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Taking Stock #1 | Interview with Emma Loisel

In an industry that’s centred around people coming together in public places, how does a premium commercial coffee supplier react when those public places are closed?

For my inaugural Taking Stock vodcast, I chatted to Emma Loisel, Co-founder and Chair at Volcano Coffee Works about the challenges of doing business during a global pandemic.

Follow Emma on LinkedIn.

Or listen to this episode on Spotify:

TRANSCRIPT OF INTERVIEW

Anil Stocker:

Okay, so hello and welcome to the first episode of the MarketFinance podcast series called Taking Stock. I’m Anil Stocker. I founded the business of MarketFinance back in 2011 and we deliver seamless funding solutions for ambitious businesses. And one thing I really enjoy about my work at MarketFinance is the variety of business owners and entrepreneurs that I meet and hearing about their journey. A few years ago we decided to bring some of those stories to life, but with fireside chats with entrepreneurs that are hosted in our office in London, in Shoreditch, on Friday nights, followed by some beers and now undeterred by COVID-19, we’re taking these podcasts online to showcase what business owners are up to, how they’re dealing with the challenges that they face right now, how they’re thinking, what inspires them, their solutions, and much more. So let’s get into the action. Our guest today is Emma Loisel, who is the co-founder and chair at Volcano Coffee Works. Hi Emma, and welcome to the show.

Emma Loisel:

Hi there Anil, thank you very much for having me.

Anil Stocker:

Great. So we’ve got to know each other since October, 2019, when our businesses came together and you started using us, and that was a time when the world was a very different place. So why don’t you kick off and tell us about your business, Volcano Coffee Works, and what it was up to?

Emma Loisel:

So Volcano Coffee Works is a specialty boutique coffee roastery based in Brixton. We roast coffee in two different locations in south London. We are an ethically traded coffee company in the sense that all of our beans are ethically traded and that’s very important to us. And we service cafes, restaurants, hotels, a lot across London and UK and we also have an operation in Paris.

Anil Stocker:

And what’s your landmark client? If someone was asking you, “Where can I get your coffee?” What would be the one that you’re most proud of that serves your coffee?

Emma Loisel:

I always find this hard, because we have such wonderful clients right across the range. You’ve probably had our coffee if you’ve drank coffee in WeWork, we’ve been their preferred partner since 2015. If you’ve been to the River Cafe and had a wonderful meal there you will have finished your meal with a Volcanic Coffee Works coffee. We have wonderful cafes like the Good Egg in Stoke Newington, Tart down in Clapham, we really work closely with our clients to ensure they can deliver a great coffee but also deliver their businesses if they can with us.

Anil Stocker:

Absolutely. Well coffee definitely has become more premium and really a great pastime here in London. Very hip thing to do. And did you found the business yourself? Were you there on the day one? Tell the story of why did you, how did you get involved?

Emma Loisel:

So I called Volcano my exit into business. I sold out with some colleagues of mine, a couple of digital media businesses in 2007, I then did angel investing for five years, and I was investing a minority stake in businesses and sitting on the boards of those companies. And I actually really struggled in that role since I really didn’t feel like I could make a big impact as I wanted to, so we decided to try a different strategy and my co-founder, who’s our head of product and our master roaster is actually one of my husband’s oldest friends. And we knew coffee from the time of New Zealand when it was… New Zealand market is a very different, it’s a much more mature market. We were struggling to get good coffee in London and decided to start the roastery with Kurt. So he’d started a business a few years earlier, we invested in it, we re-launched it as Volcano Coffee Works in 2010, and it’s just grown from there.

Anil Stocker:

Wow. So 10 years. It’s been a 10 year journey so far.

Emma Loisel:

It’s our 10 year anniversary this year.

Anil Stocker:

And give a sense of the size of the team, and is all the operations in London? I know you’re in New Zealand now and we’ll come to that, probably COVID related. Yeah, give a sense of the team and yeah, the people in the company.

Emma Loisel:

So we have two roasting sites, one in Brixton and our head office, which is our site where we also have all of our training, customer training, and our client events. We do a lot for the industry there. We have a focused roasting site in West Norwood. We also have a cafe in West Norwood. The team is 31 people, everyone else is based, we have one girl in Paris, and the rest are based in central London, and I in a crazy way ended up in New Zealand.

Anil Stocker:

So drinking coffee is probably one of the most social activities out there. So obviously this COVID chaos and social distancing must have a toll on your business. So walk us through how did the crisis hit you and when did you realize this was potentially going to affect your business?

Emma Loisel:

Yeah, it was really fast. We had our best February on record, we had great growth. We have consistently grown 30% year on year, and all of a sudden, literally in three weeks, 91% of our orders have ceased.

Anil Stocker:

90%? 90% down?

Emma Loisel:

91%. It was just literally off the cliff. And we immediately pivoted to direct to consumer. We had the business already running and we actually invested our new website last year fortunately. And we had plans to really grow that in the next 12 critical months. Nothing like a pandemic to change your strategy because we realized with all of our customers closing, we really needed to move fast. So we pivoted to direct to consumer. We’ve seen those sales grow really strongly. We were probably between week on week, we’re doing six, 700% more, which is fantastic growth. We also had started in Holland & Barrett, a grocery range so that we were about to go live in Ocado. One of the reasons we partnered with MarketFinance was because we were starting to go into big grocery, and knew that was on the rise, and needed to make sure we had a partner with us to work through our operating cash needs that we knew we were going to face.

Anil Stocker:

Oh so that’s interesting. So basically, because obviously the supermarkets are booming right now, right? They’re selling like crazy, so you were going more into places where people would drink it. Like coffee shops and WeWork, office space-

Emma Loisel:

Absolutely. We were selling wholesale, so a majority of our business is selling to the cafes and the restaurants, et cetera, that was serving its clients. So we were starting grocery but it was very early days. If this had happened a year later, it would have been a different position because you’re right, those in grocery are doing well. The challenge is specialty coffee is very small in grocery. I mean, most of the grocery coffee you drink is commodity grade coffee. And the challenge is that this then makes it actually a global issue because without the specialty coffee market open, the impact right back down the supply chain to some of the poorest communities, and our farming communities, small holders right across South America and Central America and Africa. Then the market for them has closed as well. I was speaking to one of our buying partners and they’ve seen orders in a month dry up by 70% globally.

Anil Stocker:

Wow. So I want to come back to your suppliers, but just talk us through the logistics of you were used to selling into WeWork, probably bigger packages. How did you go from that to delivering to individuals right? Directly to individuals, because you’re doing that now, right?

Emma Loisel:

Absolutely, absolutely. I mean, we had the bones of it, but what we hadn’t done is really put any volume through a process or systems, and of course at the same time we were having to furlough the majority of our team. So all of a sudden we had to cherry pick some people who could multitask and skill across different areas. Some of it most have never done before, but we had to keep in on the day to day the people that we thought would be able to do more than one role, they may experience what we needed. So we really quickly just said, “Everyone, we’ve got to get an online production line going overnight.” And you’re right, we normally pack into two bags and now we’re packing most of our coffee into 200 gram bags.

Emma Loisel:

And now we have this enormous pile of Royal Mail that comes and that’s been really challenging. But there’s also been a silver lining to that because the processes we were running within our production line was something we’ve been working to get, I suppose, streamlined and improved. And amazingly overnight they had equipment that was due to be set up, it was running, it was operating, they’d worked out how to improve the systems of different technology to work for that, so that kind of pressure makes diamonds. It’s something we’ve definitely seen even in just the microcosm of the operation of our business.

Anil Stocker:

Yeah. I mean, this crisis really gets you to accelerate plans and things. I’ve been talking to a lot of business owners and they say things that would have taken us a year has taken us the week to do just for that focus and that element of survival, that instinct to survive is a very big driver of change. And you mentioned furloughing of staff. So the government scheme in the UK where you can furlough staff members, they move off your payroll and onto the government payroll for three months. Have you made use of that? I mean, obviously with revenues dropping so quickly and so fast, I guess that’s one of the reasons to use the scheme. And how did you think about that? Did you have to lay people off, or did you use the furlough scheme, or pay cuts?

Emma Loisel:

We’ve done a combination. I think if they’d moved off our payroll onto the government’s, that would have been easier. But unfortunately that’s not how the system’s working. In essence, the government has so far written a very large IOU to the business community. We’re hoping on Monday the system comes up and they can start paying businesses back. So yes, we sat down and went, “What’s the skeleton crew we can run?” We furloughed everyone else, which is 24 people. Because we really had no idea how online would grow. We’re actually about to un-furlough some people next week because we now have a demand. Now that’s still going to be at a cost to the business in essence because we’re still nowhere near back to our profitability.

Emma Loisel:

But it’s about growing the market at the same time and using your people in the best way possible. And the rest of the team were reduced hours. So in essence, they had a reduced pay as well those that were staying on. So because very early on we had no idea of what was going to happen. What the government was going to do, when they were going to open, what the impact was, which customers were going to survive or not, whether we were going to get government support through receivables. We really just had to go to the most extreme measures and then go right now we’ll come back. And that’s what we’re now starting to do after three weeks.

Anil Stocker:

Interesting. Very interesting. So you view this furlough scheme very much as temporary and that you want to bring back your staff members.

Emma Loisel:

Absolutely. A key metric of success personally for me is will all of our staff remain with us? We’re a purpose laid company. Our purpose is everyone deserves a fair shot. And to me that’s fighting the way we’ve been working in the last three weeks to ensure the company can keep all or as many people as we can. The challenge is for the business, it’s also going to evolve during this time. So there may be changes in roles as we change. We may come out of this quite a different business than when we went in. And so, as a business leader you have to be cognizant of… This is incredibly fast transformation of the business we’re going through. But to me, you want to be able to have those choices, and to have those choices, you’ve still got to be in the game.

Anil Stocker:

And what’s the morale of the team? What are you learning about your team through this crisis?

Emma Loisel:

It’s amazing actually because you get to see the mettle of your people. And I’ve been amazed. I’ve been really, really impressed by my team. We hire very carefully and I have to say, I’m really pleased we have today because everyone has stepped up and just really dug deep. I get responses when I send emails at ridiculous time of night even though I tell them not to. They’re doing roles often more junior than them. We have head of operations answering clients on where’s my package, to our head of production on the packing line. Everyone has just rolled up their sleeves and mucked in. And that really warms my heart when I see everyone through throw the rest of it behind saving the business because the people in who are working very much feel that their work is for the benefit of everyone. We’re working hard to make sure the business survives, but that needs the livelihoods of 31 people.

Anil Stocker:

Yes. I think it’s almost like you’ve become a startup again with everyone doing lots of different roles and that smaller team and pitching in and I would also add that people respond very differently in a crisis. For myself, I actually like a bit of pressure. I like the fact that when your backs are against the wall and you need to really go for it, that kind of motivates me. But then there’s some people who find that a lot tougher. So it’s about finding the people in your team and what drives them.

Emma Loisel:

Yeah. And it’s also about not exhausting them. I mean, we may furlough some people out for three weeks just to give them a break. It’s almost like I see furlough as the bench, and so if we find that someone’s just dug so deep and is absolutely knackered, then to them I say if you need to take some time off then that’s okay. We’ve got people on the bench. It’s how we work our team all together the best way possible.

Anil Stocker:

Yes, absolutely. I was talking to someone and said it’s like running where you’re sprinting but you don’t know where the finish line is. So you can keep running at that pace and you’re like, “Okay, it might end this week.” But you don’t know what it is, so you can’t pace yourself. So that could lead to burnout and I think people are realizing as we go into week five of this and another three weeks here of lock down in the UK, that even though people can’t travel and go on holiday, it’s important for them to take a break. Otherwise you’ll see burnout.

Anil Stocker:

Okay, really interesting. So you source the coffee from all over the world, right? Like a lot of businesses that have a very long supply chain spanning continents. What’s happening right now? Can you still get that coffee in or do you think the future of your business will see more local suppliers?

Emma Loisel:

It doesn’t exist. I mean coffee is grown in the Ecuadorian belt. Especially coffee in the high mountain regions. So that’s where this product comes from, all the raw materials. From a supply chain point of view, we’re pretty stable at the moment because one, we had coffee on the docks for our normal use and of course that’s fallen off considerably. So we have coffee there, green coffee is stable for 12 months. So in essence, we haven’t had to purchase coffee for the last three weeks. Normally we’re bringing coffee in couple of times a week because we had enough on site, and we did a purchase yesterday for the first time of something that we’ve run low on. So the concern isn’t short term, the concern is longer-term, medium-term, because the issue is that the farmers pick the coffee, they bring it down, it gets milled, it then gets brought to the dock and sea-freighted to us.

Emma Loisel:

That’s several months. So I think the concern really is that in six months, have the farmers been able to be supported long enough to continue to supply into the specialty market? I also think you’re going to see some great collaboration going on between, especially roasters. Those roasters to me are our contemporaries, are our friends, so I think you’re going to see a collaboration across roasters going, “Well, this is what happened when we went through COVID,” and we’ll start trading green coffee between us to help us all get through.

Anil Stocker:

Yes. That’s another very interesting trend actually, collaboration. So where people were competing, they’re starting to collaborate and help out the sector. I’m seeing that a lot across a lot of different sectors, which is really interesting. So, okay great. Now, just to touch on, you mentioned that you went to your… Did you raise some money from the bank, or you’re a profitable company, did you have resources to weather the storm, or do you need to get financing?

Emma Loisel:

No, we are a profitable company, but our business has been completely shareholder funded to date. Bar a small overdraft, the only financial partner we have is yourselves. And so when this crisis hit, we turned to our bank. We’ve been working really hard with them and it’s been challenging for them, which I really, fully appreciate because the reason we’ve never gone to borrow money from them before is because we don’t run our business in a way that is how they normally measure. They’re looking at historic really strongly, even though we’ve been EBIDA profitable for eight years, when you look at it from our point of view, we really invest every year back into the business, into product innovation. We were the first to launch Nespresso compatible, fully compostable pods with our specialty coffee in 2017, which won innovation award at London Coffee Festival.

Emma Loisel:

We invest in the people and also launching new markets like Paris. So of course that hits your EBIDA. So when this crisis happened, we did turn to our bank and it’s taken a lot of effort on both sides to really be able to build that story, and I think that’s one of the challenges that the BBB has. How do we ensure that the businesses that we need for Britain’s future aren’t lost at this time, and how do we make sure the right businesses are supported?

Anil Stocker:

So you’re still in conversations to get this COVID business interruption loan?

Emma Loisel:

We’re really close.

Anil Stocker:

You’re very close. But that’s taken, what? That’s taken a few weeks?

Emma Loisel:

Yeah, it’s taken me a couple of weeks. It’s taken a couple of weeks of back and forth and a lot of information. And I think that the challenge is that normally I would be speaking with more venture partners for this sort of business, that understand growth, and understand markets, opportunity, and can look at the… I was talking to my bank about why are we not measuring these business against the VC rule of 40? Looking at the percentage of growth, adding it to the percentage of EBIDA, and are you above 40? Now you’re an interesting company. Because you could have a really good solid EBIDA business in a dying industry. And is that what the government wants to support, or do we need to think, how do we make sure we capture the companies of tomorrow?

Anil Stocker:

Yes. No, it must be very tough for the banks because every business is applying at the same time and they’re not built for fast processing. They don’t know every sector. So, there’s a lot of talk, I guess, in the market about how the government might need to improve this because it is taking a long time, and there’s no point having it so that people are getting money at the end of the crisis because they need it right now. So hopefully we’ll see more-

Emma Loisel:

They won’t be there at the end of the crisis. And I think that the thing. I feel we’ve had the first tremor of this crisis. We haven’t actually had the full shake yet. And the full shake is to me the end of this month where companies cannot make their payroll. Because when we talk about the scheme, the company still has to have the cash to pay their payroll, and it’s in arrears system. We don’t know on Monday whether we can claim for a bit of March and all of April. And I fully appreciate the government is building this literally, they’re changing engines in flight, aren’t they. They’re trying to take a system and retrofit it to make the system work. And this is it. Government’s going to have to behave like a startup. They’re going to have to innovate in a way that we in business we know well.

Anil Stocker:

Yes, yes. No that’s really interesting. I guess to come to some sort of looking forward, do you think that your business is ever going to go back to what it was before do you think it’s permanently gone through a change and that will be it? And I guess maybe that’s also something that we can talk about in terms of the economy. Do you think the world will even go back to pre-COVID versus the future?

Emma Loisel:

I think that COVID has forced us to diversify at a pace that we didn’t think was possible. And that if we can make it through, that will be actually we’ll come out with a better business because we’ll have a more diversified offering, which is great. But as I say, in order to be first, one must first finish. And so that’s the goal now. And so I don’t think it will be the same, and I think the business owners that find ways to make that benefit will be the winners of the situation. I don’t think we will go back to the same world either. I think there’s a lot of unintended consequences of this period of time, but I think we change things. But I was just watching the dolphins in Venice’s canals, are they going to let 20 million tourists go through Venice every year now?

Emma Loisel:

Why would you? Look at it. So I think you’re going to see shifts in the environment. How people view the environment. I think people didn’t think it was possible. I think it was Delhi I was looking at pictures of before and after, and it’s extraordinary. So I think you’re going to see people collectively start saying maybe that that isn’t the right way and all the problems we thought we couldn’t impact and we couldn’t change, actually we did. And therefore what do we need to change it? And that’s part of the reason I think governments around the world need to think about the companies they want to make that change with them.

Anil Stocker:

Yes. So I guess what I’m hearing is what you’re saying is you have to adapt or you die. We’re in that situation where it’s very binary. You either adapt or you die. And I’m hearing that you necessarily don’t think it’s right for the world economy to go back to what it was. You think there’s an opportunity to change the way we do business at a country level or at an economy level.

Emma Loisel:

I think it’s not just at a business level, but I think it’s at a personal level. I think people are going to make different personal decisions, that they didn’t think about before. But this is showing them that they can actually get up the road on a bicycle, that they don’t need to drive, that there isn’t public transport to there, so they’ve found another way. There’s what they can get online. I started doing Pilates with my Pilates teacher online and it’s 80% just painful. It really is. And I don’t have to go very far, it’s remarkable that I turn up. But it’s little things like that. I can be there within three minutes of getting off a conference call and I can be back on one three minutes after. I used to lose an hour by the time I got… All of a sudden I think we’re learning that there are different operating models for not just the economy but also our lives.

Anil Stocker:

Yes, absolutely. So this was great. It was really good talking to you and we’re going to have a lot of entrepreneurs hopefully watching this and other businesses owners. So many of them going through some tough times only thinking week to week. They can’t even think beyond that. What words of advice do you have for some of these entrepreneurs right now or business leaders on the next few weeks?

Emma Loisel:

I love the head of the WHO, the World Health Organization, when he was talking about the Ebola outbreak and he said, “What we learned from that outbreak was if you need to be right before you make your decisions, the virus will get you.” We don’t have the time to know we’re right. We have to make decisions fast. You can change it if it’s wrong, but don’t wait. I think if you even look at that a pandemic level, the country, New Zealand was one of them, Jacinda Ardern made a very early call to shut the borders and to put us into lockdown. And everyone went… And actually you look around the world and see which countries went hard and went early are the ones that are coming out of this, seemingly. Now there is still a question about how do we get the economy out of it, how do we re-open the borders.

Emma Loisel:

But I think there’s a message to all of us in that. Make decisions, change it, and let your people really fly because we’re moving at such a pace. You cannot make all the decisions. So really let’s see what our people are made of, and let them make decisions and be creative. And if they fail, that’s fine. We all do. It’s better to try and fail than to just, “Don’t send me a report. Tell me what you’ve done.”

Anil Stocker:

Yes, definitely a time for action and being decisive and you’re not going to get everything right. In fact, you are going to get things wrong. And one thing I told my team is you’re going to come in, you’re going to work hard, and you’re going to end the day, and you’re going to feel like you’ve made no progress. Sometimes you might feel that you’ve actually gone backwards, but you there are going to be days like that in this crisis. But as long as you’re working hard, making decisions, we’ll get through it. So really, really great. Really Emma, really great to talk to you. And as I said in the beginning, it’s helping people like you and businesses like yours, which is what inspires us at MarketFinance as a team and why do we keep doing what we’re doing.

Anil Stocker:

And we feel your pain. We work very hard to help small businesses and small businesses are the ones that are going to suffer the most in this crisis. The ones that account for 50% more of employment in this country. 50% of employment is through small businesses. So they’re crucial to the economy and we want to do our utmost to help them. And it’s going to be tough. But we’re here with you through this crisis. So thank you very much for taking the time all the way from New Zealand. Hope that New Zealand continues to do good job in combating this virus and that soon you’ll be able to come back to enjoy Volcano Coffee in London.

Emma Loisel:

Thank you very much. Thanks for having me.

Anil Stocker:

Thank you very much. Thank you.

Anil Stocker View All

Co-Founder of MarketFinance

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