The Daily Grind

Entrepreneur, Feb, 2000 by Michelle Prather

In an industry of high-visibility brand names, they don't have one. So how does this family's coffee company stay in business?

Take one post-grad challenging the theory of Father Knows Best paired with a sister who can sell anything to anyone. Throw that familial fire into a ring with the champs of not only the instant coffee domain but the grocery world, and what do you get? A ferocious battle from underdogs full of determination. They might not win the match--in fact, they accept that's nearly impossible. But they know how to survive. And until they're actually pinned, defeat will not be in their vocabulary.

Meet the team members of Ryan Coffee Co., the San Leandro, California, maker of Victorian House Concentrated Coffee: Greg Ryan Jr., 36, president and CEO; sister Heather Ryan-Dube, 35, head of sales and marketing; and their father Greg Ryan Sr., 64, head of institutional sales and licensing. Sounds ultra-professional for your average family-owned business--but then again, typical family-owned ventures tend to steer clear of markets dominated by Kraft Foods Inc., Procter & Gamble and Nestle, the largest food company in the world.

A new variation on the age-old mom-and-pop story: In this one, the MBA-awarded son sees potential in the stagnant idea Mom and Pop are sitting on and has to convince them there's a better way. Who knew concentrated coffee could cause such controversy?

The idea had been around since the late 1930s, and even large companies like Coca-Cola had unsuccessfully attempted to market frozen concentrate at the retail level in the 1970s. All Greg Sr. and his wife were tying to do when they invented their own liquid concentrated coffee for personal use was eliminate coffeemaker conflict ignited by "regular or decaf?" and get rid of coffee grounds and filter waste. But after friends began raving about the Ryans' homemade brew, they decided to sell it to local restaurants and hired a sales and plant manager to run the operation from their Northern California ranch.

Fresh out of Southern Methodist University in Dallas and hot on the interview trail, Greg Jr. returned home in 1989 to help run the coffee business. But with a product that perished almost as quickly as it hit the shelves, Greg Jr. didn't see much of a future for Ryan Coffee Co. He expressed his concern to Greg Sr., usually getting a response along the lines of "Oh, don't worry about it--just sell it." Frustrated, he stopped working for the company and decided to get a new job. "I said, 'Listen, I think you and Mom are going to lose a lot of money because there's no product here,'" Greg Jr. recalls. About six weeks after he severed business ties with his parents, they announced the inevitable shut-down of the company--the product was still spoiling, and they couldn't figure out how to fix the problem.

Re-enter Greg Jr., who agreed to six months of salary-free experimentation to try to unravel the mysterious spoiling of the concentrated coffee. But this time, there was an amendment to the deal. "I made my parents admit and write down that the coffee company was dead in its present form," says Greg Jr. "[And I also made them agree] that if I got lucky and figured out how to make the product shelf-stable, I would get to control the company." Not too proud to realize their son's way was the only way, they agreed.

STAKING THEIR CLAIM

After nearly six months of failed trials, Greg Jr.'s final-hour solution to save Victorian House Concentrated Coffee came in the form of a biotech firm recommended by a family friend. The company's "off-the-wall" test using one of its bio-applications would ensure the bottled product stayed out of the refrigerated section of grocery stores, where Kraft General Foods' version had died a quick death, and instead sit atop shelves containing popular freeze-dried instant coffees. For that, the $500 testing fee was a small price to pay.

Patenting the perfectly sterile, additive- and preservative-free liquid concentrate, however, proved to be an exhaustive effort. But without patent protection, any member of the $1 billion U.S. instant coffee industry could make nonrefrigerated concentrated coffee its game.

The Patent Era lasted from 1990 to 1996 and cost the family nearly $40,000. The first four years, says Greg Jr., were not unlike "beating your head against a wall." But Greg Jr., occasionally tagged a pig-headed know-it-all by family members, reminded himself, "Just because the government says no doesn't mean they're right." After a second and third try, the Patent Office finally understood the novelty of their product and approved their patent. Greg Jr.'s fearlessness, whether in asking the most obvious business questions or taking the initiative to switch patent attorneys early on, helped prove naysayers wrong. Ryan Coffee Co. would change an industry that hadn't evolved in 25 years by means even industry giants had failed to discover.

Today, Victorian House is reinvigorating the shelves of more than 800 retailers in California and Western Nevada. "It's like Sesame Street--one of these things does not belong," jokes Greg Jr. about the product's place among Starbucks' whole-bean coffees and other traditional instant coffee products.