#4 The Difficulty of Being Good: How to build purpose-driven ventures in competitive markets with Matt Morrison

Get ready to challenge your preconceptions about business and sustainability with our latest episode featuring Matt Morrison, co-founder of All Good Bananas and Karma Drinks. Learn how Matt and his team turned the hyper-competitive industries of bananas and soft drinks into platforms for good, emphasizing ethical practices and sustainable supply chains. Discover how their mission to be beneficial for both growers and the land has attracted a dedicated consumer base, proving that purpose-driven businesses can thrive even against industry giants.

Listen as we uncover the intricate balance between profit and purpose, navigating through the unprecedented challenges of the Covid-19 pandemic. Matt shares invaluable insights on transparent communication with consumers, managing compromises without losing sight of the mission, and the indispensable role of investor support. Hear about the relentless focus on product quality and the behind-the-scenes efforts to maintain sustainable supply chains, ensuring ethical practices from farm to table. This episode is packed with lessons on building trust and loyalty even during the toughest times.

Finally, be inspired by the bold strategies that led to All Good’s breakthrough in New Zealand, from importing massive quantities of bananas without secured buyers to gaining support from community groups. Matt’s stories of persistence and community-building offer practical takeaways for entrepreneurs looking to integrate purpose with commercial success. Don’t miss out on Matt’s recommended readings and captivating anecdotes that provide a fresh perspective on running a purpose-driven business. Tune in and join the conversation on how to align business with ethics and sustainability.

Link to All Good website           - https://all-good.co.nz/
Link to Karma Drinks website   - https://karmadrinks.co.nz/

If you want to follow this podcast, please subscribe to the Business and Society with Senthil Nathan on Apple and Spotify. We welcome your comments and suggestions at bspwithsn@gmail.com.

Chapters

• 1:13 Purpose-Driven Ventures in Competitive Sectors
• 4:10 Translating purpose to impact
• 5:23 Persuading investors and stakeholders
• 7:42 Balancing profit and purpose
• 9:56 Communicating with consumers
• 13:48 Driving sustainability in supply chains
• 17:22 Creating a purpose-centric culture
• 19:36 Mistakes purpose-driven ventures make
• 24:55 Managing differences of opinion and setbacks
• 27:08 Book recommendations

Transcript

Senthil

00:04

I'm Senthil Nathan, Chief Executive of Fairtrade Australia, New Zealand. Welcome to my Business and Society podcast, where we discuss the role of business and society with influential thinkers. Joining me today is Matt Morrison. Matt founded All Good Bananas and Karma Drinks with Simon Coley and Chris Morrison. Together, they launched New Zealand's first Fairtrade bananas in 2010, despite being told that they were cowboys and that no one would be willing to pay $1 more for a bunch of bananas. Today, their All Good Bananas, karma Cola and Gingerella are loved by millions of consumers in about 20 countries. All good and karma drinks were founded on the principles of being good for the growers and good for the land. I sat with Matt to understand how difficult it is to build businesses whose core purpose is to spread goodness, and how they did this in a competitive market. Matt, great to have you join me today. 

Matt

01:11

Good morning, Senthil! Thank you very much for this opportunity! 

01:21

Senthil

Excellent! Why did you, Chris and Simon, launch a business and not a developmental organization or charity? Well, business was what we understood. We'd come from business backgrounds. The purpose of business seemed to be lost and it was getting clouded over by people who were essentially trying to drive down workers' wages in the areas that we were looking at, and that business was part of the problem, and we felt that by being a benchmark, we could have some influence on tilting the playing field towards businesses that did the right thing for the right reasons and that consumers would get behind that. So, we felt that business could be part of the solution rather than part of the problem, and we already had predetermined ideas about how to do that in the food and beverage space. 

Senthil

02:05

And why did you choose industries that are hyper-competitive, so not just in New Zealand, across the world, banana and cola are very competitive industries. 

Matt

02:18

That was completely intentional but because what they offered was scale and that we could be a challenger brand in a space where there was a clear big player who wasn't living up to what we thought they should be living up to, and we felt that it was easier for consumers to have a clear comparison and that that would be part of our pitch to consumers. In bananas, there's clearly a few multi-billion-dollar banana companies around the world that have succeeded by driving down wages by growers who live so far away from us. They feel that consumers won't care. We felt that that wasn't correct and that we could turn that on its head and the fact that there was these big banana corporations helped us, and likewise with soft drinks, there was one or two very dominant players in the industry that we would automatically can be compared to. So being the underdog was going to be something that really helped us, and so we were quite intentional. 

03:29

The other thing that these areas offered was scale. When you come from a small country such as New Zealand at the bottom of the South Pacific, with just 5 million people here, scale is hard to achieve, and so getting runs on the board early within New Zealand so that we could then take it overseas was important. So, in New Zealand, to get 5 million people buying a lot of stuff, you've got to go for categories where they're buying a lot, and bananas is the second biggest product in the supermarkets, and soft drinks, as we all know, is something that consumers love on a day-to-day basis. So, they offered the ability to get scale. 

Senthil

04:10

The core DNA of all the business you have founded is purpose, and in recent years there has been an explosion of interest in purpose-driven businesses, but very few have been successful in translating purpose into impact, and you have been doing successfully for more than a decade now. How did you? 

Matt

04:29

We built it into the product itself. So, however big we would be, it was in every bottle of soda, it was in every bottle of Karma cola, it was in every bottle of Gingerella, it was in every banana. So, whether we were selling 10 bananas or 10 million, the purpose would scale at the same rate. So, by building it into each product, the consumer would also connect with that product on the shelf in their supermarket, in their local grocery store, and that they would understand the message or the purpose that we were trying to convey to them. And we focused on the growers because that was the missing link in the other brands around us. And by doing that, regardless of what happened in the business in the background, the product was the thing that was in front of the consumer and that was what was communicating our purpose. 

Senthil

05:23

What are the challenges in persuading investors and stakeholders for purpose-driven ventures? 

Matt

05:29

We've certainly had our challenges. So, in both businesses the bananas and the soft drinks have needed external investors, and this is where purpose has really helped us. There's numerous investors out there that are wanting to do the right thing and they don't just want to put their money into a stock exchange somewhere or into nameless corporates overseas. They can't be sure of what they're doing. They want to be part of something that's bigger than just a business, and so the purpose actually is what got them through the door, and we were then able to put the commercial background and why, commercially, this made sense. And we still had to win that battle for sure, because investors simply won't just hand over money because you're just trying to do the right thing, as clumsy as that might be. They really want to know that commercially it can work as well. So, they could see that the purpose was actually going to drive the commercial outcome and, as a result, we've had a lot of interest and it's kept the wheels running through tough times. And that is the other thing that the purpose has also allowed us, because All Good is doing the right thing by the growers working with communities in Ecuador and for the long term now for nearly for more than 12 years, and likewise with Karma Drinks working with kola nut growers in Sierra Leone. 

06:58

When the going gets tough, the investors stuck with us, and we've had our rough moments tough. The investors stuck with us, and we've had our rough moments. Covid was really tough on a small business that's focusing on the hospitality space in both the UK and Europe and Australia and New Zealand, and cafes closed overnight. Our sales dropped within one month by 95% in the UK and Europe and that's when we really needed investors to stick with us. They could see the long-term purpose, they could see what we were doing with grower communities and, as a result, they were very forgiving of short-term commercial problems. 

Senthil

07:42

How do you manage the tension between profit and purpose, Matt? How did you build a financially stable organization without sacrificing your purpose? Many purpose-driven ventures get this wrong, and we see a lot of examples nowadays. 

Matt

07:58

And, firstly, we didn't aim for perfection. We couldn't do everything right. There was an element of compromise, and I think this is what is necessary in all small purpose-built entities’ is don't try to get everything perfect before you fire and we really took a case of ready fire aim, whereby we got started and we put product on the water with not all the questions answered and we weren't perfect and we continue to not be perfect, but we do live by our purpose and we also are very open to our consumers and to our followers. 

08:56

So, in our case, we put the world's most environmentally friendly, Fairtrade bananas on the water from a small group of growers and when they got to New Zealand, we had to put them into plastic bags to sell them. Well, many of the consumers were not thrilled about that, because plastic bags is just one thing they definitely don't want to see on a grocery shelf. But we were told that that was the only way that they would get onto the supermarket shelves, and so we had to do that for a short term to try and solve a problem. Likewise, you know Karma drinks is based around cola, which is not the healthiest product in the world, but we've made it as much as a healthy way we possibly can, and we still think that people should indulge in a great drink when they are out at a cafe as a treat. So, you know, we have our Fairtrade sugar in there. So, perfection is not something that we felt was the right criteria for what we did, because it would be just too high a barrier and it would be too many reasons not to do it. 

Senthil

09:56

And how do you persuade consumers to make fair and ethical choices in their everyday shopping? One of the things I observed when I visited New Zealand supermarkets particularly on your brands is how convincingly and how coolly you communicate your positioning to consumers. How do you do that? 

Matt

10:14

Well, Simon, who has been the master of the brands of both All Good and Karma drinks, has found a fairly great way to get our message across, but in a way that is fun and colourful, it's not preachy and, frankly, it's… it's all about the product. Again, the product has to be amazing. To sell a banana for a dollar more, they have to be the best tasting banana. And it just happens that our Fairtrade farmers in El Guabo because they themselves are entrepreneurs, they're business people, often family-orientated business people they take more care than anybody in growing bananas. So, as a result, when they get on the shelves they taste better. So, bananas have to be the best tasting bananas in the shop. 

11:03

And likewise, with our Karma cola, our Gingerella, our Lemmy is, we just took great care in making a product that tasted great. So, whether you're looking for a Fairtrade product, an organic product, a lot of our consumers, after surveying them after a couple of years, actually didn't realize some of those qualities of our products. They just simply liked it because of the taste. So, you've got to taste great and that's really what we focused on. And then we wanted to make the product stand out. So, they are bright. Karma drinks are the brightest reds and blues. Lemmy is bright yellow, it's in your face, it stands out. And likewise with our bananas, we put big tape around it with stripes on it so that everybody could see it. 

Senthil

11:54

That's interesting. So, I was in Korea a few years back South Korea of course and I met some stranger in one of the restaurants and he asked me what do you do? I said I work for Fairtrade. The immediate response I got from him is “oh, I love Gingerella!” Please do know that there are some serious lovers for your brand in many corners of the world. Well, matt, many of the markets you operate there is a significant cost of living pressures, isn't it? What gives you the confidence that consumers will choose your product?

Matt

12:38

Well, we don’t use focus groups, we are out there talking to our consumers but also we are doing what works for us and we’ve just seen this in the last year. We've had record banana sales and New Zealand has gone through a little bit of a recession. It's pretty tough going out there in the hospitality industry. It's one of the toughest years we've had in the last 12 years and yet more people are buying our Fairtrade bananas than at any time since we began and those people are not trading down. So even though it is tough going out there, they're continuing to spend a little bit more because they want to make sure that the growers are looked after, and I think they would rather go without bananas at all rather than sell down to a more conventional banana brand that didn't look after the growers and that continues to be the case across our drinks. We've also had another record year across Europe, the UK and right through New Zealand and Australia in tough times and even with this hospitality environment in New Zealand and Australia being pretty rough out there. So, we've really seen that consumers don't change their buying habits even when they've got a few less dollars to spend. 

Senthil

13:48

Let's go a bit into the supply chains. Matt, I was reading your story about how much you tried to source bananas from Samoa and how a fly flew out of the container straight into the inspector's face. That story typically says that how complex banana or kola nut supply chains are, how do you drive sustainability in such complex supply chains? 

Matt

14:12

Thank you. They are complex and we have headaches every week, every month, getting the bananas on the water. I get the kola nut we've got from Sierra Leone and it's when we first brought it into New Zealand, it was completely illegal to get it here and we only found that out the hard way when I was going through customs in Auckland airport and the biosecurity officer stopped me and then we had a long conversation in a small room out the back. Since then, [unclear]they're happy with that. 

14:51

So, our supply chains are complex because we're getting spices from Sri Lanka and India, we're getting sugar from India and we're getting kola nut from Sierra Leone and we're getting coriander and other spices from all over the planet. So, every week is a challenge, but we have this connection with our growers that is particularly intimate, and we know them, we've worked with them now for 10 years and the fact that they are entrepreneurs themselves has helped our supply chain. So, the fact that we've got a clear purpose, we're working with Fairtrade means that the supply chains are easier, not harder, and the problem solving becomes a collective effort and our banana growers who have been working with us for over 12 years have by far the more difficult end of the supply chain than we do. 

15:51

Selling a banana, ripening it and getting it to a supermarket is fairly easy in comparison with growing the banana in the hills of the Andes, on the side of a steep hill in Ecuador, and then getting it down to the port in pristine condition, week after week after week, 52 weeks of the year. 

16:14

So, they are the ones that have the tough end of the supply chain and Fairtrade International has also supported us because they have people on the ground, and they have grower community liaison people that are helping solve these problems day by day. So, by having that purpose and actually paying a bit more to the grower means that our supply chains are stronger, not weaker, and that we've been able to overcome problems that the big commercial banana companies haven't been able to overcome. There's been a lot of unrest in Ecuador over the last six months, with some criminal gangs who've got very violent in the area, and it's created a lot of insecurity for our grower communities and also for trucks traveling. Despite this, our growers have worked a way to work as a community to keep safe and to get their bananas to port. So, we are very lucky. The long-term and close relationships we have with our growers have actually made our supply chain stronger, not weaker. 

Senthil

17:22

That's very inspirational, Matt. How do you create a purpose-driven culture in your organizations? I’ve got the privilege of interacting with many of your team members in various departments. One thing which unifies them all is what you say is exactly reflected in their attitude as well, in terms of your purpose and mission. How do you ingrain that deep sense of purpose in every employee? 

Matt

17:46

Well, we're very lucky Simon, Chris and I always understood that to have for this business to continue for long term, which is what, you know… that is our vision is that we needed to attract people that were smarter than ourselves and that could take the business over and could run. I mean that has been the case for the last four to five years. We're not in charge. Karma Drinks is led by an amazing team and Simon, Chris, and I can shoot from the sidelines a little bit, but we've got an amazing executive team running the business in the UK, Australia and New Zealand and they've taken it on themselves and led it into great things. 

18:30

And likewise with the businesses with the banana business, we haven't had to hold the tiller now for the last couple of years, and purpose and what we're doing for the people and for the land means that we attract amazing staff members, and the culture is almost self-fulfilling. Because they're joining us because of what we want to do. They're the ones holding us to task and actually solving the problems or keeping us heading in the right direction. Because they've joined because of what we're trying to achieve, so they've completely brought into it and often they've said no to much more attractive offers from bigger companies in order to be part of a purpose venture. So having that purpose, having a strong brand and what we stand for, means that we can attract great people and at the moment the labor market is really tough for brands out there. And finding great people is really the secret to success, because we're just the culmination of what our teams can do, and that's the value of the business. 

Senthil

19:36

I want to step back and ask some questions to you as an entrepreneur, when you started this venture. What are some mistakes that purpose-driven ventures tend to make at the beginning, when they launch the ventures? 

Matt

19:48

It's certainly difficult and daunting when you're thinking whether you give it a go or not, and I think some of the mistakes are aiming for perfection and also being too humble. So, aiming perfection in your products is really difficult and, as I mentioned before, we had to compromise on our products. We get our bananas from the other side of the world, which isn't a great for a carbon footprint, but we understood that our purpose was about driving better outcomes for banana farmers and to do that we needed to work with banana farmers in Ecuador, who had a history of being able to put great bananas on the water, and with Karma drinks of course, we had to compromise that we were making a soft drink, but we were making it in the best way we possibly could, out of real ingredients from real people, but regardless of that, it was still a soft drink. So, we certainly weren't trying to be the most perfect company before we started. We were clear on the impacts that we could make and we were also clear on the compromises we were making with our consumers, so we didn't aim for perfection. The other thing was that we actually forced ourselves into starting by putting bananas on the water from Ecuador without having any secure customers. 

21:16

When we went around the banana wholesalers in New Zealand and said, look, we see the opportunity here for Fairtrade bananas, we would really like you to do Fairtrade bananas. Let's talk to the supermarkets and see whether they would take Fairtrade bananas. They'll cost a dollar more, but they're going to taste better, and consumers are going to move to them because the growers are looked after. Well, we got a series of no's, blank faces, closed doors and simply no wholesaler or main supermarket at that early stage was prepared to give us a go. So, Simon, Chris, who had done this before with business, weren't willing to walk away. So instead, we put a 40-foot container of bananas on the water and then two weeks later we put another 40-foot container of bananas on the water and forced ourselves into a position where we knew that in three to four weeks these bananas were landing, they'd have two weeks and two days shelf life and we would have to find a way to sell 20,000 bunches of bananas before they went off. 

22:31

And that's really how we started All Good, and we knew that we had three to four weeks to solve a problem, because the bananas were coming, whether we liked it or not, and so there was a little bit of ready fire aim. In other words, we got ready, but we didn't solve everything. We then fired by putting the bananas on the water and then, as they were coming and as they were arriving, we were forced into a position of aiming and making sure that we were winning our little battles and getting those sales. And that's also what forced us to put our hand up and say we need help. 

23:09

And that's the other thing I really think is crucial for people starting off in this space, because it's very scary and they're obviously breaking new ground. 

23:21

Don't be humble, stand up and ask for help and try to stand out and be noisy about the problems you're facing or the hurdles that you want to overcome, because everybody will get behind you at that point and they will want you to succeed, and they will understand your purpose.

23:41

And that is exactly what we found. So, with these containers on the water, this massive problem to solve, we had church groups, schools, we had Tear Fund, we had Oxfam International. All get behind us and they started a campaign where I went to the supermarkets and talked to the supermarkets and said we will buy these bananas if you get them on the shelf. We had all the small retailers, like Common Sense Organics, one of the leading organic retailers in New Zealand, who immediately said we will stock them, we will get them out there to our customers. And so in amongst this there was sort of this groundswell of help from all these great groups that we hadn't previously thought would become a business solution, and they did. And that was the momentum that gave us the runs on the board for the first three years. 

Senthil

24:55

That's very brave, Matt, bringing a container without a market, particularly for bananas. Well, we are moving to the last section called how I did it. We ask a standard set of questions for all our guests, just to learn from your life and career and your experiences. What is your advice on managing differences of opinion and setbacks? 

Matt

25:13

That's all good. We've definitely had differences of opinions. We all come from different backgrounds. Simon is the master of the brand and marketing and messaging and communications, and Chris is more from an organizational background where he's been involved in logistics, and I'm probably just a finance bureaucrat. So, one thing that we've really… has helped is that there is some shoulders to cry on and amongst it, with three founders and also a whole host of people alongside us trying to help, we've been able to share the problems and share the differences, and we've always worked on a basis of trying to achieve a consensus. We've never, in 12 years of working, have ever had to have a vote on something. 

26:02

It's all always working for a consensus, working for a solution and just communicating openly about how we feel, about different problems or opportunities, and again, with setbacks because they're going to be numerous ones and we've had our fair share, for sure, and some of them have put us on the brink at times. We've put our hands up for help because, as I mentioned, there's a whole… everybody will have been through that challenge at some point and once you're a purpose-built venture and you're built in the right way, they will want to help because they can see that you're trying to do the right thing and that really has been the key, is that it's taken dozens, if not hundreds, of people to get behind businesses, to make them succeed, and I think that's true of most purpose-built ventures, especially in our space, in food and beverage. It's never just one person, it's a whole community that's behind it. 

Senthil

27:08

And finally, would you recommend one or two books to our listeners? 

Matt

27:13

I personally take a lot of comfort from reading books about people who've worked in businesses such as ours and overcome these problems and succeeded one way or another. So those are the books that I gravitate to all the time when I'm looking at my reading list or looking on Amazon. One of the ones that got us started was by Harriet Lamb was Fighting the Banana Wars, which has become almost a bible in the Fairtrade movement, and Harriet was one of the movers and shakers in the UK fair trade movement who got the sense of purpose around bananas in the UK. The other one was Seth Goldman A mission in a bottle, as Seth started Honest Tea in the US, which became a massive and very vibrant brand, and he did it in the right way, up against the sort of people that we were up against, and it gave us a lot of comfort that even in a market as tough as the US, someone could take a purpose-built brand and succeed. So really enjoyed reading those books. 

Senthil

28:27

Excellent, Matt. What a pleasure having you today. Thank you so much for your time and sharing these wonderful stories and valuable insights. 

Matt

28:37

Senthil, it's been a pleasure. I really enjoyed chatting with you and, yes, thank you for this opportunity. 

Senthil

28:45

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