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Cafédirect CEO John Steel on balancing commercial success and social impact, consolidating the enterprise’s output, and becoming one of the UK’s largest roasters overnight.
On 7 June 2023, Cafédirect CEO John Steel went from overseeing 25 employees to almost 100. As part of the social enterprise’s takeover of Bewley’s UK, in 24 hours the company tripled its workforce, took on a 4000-tonne-per-annum roasting facility in Yorkshire, and acquired specialty coffee company Grumpy Mule.
The acquisition was a long time coming for the CEO who, since 2017, had been searching for a business procurement to take Cafédirect to the next level. After a series of unsuccessful tenders, taking over Bewleys’ United Kingdom (UK) operation turned out to be the ideal growth opportunity.
“Buying a business larger than your own is quite a big deal – as is going from an organisation that mostly outsources its roasting to one of the largest coffee roasters in the UK,” Steel tells Global Coffee Report.
“One of the benefits of buying Bewley’s UK was that we’d already been working with the company for more than 20 years through our existing contract roasting partnership. Although we took over the business straight away, parent company Bewley’s Ireland was able to support us through the transition with some essential hand holding.”
At its new roastery in Meltham, Cafédirect now roasts its own coffee as well as products for other businesses. More than 60 times larger than its previous roasting facility in London Fields that focused on small-batch production, the plant is not only a huge step for the company but also for its farmer partners, for whom the social enterprise was established to support more than 30 years ago.
Steel says there were two main drivers for the acquisition. The first was to become a leader in the out-of-home coffee market and the second was to upscale the brand’s roasting capacity and backward integrate into manufacturing effectively. Both aims fall under the CEO’s broader ambitions for the social enterprise, which he’s been working towards since taking on the role in 2012.
Finding balance
A pioneer of ethical and sustainable coffee, Cafédirect was established in 1991 by fair trade organisations Oxfam, Traidcraft, Equal Exchange, and Twin Trading. The social enterprise was launched in response to coffee prices falling below farmers’ production costs and sought to trade coffee, tea, and cocoa directly with growers to give them a larger portion of the purchase price.
In the three decades that have passed it has achieved many industry firsts and led the charge for fair and ethical sourcing. In 1994, Cafédirect’s Medium Roast & Ground Coffee was the first in the country to carry the Fairtrade mark, while in 2018 it became the first UK coffee company to gain B Corp certification.
In 2004, it became a public company, but with a commitment that its three core pillars – people, planet, and profit – would continue to receive equal focus. It was also the year that producers formally joined the board of directors. When Steel took the lead in 2012, he says the organisation was at an impasse.
“The company had been through a difficult patch where it had grown and then started to decline and come under some pressure,” he says.
“When I came on board, my role was to maintain the purity of the impact model on which Cafédirect was built, but to modernise and help the business in order to compete against its big commercial competitors.”
Steel admits that, despite his background in large finance-orientated organisations such as Nestlé, in the first few years he was swayed by the ethical culture of the organisation and wasn’t competitive enough in terms of scale or ambition.
“When you come into a business with purpose, it’s easy to get drawn into the purpose and forget it’s a business,” he says.
“I remember people would say that small business is beautiful. They were quite anti commerce, suggesting the finance and money side of the business was a bad thing, when in fact it’s a key component when trying to influence change.”
Eager to increase the organisation’s impact, his game-plan was to streamline its output. With a wide range of tea, coffee, and cocoa products on sale in retail markets across the world, a foodservice wing, and hundreds of farmer projects in producing countries, Steel believed Cafédirect could thrive if it did fewer things better.
“To make a difference, whether that’s commercial growth or social impact, it’s much better to do fewer things but do them brilliantly,” he says.
“There are many things that Cafédirect has always done well, such as setting up the first producer-led charity, Producers Direct, and introducing producers to the board but, in the world of commerce, traditionally it has been less pioneering.”
Single focus
Over the past decade, Steel has exited many of Cafédirect’s product and consumer markets to focus on one thing: coffee.
“We were turning over around £12 million (approximately US$15.3 million) in four or five different product groups with lots of different customers, which made it very difficult to try and scale up in any particular segment,” he says.
“We switched our focus onto coffee in UK grocery, which I think surprised many people because grocery has a high concentration of power. However, since this streamlining we’ve increased our grocery segment from £7 million to £19 million per year.”
The CEO admits it wasn’t an easy decision to make. The company is structured so that farmers receive Fairtrade and organic premiums, as well as benefiting from its investment in cooperatives to provide support and training.
“Streamlining the focus has meant the company has had to move away from some projects. We care about tea producers, but the order of things is important if you want to make a difference,” he says. “If you’re fiddling around, helping tea farmers a bit and then helping coffee farmers a bit, you’re not really moving forward enough to challenge the status quo. We’ll come back to tea and cocoa, but for now we’re about coffee.”
In 2012, Cafédirect ran more than 100 small projects in 32 different cooperatives across the world. The company has also shifted its approach to these charitable programmes to focus on large-scale projects. For example, Cafédirect is now a partner of Producers Direct’s three-year, seven-figure project in Peru across nine cooperatives to improve quality and environmental impact.
“We’re now providing an example of what can be done at scale, which will hopefully influence others and encourage cooperatives to say ‘we want some of that’,” he says.
Pioneering ambition
In line with the company’s founding principles to put growers first and respect the earth, in the past few years Steel and team have set several ambitious targets. As part of its Gold Standard framework, by 2030 it wants every small-scale farmer in its network “to be empowered and engaged, having a powerful voice and earning beyond a living income”.
In order to achieve this, Cafédirect will work alongside the growing partners on its board to tackle systematic challenges facing the smallholder farmers and continue to invest in product quality, shared insights, and transparent relationships to deliver meaningful impact.
“Through our business model, we will continue to increase the value that goes to farming communities. We will continue to pay fair prices, equitable social and environmental premiums, and investigate opportunities for further value to remain at origin,” says Steel.
“Ultimately, we aim to work with key partners to understand what a living income is for every country that we source from, and our ambition is to surpass this benchmark within our network by 2030.”
Steel also has ambitious environmental plans. One of only three SMEs in the UK’s Food and Staples sector to commit to the Science Based Target initiative, the company is working towards achieving net zero by 2040. Since acquiring Bewley’s UK, this now represents a bigger opportunity for impact.
“Our biggest task is making changes now that enable coffee farmers to survive and flourish in the future,” he says.
“We’re reducing our emissions and very conscious that there’s more work for us to do in this area. This goes beyond our own operating framework in the UK to the farms and our consumers. As roasters, we need to secure the future of coffee as climate change is a genuine threat. Significant changes to the environment of this planet are going to make the lives of those farming the land incredibly difficult.”
He continues that, because Cafédirect is focused on the farmers’ lives, not just the coffee, it faces increased pressure when trying to reduce emissions.
“We can’t just shift coffee production to wherever it’s possible to grow coffee in 2050. We need to make it work in the places that already grow coffee, which makes the challenge even greater,” Steel says.
As companies around the world look to reduce their carbon footprint, he says the coffee industry, like many others, is vulnerable to greenwashing.
“Twelve years ago, people weren’t talking about sustainability in the UK. They are now, which is a positive,” he says.
“Yet, the downside is that many of the companies who are talking about it really have no intention to change. We must help consumers see through the greenwashing. It’s a hard thing to navigate in a grocery store or café. How does a consumer know they’re making a good decision?”
Cafédirect’s recently updated brand ethos is ‘making sure drinking coffee today doesn’t stop us drinking coffee tomorrow’. The company aspires to change the way coffee is bought and sold to guarantee the future of the crop and the people who
farm it.
In terms of the future of the company, over the next year Steel says the focus is on its newly acquired specialty roaster, Grumpy Mule.
“We have big plans for Grumpy Mule in 2025. It’s exciting to be able to help the specialty market in the UK grow and, in turn, provide more value for producers,” he says.
“For Cafédirect, I want to call out very loudly and clearly that the coffee you drink today is vital to ensuring there’s good coffee in the future. Over the past 33 years, the enterprise has done some pioneering work, but our ambition is to find a brand voice that can cut through the mainstream competitors. I want large roasters to look at Cafédirect and think, ‘wow, that’s what I want to buy into – the right kind of future’.”
In the long term, and with the acquisition bedding in, scaling up the business is the ultimate goal.
“If you want the market to change, it’s not enough to be a small pioneer. I don’t want 95 per cent of the world’s coffee to be held by large multinational companies who are trying to make profit for the few,” he says.
“Now we’ve made our first acquisition, I want to continue doing that. It’s tongue-in-cheek, but I like to say ‘the planet is running out of time, so if your company isn’t going to collaborate to make a difference, maybe I’ll have to step in to make sure there’s more good coffee in the future.”
For more information, visit cafedirect.co.uk
This article was first published in the January/February 2025 edition of Global Coffee Report. Read more HERE.
The post Cafédirect CEO John Steel on leading with purpose appeared first on Global Coffee Report.
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