Small Business: Kokako coffee at a 'tipping point'

Raising external finance the next step in sustainability for organic coffee firm.

The Kokako brand has had an interesting journey, starting life as a coffee cart in Aotea Square in 2001 as Auck-land's first organic coffee roaster, then moving to a cafe in Parnell next to Al & Pete's on Parnell Road with an on-site roastery.

Mike Murphy bought the business in 2007, setting up a new production kitchen and roastery in Eden Terrace. Two years later, Phoenix Organic's Chris Morrison, last week named the Sustainable Business Network's sustainability champion, became a shareholder. In 2010, having grown 400 per cent, the Parnell cafe was sold to focus on the wholesale business and Kokako became, at that time, a supplier to Air New Zealand.

More shareholders joined in late 2011 - Jonathan Templeman of Design Dairy and Chris Stevens of Ctrl Space - providing capital for a new flagship cafe, the Kokako Cafe, which opened in the former Grey Lynn Post Office in January. Design Dairy's offices are upstairs.

The business has sold the commercial kitchen. "I was trying to run three businesses. I had some strategic advice: 'Mike you are doing too much, you are not going to make any money'," remembers Murphy.

Most of the cooking is done at the cafe at 537 Great North Rd, a showcase for the Kokako brand as a coffee roaster and wholesale supplier of Fairtrade organic coffee.

Kokako has more than 100 wholesale customers for coffee and drinking chocolate throughout New Zealand.

"We've just picked up the French Cafe. We also supply Cibo, Federal & Wolfe and The Grill," says Murphy who has worked as a food retail consultant overseas.

"I've been in the food business since I was 17. I've been delivering pizza since university. What I wanted was my own brand."

Kokako also has a consulting arm, acting as both mentor and food and beverage consultant to several of its wholesale cafe accounts.

Sustainability is a big focus for the business, which has won awards in this area. The cafe was refurbished with much "upcycling".

The next step for the business, which turns over less than $2 million, is for some external finance. Murphy is looking for a new shareholder who might take up to 30 per cent of the business. At the moment he has 55 per cent, Morrison 24 per cent, Chris 14 per cent and Templeman 7 per cent.

This new shareholder would ideally have sales and marketing experience and be able to help with strategy and governance as the business goes from small to medium sized, he says.

With all the recent awards - the business was Metro's pick as best new cafe and best ethical cafe of the year - Murphy reckons Kokako has reached "a tipping point".

"I don't want to be one of those small business owners who has a great brand and under-realised potential," he says.

The extra capital would help raise the Kokako profile online, give it an e-commerce capacity, help develop a new cold brew coffee product for retail sale, and set up a new espresso bar in town.

There is interest in the brand in Hong Kong and Taiwan.

"We treat coffee as a fresh product so we would only serve or sell it overseas if we could open a micro-roastery there," says Murphy.

Top tips:

Three things are needed to engage people with your brand: quality, a sustainable but realistic approach and a focus on design.

Best business achievement

Turning a relatively unknown coffee brand into a respected industry player with strong brand recognition in five-and-a-half years.