Full of beans

THE FRIDAY INTERVIEW:John Cahill, group chief executive, Campbell Bewley

HESSIAN SACKS stuffed with green-tinged beans are weighed and emptied into Bewley's chugging roasting machinery, from which they will later emerge a beautiful brown. Bewley's baristas are back, and they're brewing up a bid to satisfy the caffeine cravings their customers never knew they had.

As ebullient and perky in person as might be expected from the chief executive of a coffee company, John Cahill oversees the Campbell Bewley group from its headquarters and production plant on the Malahide Road in Dublin.

"Hot beverage solutions" - that's tea and coffee, with an occasional indulgent foray into hot chocolate - will fuel the company's profits in 2008, courtesy of a €4 million investment in the iconic brand, he says.

Cahill, who has been group chief executive for five years, has witnessed what happens when something as prosaic as a business restructuring plan gets in the way of something as emotionally resonant as a regular coffee haunt.

The decision to close its loss-making Grafton Street and Westmoreland Street cafes in 2004 generated a surprising hoo-ha.

"Even though we knew there would be a reaction, the reaction was far greater than we anticipated," says Cahill.

"It seemed that the social aspects and the warmth of Bewley's just began to spill out and, at the same time, there was pressure to grow the business from shareholders."

Grafton Street reopened in 2005, with Campbell Bewley teaming up with Café Bar Deli owner Jay Bourke. But the Westmoreland Street premises has been sold, leaving Bewley's free of debt and ready to spend again.

"Thankfully in this environment it has given us a very clean balance sheet and the capability to do the things we want to do."

Getting back into the cafe business is currently neither on nor off the menu, but Cahill says the group will either "blow it in, or blow it out" this year.

If they do decide to put the Bewley's brand above more doors, it will be through smaller-scale cafes than those it owned during its expansionary phase, which started in 1986 when Patrick Campbell bought Bewley's, and lasted until the late 1990s, by which point Bewley's had an empire of cafés from Belfast to Southampton airport.

Real estate and rents have an irritating ability to ruin any coffee chain buzz. "There is continuous pressure on the cafe to trade more and really to go away from your roots and do things that you might not have done in the first instance," he says. Stretch the offer too far and people start to wonder if you do coffee anymore.

The Grafton Street cafe is still losing money, and it is the street's exorbitant rents that are to blame.

The last review, which came into effect in January, almost doubled the annual rent to €1.5 million.

Will it go up again?

"You're depressing me now. I think I'll go home," says Cahill, laughing effusively. The next review is not until 2013, he explains, the relief etched on his face. But he is optimistic that Bewley's won't face another major hike, thanks to a special planning control scheme set up by Dublin City Council.

"We're a food service operation and we're being assessed on retail rates, on what a Hilfiger or whoever would pay. One of the aims of the planning control scheme is to protect the presence of Bewley's. What that should do at the next rent review is move the rent onto a food service basis."

Cahill says the cafe will become profitable before that - in 2010 - but in any case, it represents a mere 7 per cent of the group's €100 million turnover, half of which comes from the Rebecca's chain of cafes in Boston and its Java City business in Sacramento.

This year, Bewley's will spend its money on the development and marketing of new products to distribute through its retail partners and some 5,000 food service clients, from packets on Tesco shelves to in-store automatic machines on Topaz forecourts.

Bewley's new capsule coffee system promises to bring fresh ground coffee to office workers with all the immediate gratification of instant. Cahill has a target to reach 350 capsule coffee clients before the year is out, and so far, the system has proved to be addictive for its pilot customers.

"We have machines on trial that we can't get back. Customers are saying, that's okay, we'll hang on to that."

As part of its rebranding, which includes a change to its logo, Bewley's is playing up its coffee expertise. The company, founded by Joshua Bewley in 1840, knows its Java from its Columbian and runs "a barista academy" in Malahide.

Its new packaging will feature messages to consumers about the origin and flavour of the coffee from director and descendant of Joshua, Patrick Bewley (63), who sits in a corner of the Malahide office, tapping away into an Excel spread sheet, while the cycle of the coffee bean "from crop to cup" is the responsibility of master roaster Paul O'Toole, who compares the Republic's coffee learning curve to our newly sophisticated palate for wine.

"Twenty years ago, it was red or white or it was Blue Nun, and that's all anyone knew," he says.

O'Toole tastes 60 or 70 coffees a day in "cupping" sessions, but he admits that marketing is not his thing - this, according to Patrick Bewley, is an old joke within the company. After a visit to Rebecca's in 1997, O'Toole noted that everyone in Boston was walking around with coffee cups.

"I came back here saying 'you'll never see that in Ireland. No self-respecting Irishman will walk around with a coffee cup'," he says.

Luckily, Cahill has hired dedicated marketing expertise in the shape of Grant Galvin, a former marketing director for Coca-Cola.

As well as the capsule coffee launch, new products include Jet Black, a high caffeine espresso for that extra kick, and Choco Lait, which Cahill says overcomes a technical challenge of creating a chocolate-based rather than a water-based hot chocolate drink.

Cahill has been in the business for eight years, during which time the nation's intake of coffee has become symbolic of the Republic's economic transformation, with enthusiastic latte consumption often singled out as shorthand for the alleged affectations of the boom generation.

If coffee is to be Irish people's permanent pick-up of choice, Bewley's wants to grind out an equally permanent position of dominance.

But the business's financial performance has, on more than one past occasion, been distastefully weak, and after a boost from its property disposals in 2006, last year's as yet unapproved profits are likely to slip back from the €3.8 million in operating profit reported in 2006, partly due to an expensive legal battle with its Grafton Street landlord - a "substantial" expense and distraction that is now resolved, says Cahill.

"You're going to see a strong comeback in 2008 and a strong performance in 2009," he says.

"I suppose if we're spending €4 million, Paddy Campbell would certainly say, make sure there's a return."

On the record

Name:John Cahill
Age:44
Job:group chief executive, Campbell Bewley
Background education:From Bishopstown in Cork, Cahill graduated with a BComm from University College Cork and qualified as a chartered accountant
Career:trained as an accountant at KPMG, then worked for food group IAWS. He joined Campbell Bewley as chief financial officer in 2000, and was appointed chief executive in 2003
Family:lives in Dublin with his wife and two children
Why he is in the news:Campbell Bewley is investing €4 million in a revamp of the Bewley's tea and coffee brand in 2008
Interests:skiing, golf and indoor soccer
Something you might expect:he is a cappuccino drinker
Something that might surprise:"I like going on rollercoasters, because it reminds me of business life"