail industry, so they looked around for expert assistance. They found it in Kate Peers, who had 17 years’ brand and marketing experience, including launching Starbucks in the UK, and Philip Banfield, an independent consultant with 20 years’ experience in the food, drink and retail business. Together, they began to explore the best coffee roasting companies and tasters in a niche market. The winning combination to emerge was Lincoln & York, the third largest roasting company in the UK, voted one of Europe’s best coffee roasters; and master blender John Thompson, with 17 years’ experience of tasting speciality coffee. John is one of a rare breed of “Q” graders, accredited by the Coffee Quality Institute. Of only 54 “Q” graders in Europe, four are involved in the work CaféPod does.

Brent explained: “To find our ideal team, we tasted beans from almost every roaster in the UK. The pod-making machine, made by the best producer in Italy, arrived in June 2012 and the first pods rolled off the production line two months later, ready to stock the shelves of Waitrose stores across the country.”

So how has the company grown so rapidly? Partly by producing a quality product – fondly referred to as “the clever coffee capsule” – at precisely the right moment to grab a share of the market and partly by sheer hard work on behalf of commercial director Philip Banfield. He says: “With the huge growth of high street coffee shops over the past ten years, it was clear consumers were demanding better quality coffee at home. Statistics show that sales of coffee machines using capsules or pods have leapt by 31 per cent, which is extraordinary.”

Philip’s strategy was to work the supermarkets in the UK, to get them on board with CaféPod sales. Within a few months of the launch, Waitrose, Morrisons, Amazon and Ocado had all agreed to sell the pods. Subsequent negotiations have produced outlets in speciality shops, coffee shops, hotels and offices.

“It’s been the most phenomenal distribution explosion I’ve known,” Philip said. “We’ve now taken on a sales consultant in Germany and Italy and are looking at the United States and Scandinavia.”

Philip, who lives in West Horsley, is now working on the next development within CaféPod – the launch of a “ristretto” strength pod – the strongest coffee on a scale of one to ten.

The final part of the CaféPod jigsaw is Kate Peers, who was introduced to the team following a conversation between Peter, Brent and her cousin, who worked with them in the City.
Kate, 40, who lives in Highgate, said:
“I grew up in Seattle, although both my parents are British, and when I finished university in 1995, I came to England to train as a barista with Seattle Coffee Company, which was just launching in the UK. I intended staying only three months, but I loved the company and could see its potential for growth so I joined the marketing team and stayed on. Pretty soon, Starbucks came knocking at the door and took over the original company.” This was the start of the coffee revolution in Britain and Kate was a part of it.

She recalls how the British began to change their drinking habits:
“At first, customers would come in to our shops and ask for tea and toast. They learned the lingo and pretty soon they couldn’t do without their morning ritual of a latte. Now they want to be able to make their lattes and americanos at home, just the way they want it, with no fuss. And that’s where CaféPod paves the way.”

Kate describes her role in CaféPod as “shaping and creating” the brand and using digital and print campaigns to get the message across to the coffee-drinking public. Like her fellow directors, she is passionate about the job and about coffee in general. She also juggles work with the demands of three young children – a six-year-old daughter and twins aged almost three. Kate, also a twin, with a brother in Seattle, clearly relishes the full-on nature of her life.
“I love being a mum, as well as working in a dynamic, creative company,” she says.

November 27, 2013