How to grow a coffee brand: Peoples’ choice

by | Nov 17, 2022 | Opinion

When Matt Lamason started Peoples Coffee in Wellington in 1994, he was in his early 20s and was a self-described “hardcore Fairtrade guy” who “wanted to make a difference in the world through coffee”. He says he wasn’t too comfortable talking about money and wealth and growth back then.

“But it’s no longer just me, it’s everyone,” he says. “Our growth affects our ability to attract great staff and keep them, and to pay consistently better prices to farmers.”

Over the past 18 years, he says Peoples has been an exercise in bootstrapping, which is something many New Zealand coffee roasters that started small and got big can relate to. But while they may have followed a similar path in terms of moving from wholesaling, to starting their own flagship cafes (Peoples has two in Wellington), and going direct to consumers, it has taken a different approach to scaling up. Rather than selling to a bigger entity, it is instead looking to the people and running an equity crowdfunding campaign on PledgeMe, where it is attempting to raise $1.5 million for 13% of the company.

“It’s fun to grow and do cool shit,” says Lamason. “But that costs money and I think the company is at an age and has the capacity within its staff and structure to 10x or 100x itself.”

He admits that’s also language he wouldn’t have been that comfortable using 18 years ago, but he knows that they can do more for the communities they work with if they sell more coffee. In their case, because they have committed to paying Fairtrade and organic premiums to farmers, volume can co-exist with values.

Lamason says he has had conversations with private equity and “bigger money” about selling.

“But there’s a conversation that’s always going to be looking at EBITDA and ROI and a sell point and that is so ‘flatlandish’. It lacks imagination.”

He’s more interested in finding a way to attract new customers through its ethical framework while helping farmers, and inspiring young people who want to use business as a tool for change.

“I don’t think the corporate model offers that … I think we need new models of how to do investment and growth, so I think crowdfunding and things like Patreon allow you to grow on your own value set. You don’t need to let go of your soul to grow. I’m excited. It does feel like the right time to do this.”

James Beyer, Peoples general manager, says history tends to show that being bought by a larger entity does affect the business and the culture.

“What we’ve seen is as large corporations purchase New Zealand coffee brands the competitiveness when we go for tenders at cafes increases. That’s driving coffee prices down or increasing how much equipment or after sales support you need to offer to maintain those contracts. It makes it very difficult for anyone without a large war chest to compete.”

For the coffee farmers, this corporate competitiveness means it’s possible they could be paid less than the price of production. But like Kōkako and others, Peoples has prioritised provenance and hopes that its challenger brand status will eventually force the incumbents to change as more consumers switch.

“We sit in this part of the market where we’re choosing [to pay a Fairtrade and Organic premium] and are looking towards a model that is truly sustainable in the long run,” says Beyer. “…Hopefully everyone else will have to live up to our standards and bring on Fairtrade organic ranges, get rid of the plastic packaging and work towards more sustainable sources.”

Peoples, which is B Corp certified and Living Wage Accredited, has so far focused on growing its presence on its home turf of Wellington, “where we’ve got market reach and where people know our brand”. The brand is positioned at the top-end of the market, but they didn’t want to have a premium attached to doing the right thing.

That means it does take a smaller profit margin than a company that doesn’t pay as much for its beans or pay additional social premiums (it claims to have given $400,000 back to farmers from its cooperatives over the past three years). But that’s a price they’re willing to pay to ensure farmers are paid well and improve their processes and their communities benefit.

When Lamason first went to Nicaragua in 2004, he says he saw coffee that was left on the trees on private farms because the commodity price was just too low to justify picking it.

Those farms were dying, he says, but the cooperative model they used was standing up because of price guarantees and premiums. Building those relationships with smaller farmers and seeing their communities transformed is one of the biggest thrills of doing business this way, he says, and for him, it was proof that the capitalist model could be beneficial,

“It’s not just about the next gizmo, or the next high-end coffee,” he says. It’s about seeing yourself as part of an ecosystem and “finding a deeper way in”; about humans helping humans by way of an ethical business. So is the difference between the bigger players and smaller indies simply the care they show for their partners?

“I’d go a layer deeper or broader and use the word love,” says Lamason. “When you talk about these small independent cafe owners or restaurant owners, the ones who keep doing it year after year and are successful, they do it because they love what they do and it comes through in the way they source things.”

There’s a real love there, he says, and it comes from a sense of craft and imagination, something he believes Peoples has in spades.

Humans love a deadline, and crowdfunding campaigns typically pick up pace towards the end. Lamason has already done a biodiesel cooperative crowdfunding raise through Pledge Me and that was certainly how it played out. Peoples’ campaign finishes on Sunday, Nov 20 and as of the 18th, just over $200,000 has been pledged. The minimum is $500,000 but he’s confident they’re “going to crack a mill”.

If the funding target is reached, the goal is to increase roasting capacity by around one third to 8000kg per week, add more machinery and grow their hospitality and supermarket presence. It will have a post-raise valuation of $12 million if fully subscribed and it is forecasting sales of $7 million in three years.

“I believe the world wants Peoples to be around,” Lamason says. “For me, being owned by the People feels right. It has an energy that’s been in the brand from the get-go … So if you think New Zealand-owned, Fairtrade and organic coffee has a place in the future, come join us.”


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Ben Fahy

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