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February 2014 Newsletter

January has turned out to be a month with a lot of stuff going on
with the business, not all of it good. We are approaching our 30th
year in the coffee business, and have seen a heap of changes over
that time.

When we started out Australians brewing coffee at home usually
involved a teaspoon of Nescafe and a kettle of boiling water. Fresh
coffee was brewed in plungers, espresso pots, filter machines and
percolators. The domestic espresso machine only became popular in
the mid 1990's.

We started selling domestic espresso machines to support our coffee
sales, and have since sold a few thousand of them, but they have
never been a big contributor to our net income. Sales have dropped
off a bit as competition from Chinese made machines and capsule
machines has increased, and consumer spending on gadgets has dropped
significantly since the GFC.

As long as we could cover our costs we've never been concerned, but
in January Lelit dropped a couple of bombs on us. First was a pretty
decent price increase, and then the news that Jetblack Espresso in
Sydney are about to be appointed Lelit's exclusive distributor.(And
yes, we were the original Lelit importers and established their
brand in the Aussie market. Italian manufacturers are very ...
pragmatic.)

Following this we've taken a hard look at our whole equipment
business, with some startling conclusions. The equipment side of our
business easily takes up more than half of our time and resources,
but generates only a few percent of our income. Adjusted for
inflation, we'd probably be better off putting the same investment
into term deposits or blue-chip stocks.

Which is what we've decided to do. We'll be getting out of the
equipment business altogether, with a couple of exceptions. We will
still provide warranty services, general repairs and spare parts for
all the machines we've sold over the years, although we expect the
cost of the parts to rise significantly. Our existing stocks of
machines are all marked down 20% from the current prices, no
exceptions. We will not be re-stocking the PL Plus machines, so our
apologies to all those who have enquired.

Right now, our number one priority is getting a large spare part
shipment organized to ensure that our service capabilities remain
unchanged. I'll repeat, we WILL be honouring all our warranty and
service obligations for the foreseeable future, just like we do with
Rancilio products. From my personal viewpoint I will now have more
time to devote to the coffee part of the business, which is a
cheerful thought.

Long time readers of these newsletters will know that I have a lot
of respect for the palate and tasting skills of Thompson Owen, head
guy at Sweetmarias in California and purveyor of some of the finest
green coffees on the planet. Every now and then we'll both get hold
of the same premium coffee at more or less the same time, and this
month is one of those times. The coffee in question is

Bali Kintamani
$46.00/kg

My tasting notes describe this as a very low acid, seriously smooth
coffee with a HUGE flavour. There are some initial herby notes which
settle down quickly into palate coating richness and a long,
lingering heavy body.


Until Next Month


Alan