Building karma through supply chains
In this blog, Tania Han, who is currently on the October 2017 Associate Programme, writes about how a small company from New Zealand is doing good whilst challenging the soft drinks market.
I first tasted Karma Cola on a tiny island called Waiheke, off the coast of Auckland, NZ, in 2016. I love that Karma Cola operates a profit for purpose model, where the profits from sales are directed to the villages in Sierra Leone that supply the cola nut that gives the drink its name.
When I happened to meet Simon Coley, one of the company’s founders, I jumped at the chance to interview him about importance of purpose, culture and pace when scaling a social business….
Simon, what is your purpose and that of Karma Cola?
Through my creative career, I came to believe more and more in the power of using business for good, to take something unnecessary like a soft drink and making it useful and better. There are a lot of people drinking soft drinks in the world. We feel a responsibility to ensure the people involved in the process benefit from the experience so we set out to prove that we could make it work in the supply chain.
Humans value things for a bunch of reasons. Whether we like it or not, we will always be trading with each other and there are consequences to those transactions. We want to understand those consequences and help consumers see the impact of their choices.
What are the values and ethos that drive you and Karma Cola?
Both my parents lost their fathers early in life and were raised by their mothers, and benefitted from an incredibly useful welfare system in New Zealand in their youth. It is really important to understand your role in the community and that it takes more than the privilege of birth to be successful or have a good life. I was lucky enough to go to India when I was 16 and it was something that shaped my view of the world. I had never seen the contrast between wealth and poverty so profoundly, in a culture that was so different to what I’d been used to, as a kid from a white, middle-class background.
I was exposed to a lot of creativity when young and was fascinated by printing and design. I later worked in advertising agencies and found myself gravitating towards issue-based campaigns. When I moved to the UK, I worked with clients like Greenpeace, who weren’t just trying to sell products but change behaviours. It was really challenging intellectually and has shaped what I do today.
At Karma Cola, we try to do a few things really well. With our design backgrounds, we realised it was important to look good because first impressions count. Without a nice label, you won’t get attention. Because we are a drinks company, our product must also taste good. We try to do good with the money from the business, our Karma Cola Foundation is one way we do that. And finally, we try to be good. We work with people whose values complement ours and who walk the walk.
What is Karma Cola’s plan for the next few years?
On the business side, we want to create a sustainable model, to make commerce altruistic and to grow at a speed we can manage. The more drinks we can sell, the more good we can do. If we can have a larger market share, then we can put more money into the Foundation that we’ve set up to benefit more people. At the moment, we have organic certification and we have fair-trade certification across all of our dry ingredients and it is important that we continue to uphold those standards.
On our Foundation side, we would like to extend that good to all of our product lines, so that our Foundation can work with ginger growers and others. We’ve seen some success in the way we work locally with villages and we’d like to broaden the scope of our Foundation to other growers. The Foundation works mainly in Sierra Leone at the moment but we would like to do more there and take it to other countries where our producers are.
What about scaling in terms of new products and new markets?
It has all been organic and done slowly. We started with cola, then looked at the fridge and realised that we only have one soft drink and wanted some variety! Early on, we found people who were interested in our story wanting to help us by selling the drink. We got a call from someone we knew in Australia who wanted to represent us in Sydney then we hired a sales person in Melbourne because we thought the coffee and foodie culture would be good to tap into. Because the coffee businesses had similar values to us, it seemed like a good fit.
We weren’t sure it would work but my business partner Chris has some experience in selling drinks. The momentum has come from the coherence between the look of the thing, the product itself and what it stands for; that has given people the confidence in us as a business.
We have been really DIY with the Foundation. We didn’t know how to be effective on the ground so we decided not to spread it too widely and to monitor each project carefully. We are aware there is a public perception of charity programmes having high admin costs and we were keen to create lasting change.
We are fortunate to have the local expertise of Albert Tucker, who has roots in the country, and was involved with the coffee industry and with Divine Chocolate. He helped us bridge the cultures and improve our effectiveness on the ground. We are also lucky that we have been able to operate with a common purpose, without too many competing agendas.
As we talk, you appear quite relaxed…
Inside, there is also a lot of fear.
Tell me how you turn that into something positive.
The first is embracing falls and failures, and learning how to recover from it. We started off really slowly to see how the market would respond. When things didn’t work, we went the drawing board and reworked our approach.
The second is focus. One example I can think of is when Ebola hit Sierra Leone. We had been funding the construction of a bridge and other programmes. We toyed with the idea of re-routing some of the Foundation’s money to a sanitation and hygiene project but when we consulted with the local communities, they told us they wanted us to keep funding those things. They are so used to NGOs changing the programme and never returning to their original objectives, so they wanted some continuity. It reminded us to stay focused.
Local participation is really important. Every time we make a decision on the Foundation, it has to be from the local community. We really rely on them to tell us what they want to use the funds for. Part of this is to ensure that the fund can run and decisions can be made even if we aren’t around. This helps us feel like we are doing the right things.
You’re growing. It’s easy to remain on message when you’re small but what happens when you grow? What is the leadership culture at Karma Cola?
We have three founders who have different and complementary styles. We have a broad skill base, and different people step up depending on what is needed. We have a culture that grew up out of selling to 4 million people and through the cafes. Now we are breaking into the UK market which is much larger so we have to figure out how to take the good stuff to our next phase.
There is so much competition for attention now, and so many channels that it can happen through, so having integrity is even more important than before. It’s a commodity that you can’t buy. We do what we say we will.
It is in our DNA to care that something is good for the land, the growers and customers. This attracts customers and talent to us. We are highly collaborative and supportive. We are in that phase between startup and structured organisation, so we need to be professional as we scale. As we go forward, we need to keep thinking, reflecting on how we are doing, and thinking about how to get others to own and lead the company.
Karma Cola has 35 employees worldwide and has sold 12 million bottles of Fairtrade, organic soft drinks in 23 countries. Nearly US$200k has been invested in the Karma Cola Foundation which has built bridges to connect villages, educated girls and teachers, and supported local entrepreneurs to build a brighter future for themselves. If cola isn’t your thing, they also make Gingerella Ginger Ale, Lemony Lemonade and Summer Orageade. They support farming communities in 8 villages. In the UK you can find them in Honest Burgers, Waitrose, Ocado, Tortilla, Wholefoods, Jamie’s Italian and Wahaca.
