As you might have heard TOMS has expanded its one-for-one initiative once again, this time into coffee production. Launching at SXSW, TOMS released an impressive line of coffee offering a variety of roasts from Rwanda, Guatemala, Peru, Honduras, and Malawi. For every bag purchased they give water to those in need. The news seems to have taken the world (or at least the web) by storm. But when I heard the news, I couldn’t help but feel a rush of confusion. Coffee just doesn’t make sense to me from both a business standpoint and an international development standpoint.
Personally, I think coffee is a strange brand extension for a company that primarily sells apparel. But coffee is a $20 billion dollar industry and the market share of specialty coffee is sizable and growing. While it might be outside of their primary business category, maybe there is an opportunity for TOMS to succeed in the coffee industry despite it being a crowded market.
The bigger issue I find with this initiative is a development issue.
TOMS is no stranger to international development criticism. The one-for-one shoe model has long been contested in the international development community because it gives shoes away for free, which can harm local markets. TOMS has improved upon this model and is committed to creating infrastructure and moving shoe production to the communities they serve in order to create jobs. After the initial success with shoes, TOMS added a new line of products: eyewear. This model is even better as every pair of sunglasses helps provide eye care to a person in need. It’s hard to argue with giving medical aid, especially when it supports local organizations. TOMS also recently launched a marketplace for other brands that give back. Though it’s hardly a new idea, TOMS is able to leverage its brand to give other socially conscious brands greater visibility and access to consumers.
I commend TOMS for the steps it has taken in recent history to improve its social impact model. But the coffee addition in my eyes is a step back and here’s why:
TOMS coffee is direct trade. That’s a plus as it cuts out the middleman and the farmers get a better price. TOMS supports women and small farmers. That’s also a plus. But the real problem is that TOMS is supporting water initiatives while simultaneously selling a product that requires a large amount of water.
Coffee has a high water footprint, even for an agricultural product.
Most of the water is used in production to grow the plant. Wet production adds to the problem. While it might only use 0.34% of the water used, the water involved is often scarce and waste from the water can be heavily polluted. TOMS uses wet production.
TOMS gives water back, you might say. Yes, it does. For every bag purchased, TOMS pledges 140 liters of water to a person in need. But here’s the real kicker: it takes 140 liters of water to make just one standard 125 ml cup of coffee. That’s 1,100 drops of water to produce one drop of coffee. You can make about 34 cups of coffee from a 12 oz bag (the size that TOMS sells).
That means that TOMS is giving 140 liters of water for a bag of coffee that needs 4,760 liters of water to produce.
TOMS gives water to those in need in the areas where their coffee is produced. But the 140 liters of water that it is giving hardly makes a dent in the amount of water used in production. A slightly lesser impact does not equal a positive impact. It’s hard to imagine a scenario where this model would have a net positive impact on water insecurity. A net positive impact on people’s livelihoods? Sure. But a net positive impact on water insecurity? I don’t think so.
The most important thing for a social enterprise is to make sure the social mission is strongly aligned with the business mission. In this case, the two counteract each other. And that, in my eyes, is a step back for TOMS.