A Responsible Produce Social Enterprise

Business Plan

Nicolas Poncelet

19/02/2017
Executive Summary

Typcially more of a problem in western societies (but replicable to other countries if

successfully addressed) is the problem of how to shop or consume responsibly. It's honestly
hard to know nowadays what is the right produce to buy with all the different labels of fair-
trade, bio/organic, etc in addition to having to choose between ecological impact (i.e. local
and seasonal produce) vs social impact (i.e. fair-trade produce coming from the other side of
the planet).

Therefore, the problem we are trying to address is that of making responsible produce easily
accessible to potential responsible consumers. The latter would not only be the Customers of
this social entreprise but they would also be the beneficiaries. The other obvious
beneficiaries would be the responsible producers/farmers.

One of the main Value Propositions of the social enterprise is to connect responsible
consumers with responsible producers and making such responsible shopping easy for said
consumers. For an initial bootstrapping scenario, we are looking to start off with a capital of
50 KEUR one-time and 10 KEUR yearly recurring, with an additional 1 KEUR per
farmer/producer involved in this initiative. Subsidies will be requested to cover such start-up
funding costs as the local governments as would benefit from a healthier population (and
therefore reduced medical and social security costs) thanks to the healthier eating habits
induced by our initiative.
Table of Contents

Contents
Executive Summary ................................................................................................................................. 2
Table of Contents .................................................................................................................................... 3
Vision ....................................................................................................................................................... 4
Mission .................................................................................................................................................... 4
Team Overview (full details in annex) ..................................................................................................... 4
Identifying the Social Entrepreneurship Opportunity ............................................................................. 5
The Problem ........................................................................................................................................ 5
The Beneficiaries ................................................................................................................................. 5
The Source of the Problem .................................................................................................................. 6
Proposed solution ............................................................................................................................... 6
Market Analysis ....................................................................................................................................... 8
Context ................................................................................................................................................ 8
Competition......................................................................................................................................... 8
Customers............................................................................................................................................ 8
Business Model...................................................................................................................................... 10
Growth & Replication Strategy.............................................................................................................. 11
Go-to-market ......................................................................................................................................... 12
Social Impact Assessment ..................................................................................................................... 13
Financials ............................................................................................................................................... 14
Revenue Streams ............................................................................................................................... 14
Cost Structure .................................................................................................................................... 14
Start-up Funding ................................................................................................................................ 14
Sources of Income ............................................................................................................................. 14
Annex Full team details + CVs ............................................................................................................ 16
Vision

Our vision is to make responsible produce available in every capital of the developed world
by 2020. This would not only ensure people a better health through better food, but would
also ensure a more flourishing local economy as well as enhanced auto sufficiency.

Mission

In order to achieve our vision, we will strive to provide responsible shoppers with the best
and easiest shopping experience such that it may offer them the desired peace of mind that
they have done the right thing.

Team Overview (full details in annex)

<This section has been suppressed for privacy reasons as I do not wish to disclose personal
information through such a public means of distribution>
Identifying the Social Entrepreneurship Opportunity

The Problem

Typically more of a problem in Western societies (but could be replicated in other countries if
successfully addressed) is the problem of how to shop/consume "responsibly". It's honestly
hard to know nowadays what is the right produce to buy with all the different labels of "fair-
trade", bio/organic, and choosing between ecological (local & seasonal) vs social (fairtrade &
coming from the other side of the planet).

The Beneficiaries

The direct beneficiaries would mainly be:

consumers in Western societies (where there is typically more awareness about the
need to shop more responsibly)
with a desire to shop more responsibly but who don't have the time, or don't want to
put in the effort, to research the best way to shop responsibly (i.e. they sincerely want
to shop responsibly but will not go out of their way to do so)

The indirect beneficiaries would be the farmers/producers of the "responsible produce"

(whether their orientation is more local/organic/fairtrade/etc) as our solution would allow them
to increase the visibility and more easily sell their produce.

Essentially, the market for direct beneficiaries is huge. Based on an Ethical Consumer
report1, in the UK alone it was estimated that the ethical market was worth 54 billion with an
average spend of 1,000 per household so a market size of about 54 million households that
are, or are willing, to consume responsibly.

1
https://www.ethicalconsumer.org/portals/0/downloads/ethical_consumer_markets_report_2013.pdf
The Source of the Problem

The problem is the appearance of too many labels and certifications of "fair-trade",
bio/organic, local, seasonal, etc as well as many greenwashing attempts from multinational
firms claiming to have fair-trade products except that when you read the fine print only 10-
20% of the raw materials are sourced from fair-trade producers. With all of this overload of
information, even with the best intentions people just don't know how to buy responsibly
nowadays.

Over time people have gradually come to expect that responsible or "healthy" food is/should
be more expensive than "normal" food. In combination with a lot of "greenwashing" from big
corporates and multinationals, certain consumers feel cheated as they believe that prices of
responsible produce are artificially raised by these corporates/multinationals because they
know that consumers are willing to pay a premium. As a result, consumers end up being
confused and distrustful when faced with all the different labels and certifications and origin
(if published) and whether or not they should be boycotting the producing company or
country of origin.

In the end, the main antagonism to be addressed is the informational overhead required to
ensure "responsible consumption" as would-be "responsible consumers" often have the "will"
to consume responsibly but they often don't have (or aren't willing to invest) the time to
inform themselves on the most responsible produce to buy.

Proposed solution

The antagonism of informational overhead can be addressed by creating new

complementarities whereby the actual overhead in terms of cost/time is centralised (rather
than being repeated by every potential responsible consumer) and the resulting information
distributed in such a way that the use of this information by would-be responsible consumers
would require the least possible effort on their behalf (i.e. make it easy to shop responsibly).
There would definitely be possibilities to establish partnerships with food- and environment-
oriented NGOs/non-profits especially in regards to the actual work required in centralising the
cost/time of the informational overhead.
In order to achieve this, the idea would be to create an online shopping platform through
which the centralised information on responsible produce could be distributed immediately
and easily to the end consumers. Instead of just being a shopping platform, the latter would
filter the results of available produce based on the end consumers preferences (e.g. prefer
local vs fair-trade) which would have been specified when the end users created their
account.
Market Analysis

Context

Our social project relates to the consumption of responsible produce (i.e. whether fairtrade,
seasonal, organic, local, etc) which is typically found (or at least perceived) to be expensive
(it has actually even become part of people's expectations that responsible or "healthy" food
is/should be more expensive than "normal" food). Worse, in combination with a lot of
"greenwashing" from big corporates and multinationals, certain consumers feel cheated as
they believe that prices of responsible produce are artificially raised by these
corporates/multinationals because they know that consumers are willing to pay a premium.
As a result, consumers end up being confused and distrustful when faced with all the
different labels and certifications and origin (if published) and whether or not they should be
boycotting the producing company or country of origin.

Competition

Although the beneficiaries' needs are partially met with the actual presence of responsible
produce on the market, in the end it is not in the interest of producers and distributors (i.e.
the market) to eliminate the "consumer confusion". Indeed, as they are competing against
one another, the main concern for producers/distributors is to sell as much of their produce,
at the highest price, to whomever, and wherever (even if on the other side of the world) and
therefore benefit from the "consumer confusion" as they are able to sell their produce to
consumers who may not have bought it had they been more/better informed.

Although for-profit businesses definitely see "responsible consumers" as a profitable market,

it is less the case for "informed responsible consumers" as the businesses would end up
selling less produce and at lower margins. Also, when it comes to local (and potentially
organic) producers, they often are "on their own" resulting in proportionally more overhead
and hence higher marginal prices, but also meaning less choice for consumers.

Customers
There are essentially two target groups of customers:

The hard core believers of responsible produce, for which the communication must
focus more on the charitable aspect for the producers in addition to the fact that
they get good food
The everyday people who would be less attracted by charitable aspects and would be
more interested in whats in it for me

As these two target groups having varying interests and/or values, it is important to find a
way to address both target segments in a way that is appealing for both rather than risk
scaring away or disillusioning one of the two segments. More details provided in the Go-To-
Market segment.

According to a market research study performed by Sustainable Brands2, 84 percent of

consumers globally say they seek out responsible products whenever possible, though 81
percent cite availability of these products as the largest barrier to not purchasing more. It
also seems that emerging markets are a more attractive market for responsible produce as
they seem to be more inclined to act on their intentions of responsible consumption.

http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/sustainable_brands/study_
81_consumers_say_they_will_make_
Business Model

One of the main Value Propositions of the social enterprise is to connect responsible
consumers with responsible producers and making such responsible shopping easy for said
consumers. We would therefore rely on personalised Customer Relationships based on trust
and the main Channel would be the Internet through which they would be accessing our
website to order their responsible produce. This website would therefore represent the main
Key Resource and therefore a Key Activity would be the development of such a website. In
addition to this, a Key Activity would be the process of selecting the responsible
producers/farmers who would actually also be Key Partners of the social enterprise. As for
the Cost Structure, in a bootstrapping scenario we would estimate an initial cost of about 50
KEUR to create the website, another 10 KEUR yearly recurring for its maintenance, as well
as another 1 KEUR per farmer/producer listed on the website. As for the Revenue Streams,
the main one would be earned income through a sales commission of about 2% and
potentially some advertisements to cover some of the initial costs.
Growth & Replication Strategy

Given that the Key Resource, i.e. the online shopping platform, is something intangible and
therefore infinitely extensible, the technical aspects of scaling would not be an issue; the real
difficulty lies in choosing the right replication strategy.

In order to avoid being perceived as another greedy and green-washing multinational by

potential consumers, Organic Growth and pure Franchising should be forgotten. Instead, we
would opt for the Open Access model of replication through the licensing of the online
shopping platform. The Open Access model also has the advantage of achieving faster
replication, therefore faster economies of scale, and therefore faster reduction of the
marginal licensing cost but in a manner which still ensures an interesting ROI (Return On
Investment) for our investors.

However, in order to ensure successful replication and to solidify the model globally, over
time we would retroactively franchise (or acquire) one local initiative in each country around
the world. This would allow us to specialise further by gaining additional experience from
different countries and therefore increase the quality of information we could make available
to other replicated initiatives. This would also allow us to indirectly be closer to all the other
local initiatives, thereby making it easier to assist them locally in replicating our initiative
thanks to our local staff.
Go-to-market

In order to attract both target groups of hard core believers and everyday people (see
section Market Analysis > Customers), the communication strategy will have to clearly
express the following key messages :

1. Enhanced taste compared to normal produce => slogan along the lines of Make
good meals, with more ease
2. Health benefits => infographic showing statistics around decreased chances of
contracting cancer and other diseases related to normal food
3. Low carbon footprint => show tons of CO2 saved compared to normal production as
well as having a section in the consumers online shopping accounts showing total
CO2 you saved up to now
4. Know where your food comes from => to ensure credibility of our offer as well as
show accountability, a picture of the producer would be placed next to each produce
which originates from them
5. Doing good for the local economy => linked to the previous point, a charitable
aspect would also be portrayed, although in a subtle and almost unconscious
manner, where we would highlight the fact that the local economy will be better off in
addition to the fair pay of the responsible producer

The passive communication channels (e.g. website, Facebook page, etc) would highlight
all 5 key messages and would explain them in a short, 1-minute animated video.
The majority of the active communication channels (e.g. targeted advertisements on recipe
websites, distributing flyers in malls and/or at the entry of supermarkets, etc) would target
the masses by focusing primarily on the first 4 points and almost not mention the last one.
As for the hard core believers, they would be targeted at specific events (e.g. alternative
music festivals, meditation groups/schools, etc) by focusing the communication materials first
and foremost on the 5th and 3rd key messages while the key messages would be portrayed
more as the natural consequence or side effect of having bought responsible produce.
Social Impact Assessment

The theory of change is that facilitating the purchase of responsible produce (by putting in
contact responsible producers and consumers with an intent to consume responsibly) will
lead to

1) more consumption of responsible produce and therefore

2) by substitution, less consumption of non-responsible produce

As responsible produce (bio, organic) is typically healthier then point 1) will lead to better
health and therefore reduced medical costs for the responsible consumers. As responsible
produce would typically be local/seasonal, thanks to point 2) we would also see less pollution
due to the fact that the non-responsible produce would not have been transported nor would
toxic chemicals have been used for its production (this would of course not be an immediate
effect as it will take time for the reduced demand to be reflected through a reduced offer).

In terms of indicators, public health statistics from the local government could be used to
measure increased health / reduced medical costs. Likewise statistics on the general quality
and pollution level of the air and water systems could be used to measure the outcome of
reduced consumption of non-responsible produce. The only downside is that for both points it
would of course take time for any results to become visible on a national scale during the
initial growth of the social enterprise.

As for social return on investment, the reduced medical cost would be easy to monetise as
any relevant statistics would typically be expressed in monetary amounts. The real difficulty
would be in properly assessing the impact, i.e. how much of that reduced cost is actually
attributable to the consumption of more responsible produce. As for the pollution from
transportation and chemical usage, the monetisation would be tougher to achieve and the
best possible way to do so would be to link it back to the health of the local population and
therefore reuse the monetisation of the healthcare factor.
Financials

Revenue Streams

The main revenue stream would be earned income through a sales commission of about 2%
for all produce sold through the online shopping platform and potentially some
advertisements to cover some of the initial costs at the out start of the venture.

In addition to this earned income, subsidies will be requested to facilitate the launch of or
enterprise.

Cost Structure

Our Cost Structure, in a bootstrapping scenario, is estimated at 50 KEUR one-time to create

the website, another 10 KEUR yearly recurring for its maintenance, as well as another 1
KEUR per farmer/producer listed on the website.

Start-up Funding

The estimated 50 KEUR required to create the first version of the online shopping platform
represent our start-up funding needs. Such start-up funding will be met through the request
of subsidies from the local governments as they would ultimately benefit from a healthier
population (and therefore reduced medical and social security costs) thanks to the healthier
eating habits induced by our initiative.

Sources of Income

As our idea is about "Responsible Produce" the buyers of the responsible produce would
both qualify as consumers and beneficiaries, however this represents only 1 single revenue
stream upon which it would be the intention to rely (i.e. the more self-sufficient we are with
this revenue stream the more sustainable the social venture in the long term). Therefore this
would really be much more of a real "business" type of social venture (relying on revenues
from shoppers) and less of a non-profit style (but style with a social mission).

Of course for the purpose of enabling and financing the take-off of the startup, in the very
beginning it would definitely be interesting to receive donations (and/or investment capital)
from the typical Family, Friends, & Fools as well as future potential customers, and
potentially even subsidies from local governments (by getting people to eat healthier we
could reduce national medical expenses and by promoting "local" it's better for the local
economy).

Wrgds willingness to pay, as per this article from Sustainable Brands, "84 percent of
consumers globally say they seek out responsible products whenever possible, though 81
percent cite availability of these products as the largest barrier to not purchasing more."
Annex Full team details + CVs

<This section has been suppressed for privacy reasons as I do not wish to disclose personal
information through such a public means of distribution>