SCV NEWSMAKER OF THE WEEK:


Mitch McMullen
Mitch McMullen
Co-Owner, Newhall Coffee Roasting Co.

Interview by Leon Worden
Signal Multimedia Editor

Tuesday, July 9, 2006
(Television interview conducted June 22, 2006)

    "Newsmaker of the Week" is presented by the SCV Press Club and Comcast, and hosted by Signal Multimedia Editor Leon Worden. The program premieres every Wednesday at 9:30 p.m. on SCVTV Channel 20, repeating Sundays at 8:30 a.m.
    This week's newsmaker is Mitch McMullen, co-owner of Newhall Coffee Roasting Co. Questions are paraphrased and answers may be abbreviated for length.

Signal: What's new on the coffee front?

McMullen: What's new? We've got a new Home Town Blend that's organic and fair-trade that we've got available at Wal-Mart, so that's pretty new and pretty big for us.

Signal: Is this just Wal-Mart in town or all over?

McMullen: Yeah, just in town. Santa Clarita Supercenter. It's the brand new Wal-Mart.

Signal: But you're not only supplying coffee in the Santa Clarita Valley these days.

McMullen: No, we're not. We're outside of Santa Clarita.
    Obviously we started in Santa Clarita and we branched out through various things — office coffee — we deliver to Disney Studios, the Getty Center, Toyota's headquarters, DreamWorks, Warner Bros., etc. We also have Mammoth Mountain Ski Resort, Mountain High, Bear Mountain; we also got into grocery stores. We started off in Ralphs locally, and then because we did so well there, they gave us the whole state, so we've got all 300 Ralphs grocery stores. Same thing with Vons, and now we're in Albertsons; we just got that here a few weeks ago. Three hundred Albertsons throughout Southern California, Arizona and Nevada. Yeah, it's going pretty well in that regard.

Signal: Why the name "Newhall?" How well does the name "Newhall" sell outside of the Santa Clarita Valley?

McMullen: Well, good and bad. We go to a lot of places, even like in Santa Monica at a Costco there, and we sample, and people say, "Where's Newhall?" or "What's Newhall?" Maybe it's good that they don't really know what it is, so they just try the coffee. And other people say, "Oh, yeah, that's way out there by Magic Mountain."
    One day I want the Santa Clarita Valley to be known for Newhall Coffee just as well as it's known for Magic Mountain.

Signal: It could happen. It's a story of "local brothers make good" — it's you and Kyle, your younger brother, right?

McMullen: Yes.

Signal: Let's start at the beginning. You began with Mitch's Java 'n Jazz coffee house on Lyons; how did you go from there to here?

McMullen: I went from a failed basketball career in France, coming back with my tail between my legs, and opened up a coffee house. It was the second one in town. Still around. That's sort of an amazing thing in this town with about 30 Starbucks.

Signal: You started on Lyons Avenue in the yellow Victorian building—

McMullen: We're over at Town Center now, but (Lyons) was a great location to launch it. We started roasting our own beans about 10 years ago and we called it "Newhall Coffee." That's when Kyle got involved with the business. He was great with the whole production of it, how to get the beans packaged, and he got really involved in that aspect of it — whereas I would go out and try to sell and get accounts.

Signal: Let's go back farther than the beginning. You and Kyle had a third brother and you all went to Hart. How long you lived in this valley?

McMullen: Thirty-eight years.

Signal: Tell us about your pro basketball career.

McMullen: I played at Hart High School and my older brother Cory played Hart High School; he graduated in '79 and he went on to Arizona State basketball. I went on to San Diego State and played there, and then tried out with the Atlanta Hawks and didn't make that, and then went over to France and played for a little bit, then came back here and started the coffee thing.

Signal: Why coffee?

McMullen: Why not? Because basketball failed. I had no other plan. I came back and had a conversation with my dad one day, and honestly, we talked about this Starbucks movement coming down from the Pacific Northwest and boy, did they move since then.

Signal: But why did you decide to open a coffee shop?

McMullen: France had a lot to do with it. When I lived in France, the culture there was really more like a caf╗ experience: People didn't stay home and watch TV. So when I got back here, I got into the whole coffee-caf╗ thing, so I started Mitch's Java 'n Jazz. It was the first (business) where live music was played out here in the Santa Clarita Valley on a consistent basis. We had jazz, blues, reggae; we had all kinds of things going (on).
    People got into the culture. The high school kids were coming there, and college kids were coming there, and they were staying out of the bars, I thought, and there was more of a social kind of gathering without the influence of alcohol, which I thought was good.

Signal: When you were doing that, what kind of coffee were you selling?

McMullen: I was selling Montana Coffee Traders because we used to go to Whitefish, Mont., every summer and there was this great little restaurant up there (that served Montana Coffee), so we just bought that. And they were trashing us so much, we were like, "Man, we should start our own coffee."
    So we bought ourselves a roaster and got our first loan from the bank — it was all business-like and everything — and started it. And you know what? The Pasta Grill down the street was our first customer, and then there was the gym, and then from there we just took off.

Signal: You mentioned the studios you cater to. Why the entertainment industry focus?

McMullen: My dad actually was in the entertainment business, and we decided to call on the studios because we knew how much coffee they drank. And we sort of hit it in there. Once you're into one — if you're at DreamWorks and you go to Warner Bros. and say, "Hey, DreamWorks is drinking it," they'll say, "Oh, that's cool, I'll take it." And then you go over to Disney, same thing.
    We got Mammoth Mountain (before) we went to Mountain High and Snow Summit. We were knocking on their door for years, and once we got Mammoth, we went to them and said, "Hey, we're at Mammoth." "Oh OK, yeah, we'll take it."

Signal: How did you make the decision to branch out into office coffee service?

McMullen: It was a very easy decision. Before, I was sitting behind my bar, slinging cappuccinos for customers I hoped would come through the door. Now I have the ability to go outside my store and go get customers. And I can honestly say today we're in 1,200 grocery stores throughout Southern California. That's just about every neighborhood Newhall Coffee can be sold. So from that small coffee house on Lyons to that in 10 years — we're still not making any money, but one day maybe. That's the next step.

Signal: Are you planning to go public?

McMullen: I don't know. Once we hit a little profit, we'll talk about public.

Signal: Where do you get your beans?

McMullen: We get them from all over the world.

Signal: When you first started roasting coffee yourself, where were you doing it? Not in the back of Mitch's Java 'n Jazz?

McMullen: Yes, we actually had the roaster right there in the back for a little bit. We started it there, and we thought people could come in and see the roaster. It was all decked out and looked nice and everything. It was a good feeling. And we decided, "Hey, if we're going to do something, if we're going to compete against the coffee giants of the world, we'd better have a better mousetrap here. We'd better have a better coffee."
    So we buy the best beans you can buy from an importer from Los Angeles. Now we have (a supplier) that's closer to San Francisco. We buy it in a pretty large quantity now, so you get better pricing. ... But we get the best beans from all over the world: Brazil, Colombia, Sumatra, Kona, Hawaii, Jamaica, Costa Rica.

Signal: What made you think you could compete with the Starbucks of the world?

McMullen: Honestly, I think the way I was raised. David and Goliath story. I believe in it. I really do. We are the little guy on the shelves next to billionaires. We're sitting there, little Newhall Coffee, on the grocery store shelves, next to billion-dollar companies just all around us and I'm going, "We're there, and people are buying our bags." And I believe in it. I just believe you can do it.

Signal: When you came back from France and talked to your Dad about going into the coffee business, why not just buy a Starbucks franchise?

McMullen: I called them up and they said, "No we aren't doing that," and I think I looked into some other things and I said, "(Forget) it, let's just do our own thing." We went with the name "Mitch's Java 'n Jazz" and just the whole local thing, because we wanted to make it a local thing to compete against the franchise image.
    I feel that's partly how we got into Wal-Mart — because they're the biggest company in the world and they could support a small, local, regional coffee guy here, especially in Santa Clarita where "Shop Local" is such a big deal.

Signal: So right now it's just in the Santa Clarita Wal-Mart stores?

McMullen: Yes, right now. Sort of a trial, and if they like it, that would be the dream. That's where we want to start—

Signal: That's where you go from that little local guy into the big, multi-national corporation.

McMullen: That's where I'll get on the phone with a Realtor or something.

Signal: So obviously you outgrew your ability to roast coffee on Lyons Avenue.

McMullen: Yes, we did, actually. We went into Kyle's garage; he actually took over the (coffee shop) for a few years ... and I went into sort of the film business, following in my Dad's footsteps to learn a little bit about that.
    That's where I feel I learned about marketing. My Dad did product placement, putting products into movies and whatnot for exposure and things like that. He was one of the pioneers, and he always taught me how to take risks and really go for things. That's sort of what we're doing. We just launched this new Fair Trade Organic line, and we're (among) the first to market. You go to the Wal-Mart Supercenter, you won't see (others). Ours is the only one.
    There's a big demand now, nationwide, for that. That's why we're getting so many new accounts right now. We launched this new thing and it's affordable. Usually, other big coffee companies come in with Fair Trade Organic coffee and they're charging $9 (or) $10 a pound.

Signal: What does "fair trade" mean?

McMullen: "Fair trade" means that the farmers, in the countries where we buy it from, are getting a fair wage for this. Usually they are the ones who get burned, and it's sort of, "Hey, let's let some of the cash flow back into the farmers' hands so they can keep producing a quality crop."

Signal: What does "organic" really mean?

McMullen: We've only recently gotten into it, and you're right: I had that same attitude forever. But now I'm a believer, because it's a pure product. It's on a farm that has to be pesticide-free for five years, and they use trees as shade to help the coffees grow. There are birds in the trees, and they actually are a natural pesticide because they kill the bugs and it's good for the environment.
    A lot of the coffees are grown near Ecuador, so we feel like by supporting the USDA, organic and fair trade, we're being an environmentally conscious company.

Signal: Thinking of countries such as Ecuador, is there some sort of policing agency or regulatory body to make sure they're actually doing this per USDA standards ?

McMullen: There are, yes. It's very difficult for them to get certified. In fact, our roasting company, we have to (follow) strict guidelines in the way we handle our organic and fair-trade beans. The whole process along the way is (overseen by) a fair trade-certified organization.

Signal: How does organic coffee differ from the rest of your products? They use pesticides on those plants?

McMullen: Yes, basically. Whatever. It's to each his own. But we actually just wanted to dabble into the organic market, and we're finding out that people really want to buy it.

Signal: So it's a marketing thing? Does it taste different or better?

McMullen: Our coffee tastes better.

Signal: No — your organic coffee versus your Newhall Blend or some other blend.

McMullen: Great question. Great question. I lose whatever I answer, because I have the regular out there and I have the organic. So I'll answer it like this: They're both good, I think. I think it depends on the region and what kind of coffee tastes you have.
    There's a limited supply of organic and fair-trade out there. You can't find organic Kona. I mean probably you can, but it's going to cost you $50 a pound or something ridiculous. We've found some great regions and some great countries that have organic fair-trade; we've found some good blends, and the way we roast it—

Signal: I'm not really trying to put you on the spot. What I mean is, are they supposed to taste different? Or is it just that by buying the organic blend, you have the knowledge that pesticides weren't used?

McMullen: I believe it's healthier, probably. When we roast it at 400 degrees, everything's disappearing, so it's a pure, good coffee either way you do it. But you're feeling better.
    I think the fair-trade aspect is a good thing; it's actually helping with better wages, and building hospitals in the communities, getting kids educated in the communities. If we buy from Nicaragua, it actually goes back — from our coffee, the purchases go directly to that specific farm, which is actually pretty awesome.

Signal: And now you're looking at developing some more blends with names that pertain to the Santa Clarita Valley?

McMullen: Yes. We launched the Home Town Blend, and we got some pictures from the Historical Society on (the bags), some old trains and (so forth). We're trying to bring (the historical aspect) back. There's another thing we want to do, an Oak of the Golden Dream type of blend. That's going to be a caramel vanilla or something like that. That was the first gold nugget—

Signal: First gold discovered in California, 1842.

McMullen: Maybe we'll have to call it the 1842 Blend.

Signal: There you go, a new name.

McMullen: Serious! See, this is how it happens. You don't know what's going to be out there. I hope you don't want royalties.
    And you need a competitive advantage. If I'm on the shelf next to Starbucks who (has) 35 different flavors over here, and Peet's and Coffee Bean (and Tea Leaf) and everybody else, I've got to have something else. What's going to jump into their cart? I'm trying to find an angle, an advantage.

Signal: Spreading Santa Clarita history throughout Costcos of the world...

McMullen: Exactly. We'll try to do that.

Signal: Which of these blends do you drink?

McMullen: I drink the Newhall Blend, the Home Town Blend, Sumatra. I'm not a flavor guy; I'm not a decaf, I'm not a dark roast.

Signal: How much coffee do you drink?

McMullen: Quite a bit. Four or five cups in the morning; I get to the office, two or three cups. Afternoon, two or three.
    All these reports coming out, it's good for the liver, it's good for all these things; it's one of the greatest energy (boosters). I'm ready to put something on my bag that says, "Prolongs life" or something. I don't know, I'm going to said until the studies (are complete).

Signal: Speaking of health, you've got a particular connection with leukemia.

McMullen: Right. The Leukemia-Lymphoma Society.
    Like you said — me, Cory and Kyle are brothers, and we grew up out here and Cory passed away from leukemia. So my brother (Kyle) and I started the Cory McMullen Leukemia Fund.

Signal: How old was Cory?

McMullen: He was 25. It was 1987. He was worth remembering. I've got his picture on every bag of coffee I have out there, with a little story that says we're trying to raise money—

Signal: His picture is on every bag?

McMullen: Yes, his picture is on every bag. And you know what? I don't know if it's going to help sell coffee or what, but he was a great guy, I loved him. I looked up to him so much. He was my older brother.
    We've raised a little bit, and it helps. I just heard on the news they've got another great breakthrough with leukemia recently, and hey, every little bit helps. We get a lot of supporters. Every purchase they buy, we donate a little bit to the society, and we have other fundraisers in addition to that.

Signal: Every bag of coffee you sell, a bit goes to leukemia research?

McMullen: Yes. Whatever you buy, whether you're Disney or whether you're The Signal, whether you're Princess Cruises or Ralphs or Costco, yes.
    We're hoping one day that it gets big, and we'd like to do something big with it one day. If we go big, that's the goal. We'll take (Cory) with us. If we go nationwide with Wal-Mart, we can talk about opening up a Cory McMullen Medical Center at Arizona State University someday in his honor. He meant that much to us.

Signal: Nowadays, you and Kyle are roasting your beans in the Valencia Industrial Center.

McMullen: Yes.

Signal: How many employees do you have now?

McMullen: About 15.

Signal: Do you personally roast coffee every day?

McMullen: No, I don't. I absolutely do not. John Sturgis is our master roaster. The guy's great. We've got an apprentice under him, and my brother sort of oversees the whole production side, which is the roasting and the packaging and the delivery. The whole process is getting them the best beans roasted in a good, small batch; package it and get it to you fresh.
    If you get coffee fresh, it's such a better cup of coffee.

Signal: Who selects your beans?

McMullen: My brother Kyle and John.

Signal: Do they travel to all of these different countries?

McMullen: That's the goal one day. We've got an importer who does, and he secures all the right contracts with us. We want to make sure that what we get in January is the same thing we're getting in November, because if you're used to the Newhall Blend and it's got a three-bean blend — you know what I mean.
    It's an interesting world out there. It's the second largest commodity behind oil. And everybody loves it. Thank God.

Signal: Where do you go to from here? Are you going to stay in Santa Clarita?

McMullen: The goal is to stay in Santa Clarita and actually move over to Newhall. I want to go to Old Town Newhall. I want to have a roasting company (where) people can tour it — like Knott's Berry Farm, it looks kind of rustic, and maybe have a coffeehouse attached. But this is Newhall Coffee territory; do an Old Town Newhall blend. And the proceeds might help Old Town Newhall.

Signal: Boost the redevelopment fund—

McMullen: I'm trying to get a good break over there. But that's our goal. We want to keep it here. Newhall has put us here. It's the townspeople who have bought our product. There's one Costco or there's one Ralphs, and then they give us 10 because this one succeeded. That's why this Wal-Mart is such a big deal, and it's doing very well right now. It's only been there about six weeks, and people in this community support us and they shop local. It's a great community.

Signal: Where there people or organizations that gave you pointers and helped you along the way? It's hard to believe that you and your brother and your dad sat down and invented this company and it just keeps growing without any bumps along the way.

McMullen: You know what? I'll be honest with you: It's just been blind luck and chance. We got the Mammoth account, which is the No. 1 ski resort in the United States this last year, and because I was up there at a bar having a drink and a guy said to me, "Hey, do you play basketball?" And he happened to be the food and beverage director. He wanted me to play on his team and just, BOOM, we hit it off. They had Starbucks for four years; this was about two weeks before the season started. We got in, and we've been there; this is our fourth year. And we get great exposure from that.
    Ralphs — I got into Ralphs locally; we helped out a charity. There's a kid who had muscular dystrophy and we wanted to help. It was a friend of ours, so Ralphs let us do it because they did the Jerry's Kids thing all the time, and let our coffee go on the shelves. After a couple of years, we were doing so well, outselling Starbucks like 100-1. And that's important here because Starbucks is the giant. And boom, now we all of a sudden have got Ralphs and Stater Bros. We've been knocking on their door for years. In two months, we're delivering to all the Stater Bros. stores —­12.

Signal: How much coffee do you move?

McMullen: We're pushing about 75,000 pounds of coffee a month, which is very, very small. Don't get me wrong: Being in all these stores, we're moving it and we're using our own cash to do it, and that's sort of our growth. When you ask who has helped us, there hasn't been anything. It's really been my brother and I stumbling into things and just getting lucky. But now we're realizing where we're at, and we really think we can take it to some other levels because we've tasted it. You taste the blood of competition. You knock out Starbucks at the No. 1 ski resort a few times and all of a sudden you feel like: We can do this.

Signal: Now your brother Kyle is shutting your two coffeehouse locations so you guys can focus on the roasting business. Do you miss running the coffee shop and having people come in to say howdy?

McMullen: That was the (most fun) thing in the world, to have a jazz band there or something. I used to take my saxophone and go up there — I couldn't play for nothing, but they'd all be loud and I'd be all quiet, trying to act like I could play. Yeah, it was fun. That was fun. But you know what? This is fun. I'm having fun here, because I can compete.
    I've always been a small town kind of guy. I played at a sort of sub-par college; we never had the national recognition. And to be able to compete against these national big boys, it's great. They're starting to hear about us a little bit, but not really. And we're taking real estate from them and places, and that's the rush.
    That's what I like to do. Because we have good coffee. It's the mousetrap. They don't have good coffee. We know what they're buying. We know how they're roasting it. We know how old it is when it gets to the shelves.
    Ours is getting there — when you buy it at Costco, it's months fresher than anything else out there, I'm telling you right now.

Signal: Where do you see yourself in five years?

McMullen: In five years, I see myself in Mammoth probably with four or five little kids around with my wonderful wife, Lisa. I don't know. Hopefully in 100,000 Wal-Marts.

    See this interview in its entirety today at 8:30 a.m., and watch for another "Newsmaker of the Week" on Wednesday at 9:30 p.m. on SCVTV Channel 20, available to Comcast and Time Warner Cable subscribers throughout the Santa Clarita Valley.


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