Inspired by travel #12: Fracino
How founder Frank Maxwell's 1950s trip down the Adriatic coast - and the purchase of a £3 coffeee machine - led to the launch of industry giant Fracino
Founder: Frank Maxwell
Started in: 1963
For a generation raised on Starbucks and Costa-filled high streets, the idea that a coffee machine could be an alien concept is hard to understand. But when Frank Maxwell decided to bring premium quality Italian coffee making, and its machines, over to the UK in the 1950s, he had a hard time convincing café owners and retailers to move away from the commonly used bottled or dried equivalent.
Half a century later, and Fracino sells thousands of machines every year to customers including Patisserie Valerie, Druckers coffee shops and Pathfinder pub chains, alongside designing white labelled machines for the UK's leading coffee brands.
Despite being hit by recessions across almost every decade since its launch in 1963, Fracino has continued its steady rate of expansion by staying true to the core beliefs on which it was founded and continuing to drive innovation across the industry.
Now the UK's sole coffee machine manufacturer, Fracino exports to countries across the globe including Peru, Russia, Australia and even the international home of quality coffee – Italy.
Maxwell tells Startups how travelling to Italy inspired his coffee revolution:
Where were you when you got the idea?
I was working for a metallurgical firm and I was travelling in Italy – it's a fairly complicated industry and it's a messy process. We were making the tips that you see on the end of drills and things. We went out one evening after our day's work and one of my colleagues pointed to a factory that manufactured coffee machines. This was in the 50s and they were all reasonably recent start-ups.
Why were you so inspired?
After I'd finished the job I went down to the Adriatic coast for a holiday and while I was there I walked past a shop the size of a normal living room where they were selling all sorts of bits and pieces of machinery. I went in to look for a coffee machine and the owner showed me one that was just a wreck – he gave it to me for 5,000 Lire, which was £3.
He showed me how to service the machines and I thought: “This is a damn sight easier than making tungsten carbide.” I brought it back to England, stripped it down and had some new bits made.
Originally I started by importing the coffee machines from Italy and distributing them to retail outlets and then I realised I could make them a damn sight cheaper than I could buy them. So I started by making a water boiler.
I progressed and it wasn't until much later when my son joined the firm that we made our first machine. He'd always wanted to work for the firm because he'd been working with me since he was a toddler. He started from an engineering background too at Rolls Royce.
Were you actively looking for a start-up idea or did it just seem too good to pass up?
The idea came about purely and simply because of the comparative difficulty in manufacturing what I was doing and because the opportunity was available.
It was a new market and a new idea and there's nothing better than joining something at the beginning. There was an established market in Italy but it was in its infancy and it desperately needed developing.
How easy was it to start the business on your return?
It was a long hard slog – it was an overnight success that took 50 years. It was very difficult to get British retailers to listen. Probably only one in a hundred places would even have a coffee machine – they were rare and expensive, so it was a difficult sale.
We've been through many downturns. In 1972 there were many importers of coffee machines but by the end of that year I was the only one left because the economy was collapsing. There was a point where the market had absolutely collapsed and I travelled all over the country to keep servicing the ones I was distributing to keep them going. It was a bad five years and I survived when everyone else fell by the wayside.
By the 1980s we started building them ourselves and we were hit by another downturn in 1989-1991 and again now of course. Every time we've been hit by a downturn we've tried to expand – buying bigger premises and more parts. When people are feeling there's no future, that's the time to move in, because the competition is consolidating and we're expanding. It's been a very successful policy.
Buying in bigger quantities allows us to get discounts and maintain the same prices even when the prices are generally rising – that's the secret. The products are hand-made using only the best materials – we never use chromed stainless steel. This way we can maintain the quality without massively raising our prices.
What research did you have to carry out to learn more about the sector and the market opportunity?
In terms of market research I did everything off the cuff. I decided that it's better to do things your own way. Coffee was already widespread, even if it was in powdered or liquid form, which is vile. It was a matter of trying to get them to change from their traditional way of making coffee and that was the hard sale.
How did you replicate what you'd seen overseas or use your experience there? Did you modify the idea for the UK market?
Originally I was bringing in Italian products so I used their expertise. When we first made the unit we based the front of the machine on a previous design from Italy. The patent had run out and we developed from that, but the rest of the machine was our own design. In the last 10 to 12 years we've developed machines which are entirely different to Italian ones.
We've put our own mark on them. We've created the only big commercial bean to cup machine that looks like a normal coffee machine rather than a box and does everything from the milk to the coffee and consequently we won an award for it in the UK.
How much did you invest in getting started?
I went to the bank to borrow £300 at the beginning and they refused, saying it wasn't an established business, so I had to scrape it together myself. At the end of the year they came back and said I could borrow, to which I replied, “I have no need of your money anymore.”
I was making enough to buy my own premises instead of renting. There were no credit cards in those days and loans were a rarity and we've tried to avoid borrowing since. We plough most money back into the business.
How quickly after starting did you experience what you'd describe as ‘success'?
Almost immediately. After about a year of trading I realised I could make as much profit in a fortnight as I did in a year in my previous job, so I knew it was a profitable business.
In no time at all we were the second largest importers of coffee machines in the world and it was almost a one-man business.
Now we sell to so many countries, both through distributors and just online – even Afghanistan, countries in South East Asia and back to Italy. We're constantly looking for distributors in new markets. There's a global knowledge of all products now – that's the beauty of the internet and we've played to that, improving our website and adding in different languages.
Where did you go for advice?
I didn't. People came to me for advice. It was a new business and there was no one around with expertise. I was a manager of an engineering company so I was well trained. That made it a lot easier and I made sure that my son got experience elsewhere first because I don't believe in nepotism.
Now we train graduates and give them on the job experience, we're constantly looking out for new trainees.
What advice would you give to others who travel looking for start-up ideas?
If you travel abroad, look around and see what you think is popular there that you don't see in the UK – then bring the idea back and consult people with expertise.
People often come to us with ideas for new machines. You have to use your contacts and find the people who can help you with your idea. We spend time on other people's ideas, researching for them and building mock-ups and we'll work with them if it is a good idea, or let them know if their idea is not going to be feasible. We're currently working with someone who was inspired while in Bangkok to create a pedal powered coffee machine, like a bicycle.
What are your future plans?
To continue looking for new innovative ideas. We tried to work on at least one new product a year and we constantly update our older ones.
Exporting currently accounts for 25% of our business and we want it up to 50%. We produce both white labelled products and our own products and we're constantly looking for new ideas. We're committed to keeping our range interesting.