Author Archives: Peter Buechler

What’s in Your Cup?

Coffea Arabica vs. Coffea Canephora Not Just Another Flavor — A Different Species

A visit to a coffee bar, whether a link in a large chain (the usual suspects) or a local one espresso machine cafe, generally reveals coffee from a variety of sources – some familiar, some not. If you care about the contents of your cup, read on.

Most “specialty,” a.k.a. expensive, coffee is the fruit of the tree, coffea arabica, generally called Arabica. Even mass-market sludge such as Nescafe touts that its Nescafé Clásico Colombian instant is 100% Arabica. Some of its other blends, such as Brazil, simply label themselves as 100% coffee, without further specification. If, as is likely, they use Robusta, they don’t specify it. Among some coffee aficionados and not a few coffee snobs. Robusta is Arabica’s poorer step-sister.

A behemoth like Starbucks dismissed the entire category. “It comes down to flavor. And that less refined flavor is absolutely the reason we don’t even touch it (Robusta).”

Even mid-market players like McDonald’s and Dunkin’ Donuts promote their coffees as “100% Arabica.”

Robusta’s inferior status can be a self-fulfilling prophecy — cheaper coffee handled cheaply and marketed to less demanding or price sensitive customers.

According to some coffee experts, this may be changing. I recently encountered a potential herald of this change while on assignment in the Ecuadorian Amazon.

Case in point, Witoca, , a cooperative of coffee and cocoa growers is making the case for high end Robusta. Why do they bother? Their founders believe that properly bred, grown, and processed, Robusta has unique advantages for both its producers and customers.

Coffee as a crop faces a number of challenges and these are made worse by a warming climate. Coffee leaf rust —  a fungal disease, which stunts and shrivels the leaves is increasing. Robusta is

Coffee Leaf Rust

relative resistant to this blight. Arabica needs higher altitude and shade to prosper. Robusta can do well at warmer lower altitude with less shade.

Witoca farmers grow both Robusta and Arabica. A trek through a coffee plantation reveals sickly Arabica trees but vigorous Robusta. Robusta is living up to its name and being a hardier species. It is better adapted to Ecuador’s weather and ecosystem and yields substantially more per unit of land cultivated.

But standard Robusta lacks both the reputation to command the higher price to improve the

A Productive Plant

lives of the growers. Rather than falling into a commodity mindset and just maximize yield, Witoca has been selectively breeding Robusta to enhance its smoothness and aroma, while maintaining its hardiness.

Robusta is generally thought to have a more earthy and bitter taste than Ababica. Witoca believes that its selective breeding program has and can continue to improve its taste. Robusta is naturally higher in antioxidants and nearly twice as high in caffeine as Arabica. For some

A Happy Robusta Tree

niche brands based on Robusta, such as Death Wish and Biohazard, the caffeine kick is touted front and center. Interestingly, high caffeine concentration may be one factor in its disease resistance. Whether it’s a benefit to the drinker depends on personal preference. In my travels, “Decafe” as a category barely exists in Central or South America.

Witoca also operates a comfortable rustic café on a back road, serving its coffee in a full range of coffee drinks from espresso to cappuccino, all made from Robusta. I particularly liked their Americano.

What is apparent is visiting a farm of one of Witoca’s member growers, is the pride they take in the care and production of their crop.

As with other beverages, consumers know what they like rather more than why. Robusta itself is not a top of mind category nor is it differentiator. Its Amazonian heritage may just be…

What Would You Do With $ 250?

Cali, Colombia 7:00 AM on the last Saturday in July. For a change, it’s not raining as we head west. In about two hours, we drive up a narrow uneven road, which occasionally scrapes the bottom of our muddy Kia. I’m here on a field visit to a prospective borrower of UNI2 – a Colombian microfinance lender.

The tiny farm has been cobbled together from bamboo, scrap wood, corrugated plastic panels, tarpaulins, and assorted found materials. Canvas curtains serve for doors. It gives the impression of of being improvised yet organic. The pig sty melds into the chicken coop, into the flower and vegetable gardens, all of which surround the residence. In front is a roofed porch. This is the site of an informal cafe from which the farm’s owner, a woman of middle years, supplements her income by serving drinks and snacks to neighboring farmers and workers. The need to have supplemental income as well as the resourcefulness to earn it, were common among UNI2’s borrowers.

I was in Colombia, assisting microlender Finamiga UNI2 with content development, marketing, and strategy. UNI2 is a provider of really small loans. It lends for farming, retail, manufacturing, and motorbike or light cargo vehicle purchase. The two hundred and fifty dollars of the title, corresponds to about a million Colombian Pesos ($COP). About the average Colombian monthly wage and the smallest loan UNI2 makes.

Depending on your location and tastes, a few hundred dollars could buy you a new golf club, a pair of balcony seats to a production of Tom Stoppard’s latest play, Leopoldstadt, when it opens in New York later this month, or a single ticket to see the New England Patriots vs. the Detroit Lions. In effect not something, which will make a significant difference in your style of living. If you were a peasant farmer in Colombia, your answer would be different.

A million or so pesos buys fertilizer, seeds and seedlings, power tools, chicks, which will become laying hens. Larger loans of a few million pesos, are used purchase piglets, calves, or leases for additional workable land. A “big” microloan of three to six million (still less than $1,500), might be used to buy a low end motorcycle. The prospective borrower in this case, hoped to be able to buy a motorbike to more easily get into town and keep her small farm supplied.

These are not loans, which a standard commercial bank, in Colombia or elsewhere, would typically make. Borrowers seldom have assets or credit history, which would qualify them for any loan. In a sense, microlenders are bankers to the unbanked and “unbankable” by conventional banks. Still these are loans, not grants. Borrowers undergo due diligence vetting. Those who are approved are charged interest, though at a below market rates. UNI2’s customers pay an interest rate averaging less than four per cent, not a full risk adjusted rate, let alone the usurious rates charged by Informal networks, gangs, and loan sharks.

UNI2 is not a charity. Its business model seems to be working. Loan default rates are lower than in Colombia’s commercial banking experience. Borrowers often take out succeeding loans after they pay off the current one. With focus on a few key market segments, lower expenses, including very Spartan offices, UNI2 can sustain itself and grow while remaining a low price lender.

UNI2 tries and generally does provide more than “dumb money.” Their due diligence and field visits focus the borrower’s plans and priorities and sometimes include advice and perspective.

UNI2 both services and retains the loans on its books. Nonetheless, it can effectively resell them to third party lenders. In doing so, it acquires resources to fund further loans. One of these lenders, Kiva, has an intriguing way of supporting development. In essence, it crowdsources loans.

Kiva members are invited to contribute capital in increments of $25 US. Kiva lenders, can browse the sites prospective borrowers and allocate their funding to any project, they find compelling. Some of the loans are completely funded and managed by Kiva, others have been originated by UNI2 or other organizations like it.

Capsule summary of UNI2 loan on Kiva

Capsule summary of UNI2 loan on Kiva

The kiva loan is just that. If the borrower repays the loan by the end of its term, the Kiva member can choose to lend the principal to another project or get it back. Any interest derived from the loan, is kept by Kiva to fund its own activities. For $25, you too could become a microlender.

This Blog Post has a Carbon-Footprint of ___ *

Marketers such as Unilever may soon have to find space on the packages of their 70,000+ SKUs to indicate the “carbon footprint” of each product. What such a logo or label would denote remains to be determined. It would be an attempt to associate a product with a favorable concept a la “natural,” “organic,” or, “socially beneficial.” Potentially it could augment the brand’s positioning – rather than an occasional nagging worry about impending climate disaster, a consumer could perform a pantry check for the reassuring logo.

Some consumer brands are talking in their Marcom and social media as if they take climate change seriously. Public announcements by The likes of mega carbon-emitters Ford and General Motors have announced that they will stop producing gasoline or diesel powered passenger cars by 2030 and 2035 respectively. Apple, which could probably afford the transition costs of carbon neutrality, has pledged to do so by 2030. Amazon recently asserted that it had become the largest buyer of renewable energy in the US Others without a clear alternative to business as usual, such as ExxonMobil, seem to view carbon foot-print as marketing exercise.

Will the consumer notice? Will she be convinced and if so will she care enough to reward the low carbon-footprint brands? Or will this branding effort be viewed as just an attempt at green-washing.

Just Show Them The Money:

BlackRock, the world’s largest investor, recently launched a U.S. Carbon Transition Readiness ETF to invest in companies, which will outperform in a low-carbon environment.

Investors seem to have noticed. Morningstar reports that in the US attracted a record $21.5 billion of net new investment in Q1 2021. This was more than double the inflows in Q1 2020 and five times the investment in Q1 2019

Is this really low carbon investing? Rationally, carbon-footprint should include all the expenditures from the inception, extraction, creation, distribution, marketing, and disposal of the a product. Capturing all those impacts may be as difficult as capturing carbon in the real world.

Absent generally recognized metrics, low carbon footprint will be as easy to claim as it will be difficult to achieve. Even an iconic low carbon product such as Tesla may not be all that low depending on the impacts of the lithium mining to produce its batteries and the source of electricity to charge them. Still, Tesla clearly owns the position as a low-carbon brand. Its branding is greatly enhanced by the marketing prowess of its mercurial chairman, Elon Musk.

Like many of Musk’s pronouncements, Tesla gained significant notice, when it announced it would not accept bitcoin in payment after all because of the high carbon footprint of Bitcoin mining.

Tesla is to some extend a projection of its mercurial chairman Elon Musk. It garnered some attention and enhanced its technology with it position, when it recently made a 1.5 billion “investment” in Bitcoin and announced that it would accept bitcoin as payment for its cars. Musk then rapidly reversed course, declaring that the climate impact of cryptocurrencies was too great and thus Tesla would not accept Bitcoin as payment after all.

* “What number did you have in mind.”

The Agile Pilgrim

Agile continues to be a buzzword. This durable adjective shows up in my inbox applied to strategy, marketing, finance, entrepreneurship, and cooking, in addition to its more established focus on software and systems development.

This would seem to have nothing to do with the Camino de Santiago, a venerable pilgrimage walk, but read on. The Camino refers loosely to a family of treks ending in the city of Santiago de Compostela in northwest Spain. Historically, it was a pilgrimage. For some it still is. Others do it for sightseeing, exercise, adventure, curiosity, and as other motives as there are walkers.

A Camino can range from 100 km (the minimum required to get a Compostela – an official certificate of completion) to 800 km (from Saint Jean Pied de Port in France). For those with more time and tougher feet, even longer Caminos are possible.

The route takes one on trails, paths, and roads through forests, meadows, cities, and towns. Some of the way is hilly, some flat. The path can be rough or easy under foot. You may encounter rain, wind, heat, cold, and fog. The scenery and townscapes can be beautiful, monotonous, ugly or intriguing. There is no Yellow Brick Road, but stylized blue and yellow route markers abound.  You don’t know who or what is around the bend. It may be a fountain with refreshing water, nonpotable water, no water at all, or in at least one case, wine. Delightful days can be punctuated by long slogs.

Eating and sleeping are part of the adventure, especially on days where you’re not sure where you’ll end or get to the village you planned, but find no available rooms. They can be at cafes and restaurants, pilgrim hostels, or hotels. These are incredibly varied. Some are outstanding, some poor, a few you just don’t want to stay at. Most are inexpensive to moderately priced, some simply accept donations. Rarely, I have found myself in some village after dark with no place open or available.

In these and many other dimensions, the trip itself is amorphous and ambiguous. Some parts of the trail invite one to linger, others to keep on without pausing. Walking hundreds of kilometers, the mind as well as the body wanders. Among these wanderings is the notion that pilgrimage and product development are more similar than you might think.

A project such as a trek or a new product can seem, ex ante, simple or at least straight forward. Functional specifications for a defined market or starting point and final destination. In the case of a trek, get to the starting point, walk until you arrive to the defined finish point, declare the goal attained, and you’re finished. Yet the number of tasks, decisions, and risks multiply quickly.

Hmmmmmm, starts to sound like we’re still in the office.

These include:

  • How far to go and when
  • Team members or solo
  • What to carry
  • What to wear
  • Budget of money and time
  • What range of conditions to prepare for
  • Where to stay
  • What to do about injuries
  • Budget – implicit or formal and explicit
  • Most importantly, what do you derive from weeks of putting one foot behind the other
  • Go as part of a group/team or solo
  • Whether to go at all
  • My feet hurt, it’s been cold raining for three days, what am I doing here?

As in many version 0 products, simplicity is a good, though not the only, choice. A meme along the Camino is a depiction of a medieval pilgrim. He wears a cloak and sandals, carries a walking staff, drinking gourd, and small money pouch. Without backpack, change of close, or extras of anything, our prototypical pilgrim traveled light and relied on the hospitality of monasteries or churches for food and shelter.

For the contemporary trekker, options range from planning down to the kilometer and hour to just showing up improvising a response to whatever you encounter. If the goal is to check this trip (or product feature) off your list, the first option may be the most efficient. If the goal is to maximize the experience and serendipity of trip, plan less.

An agile approach is more volatile. You will end up staying at both unexpectedly funky yet satisfying places, meet a wider cast of characters, have a broader variety of meals and encounter more not in the guidebook. In effect, you respond to the feedback and demands of the environment.

There are down sides. The resources for your project may be yanked just as on your trek, It could get dark, cold, and rainy with neither food nor shelter in sight. In the case of the Camino, the risks have been worth it.

Agility is recommended to optimize the experience, if the risk of failure is acceptable (to whomever stakeholders have the most votes.)

There is certainly a place for unagile in both product development and adventure. One doesn’t do agile development on, for example, a power plant.

Unagile travel is vividly chronicled by the recent film, Free Solo
The “pilgrim,” in this case climber Alex Honnold, chooses to climb the more than a thousand meter vertical rock face of Yosemite’s El Capitan without the support of ropes or other safety equipment. Physically, Alex is supremely agile, yet he accomplishes his climb, by meticulously planning and rehearsing, until he has virtually memorized every step of the mountain.

Whatever you do, enjoy the walk. As they say in Spain, and perhaps should at product meetings – ¡buen camino!

It’s seldom mainstream news, when a retailer changes its return policy. When venerable LL Bean did just that, it was. National media as well as the trade press noticed.

Bean, the direct marketer of camping and sporting apparel and its signature rubber-bottomed boot, had long defined a position of treating customers very well. This included a very liberal return/exchange policy of anytime for any reason with or without receipt. Founder Leon Leonwood (aka LL) Bean (1872 – 1967) was reputed to have said “no one ever won an argument with a customer.”

Back in the day, service at Bean’s flagship store in Freeport, Maine or from one of its mellow phone reps for catalog shoppers, was deservedly legendary. Case in point: I once ordered a set of bike panniers from Bean on sale. They were fine, but eventually one of the brackets, which attached them to rear rack, fell off. Some months later while vacationing in Maine, I stopped at the store to ask whether I could buy a replacement bracket.

The salesman looked at one of the panniers and left to do a few minutes of research. He returned, apologized that that product was discontinued, and without my asking (or expecting), offered me the full cash price and an apology.

That was then. A recent visit to a Bean store, is a different experience. The number of sales associates seems reduced and those remaining are seen neither as eager or knowledgeable as in days past. Gone is the free shipping on all items. Returns will be allowed only within one year of purchase, and only if the customer has a receipt.

Bean is privately held and does not release detailed financial statements. Estimates from Privco show less than 1% annual growth over the last five years despite increasing the number of domestic retail locations by a third (from 31 to 42). For Bean, sales growth has no longer been a walk in the woods.

Bean came to believe, not implausibly, that a number of customers were exploiting their return policy. For example, by returning merchandise bought from third party discounters for full price from Bean. In the face of no growth, they assume the tired strategy of squeezing expenses including returns.  But at the expense of diluting their primary value proposition of exceptional customer engagement and service.

“Fraudulent” returns – return of merchandise not bought from the retailer or used for more than a trial period – can be a real problem.

The Wall Street Journal reports that some sellers, such as Best Buy, tightly monitor returns. They refuse to grant returns to customers, whom their system flags as being “excessive returners.” This can happen even if the return conforms to Best Buy’s stated return policy – with receipt, within 15 days of purchase, and unopened. Of course, Best Buy unlike Bean, was never known for customer service or customer loyalty.

What else could Bean do?

Rather than jeopardize its brand image and position and surprise customers by declining their returns, it could institute better sales tracking. Thus, if Jane Q. Customer chooses to return a pair of boots, its purchase would be available at any of their sales terminals. This is already common practice. Bean could brag about the new full year to return policy with no receipt required.

The news has event has by now been largely forgotten, but the underlying problem remains. Beans still needs to grow sales. This might start with revamping their rather tired and tiring ecommerce site. But that’s material for another post.