Wakuli’s fair coffee prices make a difference

ABN AMRO’s Sustainable Impact Fund makes direct equity investments in growing companies with social impact. The investee companies range from disruptive start-ups to larger, established organisations. Whereas investing in line with ESG (environmental, social & governance) criteria often amounts to avoiding negative impact, the Sustainable Impact Fund is intent on accelerating positive trends. The investment amounts range from 1 to 30 million euros, adding up to a fund total of 425 million euros.

Early June, the ABN AMRO Sustainable Impact Fund made an investment in Wakuli, a Dutch company that sells specialty coffee to European consumers. The coffee beans are purchased directly from smallhold farmers in fifteen different countries and are lightly roasted. Thanks to the shorter coffee supply chain, both farmers and consumers get a better price. We asked Hanna Zwietering of the ABN AMRO Sustainable Impact Fund and Lukas Grosfeld, co-founder of Wakuli, to tell us more.

Why does Wakuli make a good fit in ABN AMRO’s Sustainable Impact Fund?

Hanna: “ABN AMRO is determined to accelerate the sustainability shift. As such, we look for companies with the potential to change their industry. Wakuli pinpoints what’s wrong with the coffee supply chain: farmers don’t get a good price for their beans, and consequently cannot invest in quality and sustainability. Wakuli has managed to create a business model in which they do have room to pay that fair price. This gives farmers the financial means to respect their environment, care for their community and build a future-proof business.”

Lukas, why did you want to become a social entrepreneur?

Lukas: “I can’t look myself in the eye if our company doesn’t do some good in the world. As founders, we love good coffee, and we’re keenly interested in the supply chain. We’re also a hyper-commercial business though. We want to build a really big company, so we can purchase more and more coffee for a fair price. One of us has lived in Africa and saw up close what’s going in that respect. A fair price makes the difference between living below the poverty line or comfortably above it. That benefits not just individual farmers, but also the community and the region.”

What’s Wakuli’s solution?

Lukas: “You can only be sure farmers are getting a fair price if you pay them yourselves. We’ve shortened the supply chain by eliminating traders and supermarkets. We do business directly with farmers’ cooperatives in East Africa, South America and Asia. We select them after extensive screening on criteria like financial transparency and coffee quality. After we accept a cooperative, we perform spot checks and inspect their data to see whether they really pay the agreed prices to the farmers.”

What is a “fair price”?

Lukas: “Local farmers often don’t even know what a fair price might be, because they’ve always been underpaid. In any case, a good price is higher than the global coffee market price. Especially where specialty coffee beans are concerned, given that consumers are prepared to pay more for such beans. We pay farmers twice as much as other coffee brands. What we focus on is paying a living wage, a price guaranteeing farmers an income that their families can live on. That price varies depending on where you are, because every region and every country is different. Our approach, therefore, is tailored to the local circumstances. We have to get to know the farmers and understand the challenges they face.”

So have you noticed any progress yet?

Lukas: “We’re currently working with some 3,500 smallhold farmers, a mere drop in the ocean. The more progress you make, the more you realise we still have a long way to go. Still, it’s great to see that, albeit on a small scale, we do make a difference. We recently visited a cooperative in Congo, where we’re responsible for 25 percent of sales and the income of hundreds of people, right in the middle of a war zone. We have a direct impact on these people’s lives. Wakuli is a step in the right direction, but we want to grow a hundred times bigger. ABN AMRO’s investment will help us to scale up, both in terms of workforce and technology.”

How does ABN AMRO see Wakuli’s future?

Hanna: “What’ so cool about Wakuli is that the company’s impact extends way beyond those 3,500 farmers. Let’s not forget that a brand like Wakuli contributes enormously to consumer awareness. People rethink their own choices and how those choices affect the supply chain and the farmers that remained invisible until Wakuli came along. Moreover, Wakuli may inspire bigger coffee brands to behave more sustainably. Wakuli plays a role in mobilising change and making sustainable coffee the new normal. Since I discovered Wakuli myself, I haven’t looked back. You can actually distinguish the subtle differences in flavour between regions. This sustainable coffee is not just fair for farmers, but a treat for your tastebuds too.”