Paper-shufflers, wake up and smell the coffee

Richard Blandy
November 12, 2012
The Australian

We went to the historic fishing port of Robe, four hours’ drive southeast of Adelaide, a pretty town of 1500 on the edge of the Great Southern Ocean, and a long way from anything that would be regarded as significant by the overpaid people in Canberra who spend their lives drafting drivel.

A lot of Victorians had come over for the Cup long weekend to enjoy the excellent beaches, food and art galleries. But Robe turned out to be home to something truly unexpected and even more rewarding than a great holiday: an inspiring small business called Mahalia Coffee that was a real tonic after the claptrap of the Asian Century white paper.

Mahalia Coffee is a family-run business that manufactures and distributes coffee to every state and territory, but predominantly to South Australia, Victoria and NSW. It employs 13 people in Robe, most of them women, and is growing fast. Its major problem is meeting demand for its product.

In an Australia where manufacturing is struggling and seemingly dependent on political favours, why is an under-the-radar boutique Australian coffee manufacturer, located in a rural backwater, able to succeed in Australia’s highly competitive, retail coffee market?

Why is it there at all?

Mahalia Coffee is located in Robe because the founders (and still principal owners) of the business, Paul and Mahalia Layzell, like living there.

This is a typical reason why family businesses are located where they are. Family businesses don’t decide where would be financially best to locate their firm. They decide where they would like to live as a family and then try to start something there.

Paul and Mahalia have had opportunities to move to the city, but they don’t see the point in moving, even if they could make more money. Paul’s mother lives around the corner, their kids like it in Robe, they are financially doing OK and their business is highly valued by the local community.

Mahalia happily says that they have an “integrated life”. Tellingly, Mahalia also says: “The council has been very helpful to us. It leaves us alone. No one hassles us. I am relaxed and able to be true to myself as an artist.”

The lesson for governments and their bureaucracies is simple — red tape is death to small businesses. Let them be their idiosyncratic selves and help them work through any conflicts with their neighbours.

Mahalia roasts Mahalia Coffee’s coffee beans. She and Paul are chefs and Mahalia describes roasting coffee beans as “cooking”. Creating a blend of coffee is both science and art — like making wine.

Different sources of coffee beans have different flavours. Brazilian beans, Indonesian beans and Ethiopian beans all have their own different and distinctive taste.
Beans taken from different areas within the same country taste different. Some coffees are called single-origin because they come from a single plot or set of plots that taste different from neighbouring plots.

Mahalia has cornered the market in beans from four single plots in El Salvador.

The amount of water content in each bean even affects how it has to be roasted. It takes Mahalia as much as eight months of experimentation to create a pleasing new coffee blend.

The main reason why Mahalia Coffee is successful at manufacturing while other Australian manufacturers are struggling is that it has a superb product, painstakingly and brilliantly created.

Mahalia Layzell is brilliant at roasting coffee, mixing and matching different sources of beans to produce trophy-winning flavours. Mahalia is to Mahalia Coffee’s coffee what Max Schubert was to Penfolds Grange.

Mahalia Coffee supplies the top end of the market. People are willing to pay a premium for excellence. Mahalia and Paul also ring their customers every Monday morning to ensure that they never run out of coffee from Mahalia Coffee.

Paul and Mahalia also know what they don’t know, and buy this in. They buy selected beans from two expert and reliable brokers in Sydney and Melbourne. Five specialist distribution companies (one of which got in touch because its owner loved the Layzells’ coffee) distribute their coffee for them. They have taken on a partner, Jamie Anderson, whom they met at a 40th birthday party, who works as a professional business mentor. Anderson deals with areas such as the company’s IT, website and packaging design. His MBA background is very helpful in advising and reassuring Paul and Mahalia when business risks and growing pains emerge.

While Mahalia Coffee’s freight bill is massive, and electricity and gas costs have recently surged, land in the industrial park at the back of Robe is cheap and the company owns a factory and the attached coffee, tea, ornaments and plant shop. Advertising is by word of mouth.

There are two production shifts at the company. Their employees would like to work more hours for Mahalia Coffee, but the business cannot afford the time-and-a-half, double time and treble time penalty rates that are prescribed by Fair Work Australia.

Instead, Mahalia Coffee engages more staff at ordinary time rates.

This is a typical solution in seasonal-worker-short Robe. Many people hold two jobs at ordinary time pay rates in each, because Robe’s businesses cannot afford the overtime and penalty rates ordained by Fair Work Australia. Brilliant, isn’t it.

Richard Blandy is an adjunct professor in the School of Management at the University of South Australia.