Every big business, from Nike to Zoom, was once an ambitious, fresh-faced start-up. Somehow these youthful companies kicked on, each evolving from a pimply-faced, turbulent adolescent into a mature and well rounded organisation. As our readers know from seeing our previous interviews, every company has a unique, evolutionary tale to tell – a very human story by ambitious protagonists with all their dreams, flaws and fears. The narrative of each springs from the decisions that these people make; decisions informed by their courage and brilliance and forged by luck and misfortune.
In this article, we hear from a business that is making great strides in its journey from high-potential juvenility to securely profitable adulthood. Making this transition is one of the biggest challenges any entrepreneur faces. It’s one thing to conjure up starry-eyed business plans, spend investors’ money and dream of success. It’s quite another to grow sustainably, make cash rather than just spend it, dodge Covid-shaped curveballs and other such pitfalls, and stay just as driven as the day you launched.
Pact Coffee, founded in 2012, is transitioning smoothly to maturity in style despite – in fact maybe because of – coronavirus. We first spoke to Pact in 2018 when we heard about its compelling mission to produce the world’s best coffee while also paying farmers a uniquely high wage – at least 25% more than Fair Trade. Two years later we’re back to see how they’re progressing. What we find is a £10m business that’s bigger, more mature and even more resilient. It is still obsessed with the same mission but it is now also growing roots big enough to thrive in all conditions.
So, how has the Pact Coffee team nurtured the business from an exciting, young sapling into a steady, fruit-bearing tree? CEO Paul Turton and Head of Coffee Will Corby, speaking below, put it down to four key factors.
1) We’ve built up resilience by being an omnichannel business.
CEO Paul Turton: “My key piece of advice for entrepreneurs: make sure your business is a multi-channel operation – if it is, it will be stronger especially through turbulent times. At Pact, we sell our coffee through a number of different channels. Lots of people say start-ups can only focus on one – that you can’t chase more than one rabbit. I strongly disagree. Before Covid-19 we focused a great deal on B2B – selling coffee to offices. We grew B2B from virtually nothing in 2018 to £2m. But then Covid hit and we needed to adjust our strategy. As many of our B2B customers effectively went into hibernation, by doubling down on our consumer direct to home activities we have seen stratospheric growth in sales – from £5m to £9m+ in just a few months.
“However, we didn’t have to make a standing start in consumer. Far from it. We were already strong in that area because we had focused on consumer sales from launch in 2012. It wasn’t until later that we started building B2B. What I’m saying is, having strength in both consumer and B2B – and also in retail, e-tail, subscription and other channels – is vital for long-term stability and growth.
“And no surprise, we’ve already started refocusing on business-to-business. Not by selling to offices this time – Covid has put a stop to that – but by focusing on cafés, restaurants and hotels. In just a few weeks we’ve built our trade sales back up to just shy of £1m.
“What I’m trying to hammer home is that you should explore the opportunity to sell via every channel you can.If you do, you can grow and focus on other sales and marketing channels depending on fluctuating market conditions. Such a strategy reduces risk and gives greater flexibility and stability. At times during lockdown we were roasting the largest quantity of speciality coffee in the UK – maybe across Europe, too. That was all down to our multi-channel approach.”
2) When times are tough, prioritise – with absolute clarity.
Paul: “To survive and thrive during challenging times, you have to break things down and think clearly. You have to identify your critical priorities. In March 2020 we had no idea what was going to happen. Would the government shut us down because we were a ‘non-essential’ business? Everything was so uncertain. So, we focused very clearly on three key things.
“First, we prioritised staff safety and wellbeing. Second, we focused on making sure we were serving our existing customers – it’s exciting to try to acquire new sales but that’s no good if you’re letting your existing customers down. Third, we prioritised cash conservation. And that’s it. We didn’t try to do anything else until the fog cleared.”
3) A powerful mission makes your brand magnetic.
Will Corby, Head of Coffee: “Our mission hasn’t changed over the years. We still pay our coffee growers a uniquely high wage – significantly more than Fairtrade – and we still produce what we think is the best quality coffee in the world. Our mission improves farmers’ lives in countries where there’s no health service and no national insurance – every bean we sell is changing lives. We see photos of our growers’ families – their kids who can now go to school because their parents are bringing in enough cash. Some of the children we met six years ago, who back then wanted to escape to the cities to work in call centres, now own coffee farms and sell to us. That’s an electrifying feeling.”
Paul: “It feels great coming to work and knowing we are on a mission to improve the world of coffee from the inside out and bring speciality coffee to the lips of the nation. Our glowing customer reviews and 4.7 rating on TrustPilot suggest we’re on the right track.From a business perspective, our mission also attracts talented people and adds value to our brand. For example, in August 2020, after receiving more than 400 applications, we hired Morwenna Francis as Marketing Manager – she was previously EasyJet’s head of marketing for two years. Morwenna is now working closely with Tour de France winner Geraint Thomas, our brand ambassador. We can attract great people because of our mission and values. They draw talent and keep us all motivated.”
Will: “There are half a million families in Colombia producing coffee. Pact Coffee is a name they now know. The growers all want to be involved because our brand is respected. What we’re doing is revolutionary in the coffee industry.”
4) Know when it’s time to stand on your own two feet.
Paul: “My final piece of advice to anyone starting out or scaling up is this: know when it’s time to be profitable and go it alone. Figure out when that moment is. You can only live on investors’ money for so long.
“We’ve made that break; we are profitable, and we are very much standing on our own two feet. Our plan now is to hit £15m in the next 18 months. Beyond that, it could be huge. Instant coffee still accounts for around 80% of coffee sales in the UK. The speciality coffee market is only going to grow. Because we operate across all channels – consumer, trade, offices, online, you name it – and thanks to our mission and ethos, we think we are well placed to capitalise on this opportunity.”
CLIC’s final word
Paul and Will from Pact Coffee offer strong, clear advice to entrepreneurs and business leaders looking to move beyond the start-up phase. First, spread your risk by selling across as broad a range of channels as possible – as Covid has proven, over-reliance on one channel is potentially catastrophic. Second, prioritise, prioritise, prioritise. Thirdly, do not underestimate the power of a company mission. A strong mission – one that goes beyond profit – not only motivates, it also attracts talent. Finally, always look to usher your business towards self-sufficiency and work out when to break free of investors’ apron strings. By doing these four things well, Pact Coffee has put down roots large enough to provide stability, even during the hurricane of the pandemic. Their progress provides good lessons for us all and invaluable insight that might just help you and your business get to the next level.