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HE landed the biggest deal in Australian Shark Tank history, and coffee mogul Kane Bodiam's vision to produce the freshest pods which are also biodegradable earned him a $2.5 million investment after a bidding war between the 'sharks'.
Bodiam's iCapsulate business produces tens of millions of coffee capsules each year and supplies to some of the biggest retailers including Woolworths, Coca Cola, Robert Timms along with Bell Tea & Coffee and Hummingbird in New Zealand.
It's already a well-established business with $4 million in sales and 44 employees, but Bodiam was looking for funding to kick iCapsulte even further along to become the only company in the world that meets Australian standards for environmentally friendly, biodegradable hermetically sealed coffee capsules.
Bodiam went into the Tank looking for $2.5million for a 15 per cent stake, valuing his business at $16.6 million and to seal the deal he served up two cups of coffee one from his capsule and one from another brand.
The sharks all love his coffee and a bidding war begins with Banks, Glen Richards and Naomi Simson all making serious offers. Steve Baxter withdraws as he simply cannot believe that the costings for a superior coffee capsule is lower than his competitors.
Bodiam gets to choose his partner and after consulting with his fiancée Olesia, he chooses Banks and offers him $2.5 million for 20 per cent. Banks counter offers with $2.5 million for 22.5 per cent and the deal is done.
For Banks, his interest in investing is down to the simple fact that Bodiam is on the verge of developing a unique product.
"The world is desperate for biodegradable coffee pods," Banks says.
"Australia alone uses a billion pods and they go into land fill!
"Also, he isn't really a coffee supplier of scale but he could end up packaging coffee in pods for many more brands and even licence the technology, so it was all about being the ONLY one in biodegradable pods in Australia at least, and maybe Asia."
Business News Australia spoke with Kane Bodiam about what he plans to do with the record investment and his big push into US and Asia.
Your business had serious legs even before you went on Shark Tank with big contracts and $4 million in sales, so why go on the program?
Yes, the business had legs, and great growth, but I was growing it just through my network and associates. The sharks offer exposure to markets I would not have even conceived. I feel like my coffee blinkers have been removed and have a whole new prospective.
Were you expecting the bidding war between the sharks?
No not at all. When Steve almost choked when I proposed the amount and percentage, I was already concerned. But I did believe in what we did, and when the offers came I didn't even know how to react, so I retreated to the back to speak to Olesia (my partner).
And why did you pick Andrew's offer in the end? They were all great offers.
Naomi was lovely but I don't think we could have structured correctly for it to work for us. I was struggling between Andrew and Glen and both would be great mentors, but inevitably Andrew is close friends with Les Scirato, MD of Vittoria Coffee, a company who I hold a great interest in building strong relationships with and his massive networks in the US. These will assist in the market we are expanding into.
So, what's the plan with the new investment? How are you going to use it?
We are using it toward new equipment, we have invested further in new machinery. We have already put in another new larger coffee roaster, a new high-speed boxing and filling line for our new capsule format that starts from August. It's a dual compatible capsule that fits the Caffitaly system (Woolworths) and Kfee system (Aldi). But we can produce right here in Australia opposed to Germany or Italy where it's currently made. Keeping everything in Australia which is so important.
There must have been some serious R&D going into your products Like a three-year shelf life on the pods instead of 12 months, being environmentally friendly etc did this suck up a lot of your early capital?
Yes heaps! I hate to think how much we have spent, especially as we develop ourselves and bring to market or work exclusively with European companies to make exciting products.
Talk us through the development.
This will take some time. Firstly, find what we want, come up with concepts, realise concepts, make validation tests, adjust and revaluate, find manufacturing companies of these materials. Test, test, test, patent, partner exclusively with manufacturer of final mould. New machinery realisation, final test production, and loads of time and money.
You're planning a big push into Asia, what's the strategy for that?
We are pushing in already, we have started with Singapore and Korea. When our new format is available we will push hard in Singapore where the current supplier from Italy has had a monopoly. US is also huge for us with big orders already starting.
What have you learned from your business partner Peter Draper, what key lessons?
Patience! I get impatient, I don't procrastinate. I get frustrated when people do especially when there is great opportunity, that frustrates me. Pete, has been an amazing mentor, having been one of the owners of Fantastic Furniture, his knowledge is amazing, I like that for all his amazing successes, he is down to earth and we can have a beer after a hard day and make plans to make an new project. He doesn't tire of my ideas, and has supported me with everything I wanted to do.
You challenge others to try and make a better product than you do. What do you do if that actually happens one day?
We work on bettering ourselves both personally and professionally. I love competitiveness, and if someone did we will strive even further. I don't allow short cuts or bad product. I hate it. Your product is a representation of your business, if you make rubbish then you are. We only will make the best, my staff who are my family hold the same values, and we all jointly make the best capsules and single serve products. And we will grow that in every format. I feel other manufacturers forget one simple fundamental, if your customers are selling the best and doing well you are! Don't put money first! Be confident in the price you give them, as you should be confident you will grow their business through quality and price.
Do you get cranky if you are served crap coffee?
That's an understatement. Again, Olesia and Pete will say be patient, but I say it's a reflection of the lack of care.
Business News Australia
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