 Awesome. And how did you come about draining the family business? So after school and university, we returned to the farm just to looking at various opportunities and actually just started packing coffee with my parents, my grandparents. Good evening. Welcome to the Private Property Farming Podcast. My name is Mbali Nwokor, your host every Tuesdays and Thursdays right here on the Private Property Channel. So I'm not sure where you're watching us from, whether it's Facebook, YouTube, Instagram live. But thank you so much for following our channel. Thank you so much for subscribing to our YouTube channel as well and liking all the podcast shows that we've recorded and aired so far. Today we're sitting on episode 118. And we have Dylan Cummings, who is one of the directors and members within the family who run the Beaver Creek Coffee Estate. And our topic for this evening is called The Business of Coffee. So if you're a coffee lover and don't, I'm pretty not sure how the coffee process works. I think this conversation might be the one for you. And just understanding the farming or the business around coffee and how you get to enjoy your cup of coffee every single morning. So if you have any questions for Dylan, please feel free to comment, like and also share this video to anybody who you might think could find our conversation this evening interesting. And so, yeah, let's get straight into it. Dylan, thank you so much for joining the podcast. How are you doing? No, very well. Thank you for having me, Mbali. It's a pleasure. So Beaver Creek Coffee Estate, you said it's a family business. Tell us more about it. So the family business started in the early 80s by my father, my parents and grandparents when they originally bought a banana farm and then slowly converted to coffee. At that time, there was quite a lot of coffee being grown in South Africa. Also, training the family business. So after school and university, we returned to the farm just to looking at various opportunities and actually just started packing coffee with my parents, my grandparents. It was kind of a quite a small business at the time. My younger brother Robbie had joined the family business a year before me and he was looking after the farm. And over those years, our family built this coffee business to include not only a very strong wholesale business, but also two cafes. And we're working on various projects in the coffee space. Right. So is Beaver Creek involved in the entire valley chain around producing coffee? So farming, chicory, processing it, and then obviously selling your own brand of coffee. And obviously now you're at wholesale level. So are you guys involved in every process of the value chain? It's quite a unique business in that we are fully vertically integrated. So we're not only growers of coffee, we are also processors and we also roast, which is typically done kind of as a separate entity. We have our own cafes and like I said, we also wholesale to both the hospitality industry and also to retail. So it was quite one of the early decisions by my father and grandfather. And at the time, we were actually part of an association called the Natel Coffee Grows Association. And what my father and grandfather saw was the opportunity of the value addition of roasting. So early on in the business in the early 90s, we moved from being solely a grower to actually a roaster and starting to be to sell coffee to coffee shops or restaurants. And that's kind of where a lot of those farms in the 80s are closed down. And that whole industry kind of collapsed. We kind of survived that period because of the fact that we had the value addition of roasting. Right. So just for a point of clarity, you get the primary production, which is farming the actual coffee. And then the roasting part, is that the post harvest leg of the farming? So there's actually in a traditional value chain in coffee, you have the grower, which would be looking after the coffee trees, and then they would harvest the fruit. So it's a red wrap berry that is harvested. And then in the traditional post harvest processing, it's really divided into, say, three kind of stages or operations. One would be the wet milling, often referred to as a washing station or wet mill, which would handle the coffee cherry. It would remove the skin, the fruit part of it, separating the two coffee seeds. There would be some further processing of fermentation, washing, and then drying. This dried coffee would then move from the wet mill to what is referred to as a dry mill, where they would do the final processing, which may include further drying if necessary, but would really involve the removal of the final two layers before we get down to the raw coffee, which would be hulling. And then there would be some sort of grading, either by size, color, density, to a final raw coffee, which is often in the trade called green coffee. This would then, again, traditionally put into a 60 or 70 kilogram Hessian sack, which will then be shipped in containers to a country of consumption, roasted, where we would arrive at the roastry and then would be roasted, packed, and then sold. So that's a traditional kind of value chain and coffee. What makes us unique is the fact that all those processes are all in one location. And we not only grow our coffee, we also work with other growers in our country. And we also process for other growers in the country and do the roasting. Oh, wow. So, like you said, you decided to pursue the whole, the entire value chain of coffee growing. Didn't the option to be a grower for a large multinational? I don't want to mention names, but didn't the opportunity seem more lucrative for Beaver Creek, maybe just to be the grower and then you sell the coffee to a more larger, more established company that deals with coffee? So, you know, over the last 20 years, the market for coffee has changed a lot. So, you know, especially in South Africa where we have predominantly instant coffee consuming country, there has been a shift to the roast and ground market, which is kind of the filter coffee, the espresso coffee, the whole bean market, sometimes over 30 years. So, the value, the raw material cost in the world market is, even though it's recently got quite high, historically it's very low price. And that extra roasting aspect of the process adds a lot of value to the final product. And then selling directly to the consumer further kind of gives you that increase in value that you can get from the product. And I would say, actually, up until we've introduced our new model, you know, farming coffee in South Africa hasn't been viable because of the raw material having such a low cost. So, whereas potentially lining up with a big multinational, selling raw material where they would do the value addition, I think at our scale and kind of what our aspirations are, we think that extra value addition is far more beneficial to participate in that final bit of the processing or the final bit of the value chain. Yeah. Under what brand are you selling your coffee, Dylan? Because, you know, typically we think of Starbucks, you know, they're coming to the country and have taken over the coffee market in South Africa. So, under what brand are you selling in and where could people find your coffee? So, under the brand named Beaver Creek, that's the name of our farm. And we also have a second brand called Redberry. Beaver Creek, we sell it direct online through our websites. We also have a fair amount of retail. So, we supply a few spas and pick and pays. We are looking to expand this part of our market. We also supply a lot to the hospitality industry. So, we supply the lacks of spur within KZN. We've been recently working with them and we're looking to expand that partnership. We work with a number of independent coffee shops, restaurants, hotels, BMBs. So, we've got quite a bit of places that we sell our coffee to. And then, we're also working with the export markets, specifically around the Redberry brand, where the Redberry brand is slightly different to Beaver Creek in that we are working with other growers and we are selling other growers coffee. And that we are looking to develop the international market for that, because there's a growing demand for high quality unique coffees around the globe. Right. So, now am I correct in saying you're actually selling the raw product? You know, obviously distributing it through to retail, hospitality industry and some other coffee shops. So, I could be buying coffee at my local coffee shop, but it could actually be coffee that's grown by Beaver Creek. Is that correct? Yes. So, we sell it in various forms. But yes, we do both import and we grow our own. So, we do a combination of both. And that's why we've kind of made this strategic decision to start to spend more time promoting coffee farming in South Africa, because we think it's actually a viable pursuit with this new model we've been working on. And we offer the farmer the integration into the value chain. So, we're spending a lot of time developing that part of our business because we want to eventually within the next 10 years be 100% South African coffee. Yeah. So, let's just talk about the opportunities that exist within the business of farming coffee. You mentioned that there's not a lot of coffee farmers in South Africa. Why is that? Is it because of climate change? Is it because of high input costs? Is maybe South Africa even suitable for growing coffee at the stage? So, you know, though historically coffee has been grown pretty widely in South Africa, there never was a suitability study done. So, other than kind of farmer's experience, you know, there wasn't any kind of climate study done. So, we took the last year to final do a suitability study, which we took some research that was done in 2015 and we looked at South Africa. And we actually took a little bit further and took out all the residential areas or the environmentally sensitive areas and also looked at slope. And we actually have found 750,000 hectares that are suitable for coffee in South Africa. So, there's a high level of suitability. And then a lot of the areas that are suitable are those areas that the land is actually underutilized. So, there's high levels of suitability. Historically, I think there's two factors. One is the fact that South Africa is predominantly being an instant coffee-consuming country. So, the higher value roasted ground market hasn't been there. But as I've been discussing, that has really changed over the last couple of years, with like, you know, institutions like Wimpy and Muggin being really promoting the consumption of pure coffee. And more recently, the likes of Seattle Vita and Starbucks, like you mentioned. And then the second thing is the, you know, there's a perception that coffee can only be grown at altitude on a mountain somewhere. And this is really a myth. And this is kind of what we've proven with our suitability study. So, a combination of not having a strong domestic market and misunderstanding around suitability, I think that's not allowed the industry to kind of prosper. And that's what we're trying to change. And we believe it's actually a high-value crop that coffee is. Yeah. And how easy or difficult is it to break into the markets, especially around, you know, the wholesale industry, the retail space, as well as the hospitality industry? You know, are there more dominant big players or are there opportunities for new entrants to obviously penetrate the market? I think, you know, like any market, there is a barriers to entry. I think for us, the most important thing has always been understanding what it takes to make a high-quality cup of coffee. So, if you understand how to make a high-quality cup of coffee outside of your own establishment and someone else's, you really help your customer, you know, produce something that their customers will come back and for. And that's kind of the relationship that we've built with our customers is understanding what it takes, not only on the farm level, in the post-hospice processing, include roasting, but also within their establishment, you know, how to produce a quality cup of coffee that a consumer will go out his way or her way to consume. So, I think the market, the number of roasters in the country has really exploded over the last 10 years. It's quite phenomenal how many new entrants have been in the market. But the opportunity of new entrants, I see, is really around the growing side. I think there's a big opportunity for more growers in the country and not necessarily only for the domestic market, but also for the international market. The world consumes somewhere in the region of 10 million tonnes a year and there's a slight surplus in the world at the moment. But the forecast within the next 10 years is to reach 12 million tonnes. So, there's an extra 2 million tonnes of coffee that the world, the forecast are for. And like you mentioned, with climate change, areas around the world are reducing for coffee production. So, we see that there's a big opportunity in South Africa to meet that demand and to produce a high quality coffee at that. Yeah. And even from a production perspective, what are some of the opportunities that exist around the South African context and where are the best provinces to farm the coffee? You know, especially provinces that are maybe underutilized and could be ideal for coffee growers. And also just what type of certification does one need to start roasting, especially for any coffee growers that are currently producing at the stage and maybe want to take their business much further and go into roasting. So, what are some of the certifications or compliance aspects that are required around roasting? So, in terms of, you know, the suitability in South Africa, at least I'm quite broadly speaking, but it's the coastal belt of the eastern Cape as almost as far south as East London, the Quasalutel coastline, probably depending on exactly where you are, can be up to 60 kilometers inland. And then further north in Pumalanga, around the Sabi Valley, Hazy View areas, even in Barboton area, there's suitability there. And then even far north in Lumpopo, around Zanin and Louis-Trichart, there's some suitability in those areas. And that's kind of, again, there's different zones within that area with different risks, but generally speaking, that's where coffee can be grown. So, with coffee roasting, there's no real certification that one requires. You can simply buy a roaster, and this has been happening, like I say, over the last 10 years, buying a small roaster and putting it in your garage and buying coffee and roasting it and putting it in a packet and selling it. So, there's no real certification. But with growers, we know the difficulties of being a vertically integrated business. And what we're promoting is that the farmer focuses on farming, because there's only so many hours in the day and only so much you can do. So, the model that we've been working on is that for our growers, and we're working with about 22 growers now within all those regions in South Africa, is that we do the post-harvest processing, and we do it at a very low cost. And the idea being is that by enabling integration into these value chains with the growers, it will incentivize them to plant more coffee and invest in the coffee sector. So, I wouldn't recommend it to roast as a grower because of the challenges of just farming and then processing, they're very big challenges. But it is on the other end, if you want to have a very small kind of operation where you just, the barrier to entry to roast is not that difficult, though like anything, there's always a risk attached to all these things. Absolutely, absolutely. Just maybe mention some of the challenges that you've experienced with working with some of the growers. You mentioned you have 22 growers in various regions. I know the farming industry is extremely under pressure right now with high prices of fertilizers and fuel costs. So, what are some of the challenges as a roaster as well, that you've experienced working directly with some of the growers? Initially, we were really just promoting coffee farming, so we weren't really necessarily prescribing a specific way. But what we found is that certain practices, best practices that are quite well known in the industry, weren't followed because farmers were thinking, well, this is similar to other crops we've grown. So, what we've moved towards is a much higher level of prescribed farming. So, we are prescribing a specific cultivar or species of coffee. We are actually sourced in a local nursery that can produce a high-quality seedling at a very low cost to make it easier for the farmers to invest in coffee without having to build their own nurseries or have some poor practices in the nursery that we end in poor quality seedlings in the ground. We're prescribing spacing which will come down to population density, irrigation systems, because we found that though a lot of the farmers could farm, they were just not necessarily following best practice and we really went to the Brazilians. So, we're working with some agronomists in Brazil that really, one thing that Brazilians have really got right is around yield per hectare. And we've looked at the Brazilian way to bring that here, to get those high yields per hectare, sustainable yields that the farmers can really make, create this high value crop. Because there's one thing of getting a high value, like your price per ton or price per kilogram, there's one thing in achieving a high price for that. But being farming, it always important to come down to a hectare. And if you're not having the right yields per hectare, then you can, doesn't matter how much money you're getting it, it still might not be profitable because you're not just getting the right yields. So, we've kind of trying to mitigate the risk of the grower by focusing on these kind of best practices and be able to facilitate that for the growers. And that's what we're moving closer into. In the post-hovers processing, there's so many challenges in the post-hovers processing, which we're getting to do roasting here. It's always down to the detail and the experience of that. And one of the big projects that I'm working on is to develop a super factory. So, having spent 20 years in the industry, I realized that post-hovers processing is probably the weakest link in the value chain in coffee. And this is across the whole globe. So, we've developed a super factory concept where we are not only very efficient, but produce a much higher quality coffee, not to buy like a couple of bags, but by the container load. And this is part of the model that we're working on to facilitate the growers to make it very cost efficient. Again, like I say, we can offer a farm gate price that is more valuable than someone who's going to process and roast their own coffee on the farm. So, there's a lot of challenges and that's what we're trying to alleviate with the growers is to try and mitigate the risk and reduce those risks. Yeah. I think that coffee is one space in the industry that's definitely overlooked. And like you said, there's not a lot of us being farmers in the coffee space. And I'm glad that you're quite excited and have high hopes rather with regards to the coffee industry in South Africa. And I think if we can get more farmers in coffee, we could see a lot more South African brands in the coffee space. But thank you so much for your time, Dylan, and highly appreciate your insights this evening. No, thank you so much for the time. And all I'll just say is when you get the opportunity to taste South African coffee, you also have the same excitement that I do. Absolutely. Thank you so much. That was Dylan Cummings, Director of Beaver Creek Coffee Estate and we were speaking around the business of coffee. Not only farming coffee, but roasting coffee, identifying various markets that one can penetrate within the coffee industry. And as Dylan said, South African coffee is the best coffee and it takes a whole village to make a farm successful. More so, coffee farming is successful. Definitely we need more farmers. We need more vertical integration, support from retailers, wholesalers, industry experts, agronomists. And it's never too late to also learn what other international markets are doing around the coffee industry. How are they getting more yield per hectare? Because at the end of the day, as a farmer, you get your money through your yield because yield times price equals your revenue. So I hope you found this conversation quite interesting. And if you missed our talk this evening, you could catch it on our YouTube channel, the Private Property YouTube channel and go on to the farming podcast playlist. And that's where you'll get this episode, which is episode 118 with Dylan Cummings. And that's it for me this evening. I hope you found it quite interesting. And please feel free to comment, like and share this podcast. And I'll see you next time. Take care.