Getting to Market with a Detour
From tree to table, the average coconut oil has likely changed hands 9 times. Each change of hands hikes up the price and disconnects the consumer from the farmer. By the end, a hierarchy of profits has left the farmer, who usually needs it most, with the least amount of money. “On one side, we see the farmers making so little from their work while the middlemen and big oil companies reap the profits. Then on the other side, many in the West are asking questions of brands like: Who are the people behind the brand that actually made this product? How are they treated? Is my purchase feeding an oppressive system or helping people? We saw an opportunity to benefit both sides.” remarked Erik.
Dignity has had a goal of connecting the local farmer to the global export market, but did not always know how reaching that goal would unfold. A successful Kickstarter campaign in May 2015 provided the necessary funds for Dignity to detour from their original plan of selling in bulk and instead develop their own brand for retail sales. They became the direct bridge between the farmers as well as factory workers, and the end users. This tangible connection between customer and producer has shaped the position of their brand in the market.
The Dignity team chose coconut oil as its first of six products because of the rapidly growing market and long shelf life. Knowing they couldn’t compete on price with big name brands, they went for a high-quality product. They aim to build a brand loyalty with people who can, quite literally, taste the difference. Dignity’s product, Raw Virgin Coconut Oil, is extremely healthy. Normally used in cooking and food preparation, it is also pure enough to be used directly on the skin. One of their unique selling points is that the centrifuge method produces oil which is considered a raw food, preserving and passing on the health benefits found in the coconut.
Nearly all coconut oil brands in the USA ship their oil in barrels and pack into jars in the USA. Seeing an opportunity, the team decided they would pack their oil into jars at their own Community Transformation Plant leading to more jobs and added value right there in the Philippines. This decision has also impacted the employees themselves. When the jars and labels arrived, suddenly the staff could really imagine the finished product on the shelf and the person on the other end buying the oil. When they held the jars in their hands there was a growing sense of pride in the factory: ‘We made this!’ Just the act of packing the jars in the Philippines created more dignity for the employees.
On the other end, the consumers benefit from the traceability of the oil and the direct connection with the farmers and the plant staff. Dignity currently employs about 80 employees, with plans for 150 at two shifts. Workers sign each jar coming off the line, creating a personal touch on the finished product. The idea that customers can make a real difference for real people by choosing this product is another of the key marketing messages for Dignity. They share extensively and openly on their website about the community impact and individual empowerment the business is facilitating. They encourage their customers by showing their purchases can improve lives and disrupt systems of oppression. Dignity’s is not just another run of the mill coconut oil!
After a long road of planning, building, research and production, Dignity is entering the market with their coconut oil this month. They will be selling directly through their website, as well as certain brick and mortar stores, and distributors, who value their quality and community impact.
Dignity’s other current product is a coconut shell powder which can be used in innovative plastic products to replace non renewable constituents, while making the plastic stronger and lighter. Dignity partners with Essentium Materials, an R&D company focused on developing new products from materials often considered as waste. They share Dignity’s missional goal with a focus on adding value to waste products usually found in poor communities and being good stewards of the environment. Dignity has been supplying coconut powder to Essentium Materials since 2014 and they are now working together on applications in the automotive, cosmetics, 3D printing and other industries.
“Not only do we want to create environmentally-friendly products, we strive to care for the earth throughout the production process. It’s not just about limiting environmental damage. We want to do business in a way that has a positive net benefit on the earth,” affirms Don. Many of the choices made in starting Dignity are tied to this goal, including the construction of their plant, the production processes and their products and packaging choices.
For the factory’s roofing, they chose a special kind of material that lets in enough natural light to reduce much of the need for artificial electrical lighting. Instead of using a traditional air conditioning system to cool their plant, Dignity’s engineers installed a custom made geothermal cooling system that harnesses the air conditioning provided by fan coils to, in turn, provide the heat for hot water needs. Don remarks, “For such a blistering hot environment, this is an extremely effective, low energy way of cooling a building. In fact, it works so well we sometimes get complaints that the plant is too cold!”
Dignity’s production process aims to use as much of the coconut as possible, thereby reducing waste products. Three of the final six products: renewable plastics constituents, erosion-control blankets and soil conditioner have direct environmental benefits for consumers and the community. Packaging of the coconut oil utilizes recyclable materials as much as possible, using a glass jar and metal lid that, although heavier to ship, are easier to recycle.
A Holistic View of Transformation
Dignity believes that helping someone have peace with God is part of community development, environmental stewardship, and profit sharing. So when dealing with tough issues like addiction, slavery, abuse of women, desecration of our Earth, God is at work in breaking these cycles. “Unfortunately religion has often been used to hurt people, causing many to keep religion and spirituality out of the workplace and any other environment where there could be casualties. We do not force religion on anyone; nevertheless we have seen the power of God transform lives, break addictions and heal marriages,” comments Erik.
Beyond the transformational decision to locate their processing plant in the community, Dignity has also launched a Community Health Education program which is owned by the community and led by community members. This started with a baseline survey of the two nearest towns to the plant, with community members asked a wide range of questions. This raw data was presented to community leaders who then prioritised their own transformational initiatives. Not only does this process respect local leadership, it also creates ownership. Once priorities were established, the team went to work training volunteer Community Health Educators who would facilitate discussions in small groups on a regular basis. Targets include: clean water, healthy relationships, livelihoods, hygiene and savings. Dignity has gained significant credibility in the area by investing for the long-term and becoming a local employer. This trust has enabled Dignity to help bring positive change on a wider set of social issues.
Locating the plant in this very poor, very rural coastal region has brought noticeable change in other ways. A new level of energy and hope has emerged in the community. Employees are starting to talk about sending their kids to college. Previously that seemed too far fetched, but now with a stable family income, it has become a possibility. The plant itself has brought infrastructure development to the area. The federal officials, the Governor, and the Mayor of the region spent around 100 million Pesos to pave a 68 Kilometer stretch of dirt road through the rural seaside villages. With this two-lane concrete road people have access to a better quality of healthcare, now taking only two hours to get to a hospital on a decent road. Bus lines run into the area several times a day from the city. New options for nutritionally beneficial vegetables are available in the area. People have access to more choices for food and household goods, and they rely less on resellers to supply their needs.
Other businesses have popped up locally. There is now a bus stop on the road at the plant and a new restaurant that first sprang up servicing the construction workers that built the plant. A new business now makes construction materials available in the town. Dignity put in a satellite dish to get internet and the community uses it during off-hours. More people now have mobile phones and a telecom company put a tower in the area. People can communicate better and access services like mobile banking, which empowers them with more choices.
Capitalisation has been the biggest struggle throughout the business startup process. The team has been looking for Kingdom Investors – those wanting a for-profit business to invest in, but who also want to see the social, spiritual and environmental impact; such Investors, however, have been hard to find. The greatest challenge has been running out of capital at crucial stages. A mistake that the team identifies was starting to build the plant and then begin production before they had raised all the capital they needed to sustain continuous production. They had been optimistic that they would raise the remainder of the funds as they got started, only to have to shut down the plant before the product made it to market. Work stoppages have made the road longer and more expensive than Dignity’s founders estimated.
Stephen admits, “Early on we had experienced entrepreneurs tell me it would be twice as expensive, twice as long, twice as hard and half the profit. I would smile and nod my head, but now I’ve experienced it and it’s true except for one… it’s been ten times as hard! We had to significantly change our plan multiple times. We would have been better off had we doubled our timeline, doubled our budget and doubled our support staff.
Reflecting more, Stephen emphasises, “SMEs are very different from micro-enterprise. We’re talking about 100-200 employees at one Community Transformation Plant. All the answers are different from a smaller business. And because the answers are different and the model is pioneering, there were far more people telling us we can’t do it than cheering us on. You need to have conviction in your calling because people will tell you you can’t do this, even your smartest and most seasoned investors. One of the reasons there are not many BAM businesses is because this is new and incredibly difficult.
“The journey is long and hard when signing up to be a part of the first wave of a movement or new idea. You cannot do it without good people whom you trust immensely. For us, that means our key staff in the Philippines are our greatest assets. Similarly, we cannot over-emphasise how crucial it has been for us that the early investors, leadership in the USA and Board and leadership in the Philippines have like-minds and hearts.”
As they rub shoulders with their employees and people in the community, the Dignity team hope they are able to demonstrate the love of Christ through their lives. There has already been tangible evidence of transformation: stable jobs have been created, community issues are being tackled, local churches are working together in greater unity, farmers have been empowered, the local economy is growing – there is a sense of hope. The real business of Dignity Coconuts isn’t processing coconuts, but bringing production into communities where it can have a holistic, transforming impact: social, environmental, economic, physical, spiritual, and emotional.
In the future, Dignity Coconuts hopes to multiply coconut processing into dozens of locations in other parts of the world, especially in places where dignity is hardest to find. They also want to expand into other products in the future. The end goal isn’t coconut products, but bringing more and more ‘community transformation plants’ into places where they can truly make a difference in people’s lives.
Watch the Dignity Coconuts video
Jo Plummer is the Co-Chair of the BAM Global Think Tank and co-editor the Lausanne Occasional Paper on Business as Mission. She has been developing resources for BAM since 2001 and currently serves as Editor of the Business as Mission website.
With thanks to Erik and the team at Dignity Coconuts.