An Update From Darcy

Kua writes a Letter To Coffee Drinkers once a month. Topics range from daily goings on, to updates on Kua’s strategy, to recipes for coffee biscuits. The content below was the Letter To Coffee Drinkers for May 2022.

Dear Kua Coffee Drinkers,

“Kua’s turning into a hungry for-profit.”

Mum had just introduced me to friends, but this quip came from my brother Owen, sitting across the table. It’s true, but not quite how I would explain it …

Since 2018 (our final year of university), we’ve proudly run Kua using a simple charity model, with 100% of profits reinvested where our coffee is grown. But in a few months from now, we will look something like this:

Why the switch?

In August last year (deep in lockdown), our team set Kua’s first ever properly ambitious goal: to sell 1000 tonnes of climate positive coffee in a single year, before 2030. We did this in response to a Fairtrade report, which estimates that climate change will cut the world's coffee growing regions in half. The industry needs to move to climate positive operations, but I worry that this won’t happen until companies start seeing it as a competitive advantage. In their eyes, today’s Kua is just a ‘cute little project’ … but at 1000T, they’ll take notice.

Our plan is to get big enough quickly enough that it inspires others to copy us.

To date, charity has made sense. To meet the exacting standards of the ACNC, we’ve had to build a supply chain that actively supports smallholder farmers facing huge climate risk, whilst operating with a minimum footprint. But when we look at what’s needed to get to 1000T, we run into some problems: charities aren’t designed to attract investment, nor do they cope well with the risks of rapid growth. That’s a job for ‘hungry for-profits’.

I’ve been learning Spanish, which has a phrase ¿por qué no los dos?. In other words, let the charity do what a charity does best (impact) and the for-profit do what a for-profit does best (scale). This hybrid structure is quite unique, particularly because the charity will own one half of the new company and the employees will own the other half. This feature means our whole team is incentivised to be hungry for scale … but only in a way that meets our existing values and impact standards.

What does it mean for you? Not much: our prices stay the same, as does the way this money is spent:

If the transition succeeds, you’ll notice the number of fellow Kua coffee drinkers start to increase. If it really succeeds, you’ll start hearing about more companies doing similar climate positive initiatives. Either way, I’ll keep you updated. Email me anytime: darcy@kuacoffee.co.

Happy days,
Darcy

P.S. You’ll be pleased to know that I saved this spiel for your letter, and simply smiled at my brother’s quip.