1 of 3
Coffee blossoms on the Gichangi Family Estate in Kirinyaga, Kenya.
2 of 3
Sustainable Agriculture is notoriously tricky to define. Family-run businesses, like the Gichangi Estate, face massive challenges on a constant basis.
3 of 3
Coffee and tea coexist at the Gichangi Family Estate, which was founded in 1955 and is still operated by the Gichangi family.
From the small green shoots that rise in sun-warmed soil across the Equatorial Belt to a steaming ceramic cup cradled in the consumer’s hands, the coffee and tea industries are fascinating studies in the intersection of social impact and growth (or lack thereof, in many cases). Far-reaching and complex, the trade consists of millions of individuals working for thousands of businesses, small, medium, and large. Each has a part to play in the vast ecosystem which supports the daily beverage habit and moves billions of dollars and millions of jute bags around the world every year.
This much complexity gives rise to opportunities both for exploitation of the human and natural capital serving the supply chain, and their protection. Sometimes exploitation and protection are so closely-woven that they look the same to the external eye—and the judgment depends more on where the observer stands and their implicit biases and needs than anything else. Though much effort has been made to define what makes for “Good Growth” in coffee and tea, no consensus has been found—except that we all acknowledge these valuable resources are not renewable without more investment, and if we want to see a future in which coffee and tea exist, our behavior needs to shift.
This column will explore the nexus between business development and social impact in these industries. The title is intentional and centered around this simple question: is it possible to make money by doing good in the world?
Good Growth will explore business models throughout the supply chain in the coffee and tea industries through interviews and analysis, supplemented by examples from other sectors. It will interview key players occupying varying—often opposing—positions in the supply chain, seeking commonalities and paths to answer this critical question. It will not restrict to current businesses only, but will examine examples of past projects which bring lessons to a modern audience.
How to Determine ROI on Social Impact?
A constant challenge which arises in the conversation around social impact work and how it influences the bottom line, or the revenue growth, of a business is how to measure it.
When a business is purely a social enterprise—with stakeholder benefit baked into each aspect of its cultural and organizational DNA—it is easy enough to assume that any growth is attributed to or influenced by social impact.
For example, in a typical “producer-first” coffee importer—take any number of case studies, including Sustainable Harvest, Catalyst Trade, Terra Negra, JNP, just to name a few—the entire business is set up to benefit those downstream, so any profit or success is easily tied to the impact portfolio. When every marketing campaign highlights working conditions on the farm level and every employee is recruited through their idealism, the business is a unified “Good Growth” thesis statement in the making… which is easy enough to credit.
But how does a more traditional business measure the impact of social programming on its success, when sustainability is just part of its business endeavors and often not fully embraced throughout the organization? This is where things get sticky, due to a wide variety of factors. Companies as substantial as Unilever face this measurement challenge and acknowledge it publicly. In 2020, Unilever stated, “When we set our Unilever Sustainable Living Plan targets 10 years ago, we knew we would have to work immensely hard on multiple fronts to meet them. And that’s what we have done. What we didn’t realize was how hard it would be to measure our progress.”
Marketing vs. Reality
Another constant and broadly-understood challenge is the question of how much public discussion around company social impact work is reflected in its operations, and how much is solely for marketing purposes. This is widely known as “greenwashing”, or even “coffeewashing” (recently coined by Fionn Pooler), and further referred to by Unilever’s CEO Alan Jope as “woke-washing” when he spoke in 2019 on the topic in Cannes. “There are too many examples of brands undermining purposeful marketing by launching campaigns which aren’t backing up what their brand says with what their brand does. Purpose-led brand communications is not just a matter of ‘make them cry, make them buy’. It’s about action in the world,” he said.
It is widely accepted that Gen Z is known as the “most purpose-driven generation,” and seeks to back brands which align with personal ethical identities. Coffee businesses are tailor-made for this fit, but trouble does arise when the same terminology is used by “real” or “DNA-level” social impact firms and by those utilizing the concepts to expand their market cap. We can observe the fallout of a company being caught in misalignment by watching the recent case of the NCL (National Consumers League) filing suit against Starbucks for false claims and misleading marketing in its coffee and tea products.
Sustainable Unsustainability?
Recent conversations led by Sucafina through the vehicle of its recently-acquired subsidiary, Sustainable Harvest, at the SCA (Specialty Coffee Association) Expo in Chicago were centered around the concept of “unsustainable coffee,” asking questions on what makes a brand sustainable, how purpose-driven coffee businesses can succeed when by the nature of their structure they take on much of the risk in the supply chain, and what the future of farmer-focused green coffee looks like. Acknowledged is the dissonance that the reason this conversation is happening is that Sustainable Harvest itself, an undeniably powerful positive impact for more than two decades around the world, had reached a point of unsustainability in 2023. Other brands focused on supply chain sustainability have recently closed, been acquired, or gone bankrupt.
Unilever itself, after showing remarkable growth for years while it led the corporate world in sustainability and social impact strategy through its 2010 Unilever Sustainable Living Plan (USLP), has faltered recently on its earnings and has divested some of its verticals where this sustainability focus was most felt, such as its tea business, ekaterra—which included Lipton’s, PG Tips, and Tazo Tea (the buyer of which, is also divesting many of its properties along with their pesky human rights claims)—in 2022. As referenced earlier in this article, the position where an observer stands greatly influences the conclusions they draw from these developments.
Time Frames and Markers of Success
Assessing the success of a social impact business is extremely difficult to do, because success is more nuanced than simply demonstrating continual growth on quarterly earnings reports and keeping a high net promoter score with customers. While the formation of the business dictates what these metrics might be, success for a social impact business certainly requires the impact projects it embarks upon to achieve success and for continual reporting and adjustment to take place.
Time horizons can be tricky here: success this year in raising profit margins by 2% might sacrifice the 5-year achievement of diversifying the supply chain to 100% EUDR-compliant growers. Investors and shareholders may have different expectations around business growth while idealistic founders or business managers may prefer to focus on the business’s environmental impact.
The difficulty of measuring, marketing, and analyzing the intersection of growth and impact, along with the trend for solely impact-focused businesses to fold dramatically (or just as dramatically be acquired by greater interests which may or may not share their goals) only brings us back around to the ultimate burning question: is Good Growth possible within the coffee and tea industries?
Answering this question remains in itself a good task, as does sitting with the mess and sprawl of the data and its related realities. If Good Growth is possible, we shall achieve it, and if it is not, we shall be better for the attempt.