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Cashing in on coconuts
Cashing in on coconuts

For Dan Etherington, the key to business success is innovation. Hardly an earth-shattering insight, you might say. But consider that Dan's company, Kokonut Pacific, manufactures hand-operated coconut oil machinery that uses a traditional extraction technique and sells it to rural communities in developing countries. Even in this low-tech market, innovation is crucial.

Dan's first innovation was to match supply with demand. In 1992, when he was an agricultural economist at the Australian National University (ANU) in Canberra, he led a consultancy team to Mozambique. There, a village soap maker said he needed a way to extract oil from coconuts. Dan later recalled that people on an island in Tuvalu had developed a method to press oil from sun-dried coconuts.

Working with the CSIRO, he used this approach to develop a coconut oil machine. After testing designs, they came up with a disarmingly simple unit: a metal plate for drying coconut flesh to the right moisture content and a hand-operated press for squeezing out the oil.

Ready to take his equipment to the market in 1994, Dan retired from ANU and started Kokonut Pacific. Though a few units were eventually exported to Mozambique and elsewhere in Africa, Dan set his sights on the island nations of the South Pacific and Caribbean, where coconuts were plentiful, but people struggled to make a living producing copra, the raw ingredient of industrial coconut oil.

The design and innovation process continued as teething problems cropped up. For example, villagers would sometimes damage the press by using more force than was needed to expel the oil. Now the press has a shear pin that can easily be replaced if excessive force is applied.

"It's been a continuous process of learning and developing in-house expertise. People rise to the challenge if you give them the chance."

Dan and his team of four employees have also had to take an unusually far-reaching approach to marketing. While some villages produce oil for local use, others need to sell it further afield. Kokonut Pacific has helped them with product development and sales of certified organic virgin coconut oil, coconut oil soap and coconut oil biodiesel fuel.

In the Solomon Islands, where producers lack the most basic infrastructure and support, Kokonut Pacific has created a local joint-venture company that buys back the coconut oil for export. "Our main problem now is managing rapid expansion because so many communities want to join the scheme," Dan says.

Thanks to growing demand for coconut oil among health-food shops and the successful launch of the Niulife brand of products, which Kokonut Pacific sells through its website, machinery sales have boomed. The company sold 100 units last year and Dan hopes to match that number this year.

He sees innovation as a way of keeping his team engaged. Each problem has become an opportunity to challenge employees to think in new ways. For instance, the Kokonut Pacific website was developed internally, even though no one on staff had online experience. It paid off: Internet sales in the first year were $90,000.

"It's been a continuous process of learning and developing in-house expertise," Dan says. "People rise to the challenge if you give them the chance."

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In Business is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ).  2006. Important Notice: The information contained in this magazine is given in good faith, and is accurate at the time of publishing. To the maximum extent permitted by law, neither ANZ, nor its employees, agents or contractors accept any liability for loss or damage arising as a result of any person acting in reliance on information contained in this magazine. This magazine should not be used or relied on as a substitute for detailed professional advice or used as a basis for formulating investment decisions. All advertising contained in this magazine is not endorsed by the publisher nor ANZ. Some editions of In Business contain articles prepared by Businesswriters & Design (http://www.businesswriters.com.au/).

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