Beverage devices and their boiling point

AFTER THE BOOM:TRADITION SAYS consumption of tea and coffee increases during a recession but Drewry Pearson isn't so sure that normal rules apply this time. As owner of Marco Beverage Systems, he has a fairly good idea of the dynamics of the hot drinks market, both at home and abroad.

The firm, founded in the 1980s and bought over by Pearson about 12 years ago, designs and makes all manner of equipment for brewing coffee and tea from its base in Sandyford, Dublin.

The products are then sold to wholesalers, who supply them to customers who need to make large volumes of beverage, such as catering companies or offices.

Up to 60 per cent of the firm’s water boilers and coffee machines, all manufactured in Dublin, are exported.

Pearson says the wider Irish industry in which he operates is probably down about 30 per cent over the past year, with Marco’s trade declining by 20-30 per cent. Things are more positive in England, where volumes are up, but Marco isn’t feeling the benefit because of sterling weakness.

“We’ve been lucky because we’re reasonably financially strong,” says Pearson, pointing out that the firm can so far afford to keep its sterling in the UK and pay its Irish bills from euro savings.

“We’ll come out quite well if we can manage our cash,” he adds.

Pearson says the biggest effect of the economic slowdown and the sterling differential on his business is that they have forced him into seeking new foreign markets. New euro-zone customers are ideal because they will eliminate currency problems. The problem with this, however, is the travel involved. Pearson reckons each of his increasingly frequent trips abroad consumes about €300 a day, while every shipment of a finished product costs about 5 per cent more when sent further than the UK, “so we have to be 5 per cent more efficient or 5 per cent more expensive.”

Back at home, he bemoans the “hopelessly high” wages across the economy and the associated “unrealistic costs”. The company has cut its staff from 60 to 50 over the past year, which “broke my heart”. He has also reduced wages, paying tribute to his staff for their co-operation.

In general, he says, the changed environment has meant that any risks he takes with the company have to be as calculated as possible. “You have to know that everything you do is going to work. That makes it so much more difficult to make decisions.”

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