06 Aug 2017
5 min read
During his time in Australia, Gagan Pradhan depended on two things to keep going: chocolate for energy and coffee for caffeine. Today, he has established a thriving business out of coffee. When Pradhan returned from Australia, he noticed that Nepal had a lot of food and beverage outlets, but didn’t have an established coffee shop; so he pounced at the opportunity. He went to the US to take a month-long intensive course on running a coffee business and brought back to Nepal all the basic equipment required in a coffee shop and started Himalayan Java Coffee. In this interview with VMAG's Sujan Lal Manandhar, Pradhan, owner of Himalayan Java Coffee, talks about his business and his mantra for success: passion and patience.
What were your struggles in the initial phase?
I conducted a feasibility study where I asked people several questions about their coffee-drinking habits. The study suggested that people were willing to pay up to Rs 100 for a cappuccino and would even, at that price, come back to an outlet seven times a week to buy the drink. However, when I priced cappuccinos at Rs 45, I was surprised to find people complaining that the quantity of coffee wasn’t enough for the price. Most people weren’t familiar with coffee jargon and couldn’t make much sense out of the menu. Coffee just meant ‘instant coffee’ back then. They would come inside the shop, check out the menu and leave without ordering anything. Nepalis weren’t familiar with what all could be made out of coffee. Things remained this way for about two years.
What was the turning point for your business?
In 2002, my partner and I decided to install a television set in our coffee shop—to screen documentaries, news shows, MTV, among others, to attract more customers. This was during a time when we didn’t have quality movie theatres. We used to hold movie nights on Tuesdays. That year also happened to be a FIFA World Cup year, and around 300 customers gathered in our shop to watch the matches. That’s when Java started to gain traction. Himalayan Java quickly became very popular because of the variety of coffees we offered.
How did people get into the coffee-drinking culture in Nepal? And how has the culture evolved?
Many Nepalis have been abroad and have witnessed the coffee-drinking culture in other countries. These Nepalis would return to Nepal and take their friends and family here to our coffee outlet and would explain the whole coffee-drinking trend they’d witnessed abroad. As a result, more people started taking to coffee, and our business slowly started to grow. But things have changed to some extent today. People today visit coffee shops, not so much for coffee, but in search of a place to relax or work. They want high-speed internet access and an amiable staff to cater to them. Coffee shops have become an extension of the living room. The coffee shop has become an office away from the office.
What is the business like right now?
In the last six or seven years, the coffee business has boomed. Almost every galli has a coffee shop. Thamel alone has around 200 espresso machines. In Lakeside, Pokhara, I have come across close to a hundred coffee machines. Many people could have been inspired by the culture Java has set. There is a huge demand for our coffee. We have received multiple requests from people who want to buy our franchise (both domestic and international clients). This phase of our business has by far been the best. We even started coffee farming a year and a half ago. One of the reasons for this was to inspire other farmers to cultivate coffee. We have outlets in the US (in Minnesota and Washington) and in Thailand. Our goal is to open 25 stores abroad and 25 stores in Nepal in the next three years.
What do you think of the competition?
I believe competition is crucial in any industry. From day one, our intention has been to promote Nepali coffee among growers and consumers. We encourage young people to enter this business. If we did not want others to penetrate the market, we would have never started our barista training school, sold coffee machines and beans, or gone into franchising. We have sold 16 coffee machines to establishments in Durbarmarg alone.
What kind of challenges do you face in the business?
Keeping things consistent is a big challenge. The three most important things in the coffee business are water, milk and electricity. Electricity is available today but water—not as easily. As for milk, we are very careful about the milk we source. I believe that the industry needs to be regulated better. Nepal does not have a department that regulates the food sector properly. Neither is there a grading system to distinguish the quality of coffee. Farmers grow coffee but do not sample in order to figure out its taste or category. I’ve heard of farmers who store coffee in their attic. They need to know, that the smoke from the food they cook in the lower floors of their houses can alter the aroma of the coffee they’ve stored upstairs. So I also try to educate coffee-growers regarding such issues.
How has your business helped promote Nepali coffee?
Around a decade ago, I used to promote Nepali coffee in conferences held by the Specialty Coffee Association of America. Himalayan Java has been certified by the US Food and Drug Administration, which is why I can take the franchise anywhere in the world. I think we have helped Nepal establish its own identity in the coffee world. In 1999, around 30 tonnes of coffee were produced in Nepal. About 70 per cent of the coffee was exported, while 30 per cent was consumed domestically. Today, we produce around 700 tonnes per year. Currently, Brazilian and Vietnamese coffee-farmers get around USD 3 per kg when they export their coffee, but Nepali farmers can get up to USD 10. I would not be surprised if Nepali coffee goes on to become one of the world’s most expensive coffee varieties. Java has been a regular buyer of coffee from Nepali farmers for the last 18 years.
We are also focusing on training people who want to work in cafes. We have a basic barista training school in Civil Mall, and we also provide advanced courses at our franchise office in Kamalpokhari. We also have a baking school there.
What suggestions would you give to the people who want to get into this business?
I think we have more than enough coffee shops in Nepal’s major cities, but not all of them are doing well. My simple suggestion would be to do what you do with passion—and to have patience. I think you need to do your math, conduct feasibility studies and not jump to hasty conclusions. You should find the perfect location. Do not be afraid of investing, and know your budget. It’s not just about having opened a coffee shop; you constantly need to innovate to stay on top of the competition. You need the right equipment, menu and prices, and you should devote yourself to the business for at least two years, without distractions.
(Photos by Srijana Bhatta)