Today’s case study is pretty much The Honest Brand that Amber introduced in the book “Who Said Your Business Is None of Our Business” – An SME that saw unjust in an industry they cared about, and found a way to make right what felt wrong. With a strong mission to change the way the supply chain in the coffee industry worked, the founders of Baba Yaga’s client today built a online retail business that scaled steadily over three years, gaining tens of thousand of subscribers to their specialty-coffee-tasing-subscription-model.
The concept was simple yet powerful: shifting the “coffee at home” economy from cheap, burnt, mass-produced supermarket coffee where farming labour is exploited, to high-quality cuppa that is good for the environment and benefits the entire supply chain. The subscription model is nothing new, yet the key to its sustainability is to retain customers month after month whilst continuously acquiring new subscribers. Let’s see how we achieved that with our Honest Brand.
🎙: What environmental and social effects does the coffee industry cause?
🧙🏻♀️: Coffee crops frequently grow in biodiversity hotspots. With the popularity of coffee, many farmers clear out land and use it for blend farming through unsustainable practices to get more harvest. As a result, these monocrops threaten both natural biodiversity and long-term economic viability to the farmers.
The environmental impact of biodiversity loss is when the purpose of the land has been cleared for just one type of crop, the natural habitat such as birds, insects and other animals also disappears. In addition, farmers invest in pesticides and other chemicals to enhance the crop’s growth and prevent invasion from insects. These two factors combined with unsustainable farming practices heavily impacts soil health, making the land unsuitable for farming in the long-term.
On top of that, unfair compensation of the coffee industry creates a vicious circle of accelerating the environmental and social issues in the industry. Many remain unaware that not only is our environment being endangered, coffee famers are facing exploitation where child labor is a severe issue in the industry.
🎙: What challenges are specialty coffee companies facing today?
🧙🏻♀️: Specialty coffee is a grade of coffee than a particular certification of business practices, despite its contribution. Most companies that work in this area are SMEs, such as small hold farmers, independent coffee roasters and cafes. The main challenge is that with a product grade it is difficult for the public to understand the underlying impact work these SMEs have achieved.
Consumers may have heard about Fairtrade or Rainforest Alliance coffee, but for small hold farmers is practically impossible to obtain this kind of certification due to the financial burden.
What is specialty coffee?
💡Specialty coffee is defined by the Specialty Coffee Association (SCA) as “a coffee or coffee experience that is recognized for its distinctive attributes, resulting in a higher value within the marketplace”. Specialty coffee plays a critical role in shaping a more sustainable and equitable global coffee industry.
It encourages farmers to re-introduce biodiversity into their land so that it could enhance the taste of the coffee beans, and so on. With decent compensation for their crops, farmers can afford to break the vicious circle of the labour exploitation issues in the general coffee industry.
🎙: What strategy did Baba Yaga choose to improve its client’s situation?
🧙🏻♀️: Our client is an online specialty coffee retailer, with a subscription based business model. They offer consumers a tasting-style subscription service where a different combination of specialty coffee from independent roasters are featured each month and sent to the consumer’s doorstep. The client has a mission to use at least 1% of their revenue to give back to the coffee farmers and help them send their children to school.
Yet, it is difficult to elevate consumer’s “willingness to pay” beyond the price they pay for making coffee at home, a.k.a. supermarket coffee due to the complexities mentioned above. The balance between rotating coffee suppliers to keep the consumer’s curiosity, and finding suppliers that have sustainable certifications is a big challenge. All in all, whilst the business is making a positive social and environmental impact, it is hard for the consumer’s to see the alignment.
Our client already understood that the key to their business model was to both increase subscriptions and retain existing ones and had already implemented technical optimization such as automated processes that focuses on incentivizing new subscriptions as well as retaining those that are considering to unsubscribe. They also collect client satisfaction data (reviews and regular client surveys, interviews).
To resolve the challenge, we worked with the client to realign their vision and mission by optimizing their data analysis process of their existing data points, including their environmental impact, supplier’s data, and subscription statistics. Most importantly, we used this data and turned them into metrics, setting clear and actionable KPIs for the short and long term benefits that their business brings to their customers and their upstream suppliers. This turned information into insights, and we identified the areas in which the client has the strongest impact on as a business.
The next step was to realign their vision and mission based on these findings so that the client could apply for B Corp certification, which would help them with stronger consumer recognition in their local market. In the UK, 51% of consumers recognize the B Corp certification. Consumers trust the retailing brand in doing business for good and adopting ethical business practices. This helps our client add credibility to their procurement choices (of featured coffee roasters) in terms of sustainability practices and product quality.
🎙: What outcomes have been seen after Baba Yaga provided strategies and support?
🧙🏻♀️: Aside from gaining certification and the B Corp status, we helped the SME realign their vision and mission with their true impact.
As an SME with an innovative business model, the true impact they had was changing consumers’ behaviours by shifting the demand in mainstream coffee into socially and environmentally responsible coffee. This lever creates a ripple effect where consumers are better educated and can make informed decisions in the future to not consume unsustainable coffee from large corporations that exploit coffee as a commodity. By truly apprehending its key impact, the company was able to better articulate its impact and strategize its business to maximize its business value over time.