TOMS CEO Blake Mycoskie took the stage at the South by Southwest Festival last week to make a big announcement. The man behind the company that has pioneered the one-for-one model through its sale of shoes revealed the company’s new venture: coffee.
The sky blue label with a white stripe, a nod to the flag of Argentina, where the design for TOMS shoes were discovered, will now adorn bags of coffee in the company’s expanding stores and neighborhood Whole Foods. Money from each bag or cup sold will help bring clean water to more people in the world. Or as the tagline says: “Coffee for you, Water for all.”
The coffee itself aims for the middle of the market, something that is better than Starbucks, but not quite at the high end of Counter Culture and Stumptown. Mycoskie and TOMS got a fair share of attention for the new business. He revealed that TOMS will continue to add new ventures each year to extend the organization’s impact and grow the overall business.
The coffee comes from Guatemala, Honduras, Malawi, Peru, and Rwanda and will sell for $13 per twelve ounce bag. TOMS says a bag of coffee will deliver clean water for one person for a week. That comes thanks to a partnership with the Denver-based Water for People. A yet-undisclosed amount of money made from the sale of TOMS coffee will be given to Water for People for its work in the same countries where the coffee originates.
“We have this philanthropic and aid problem where we have long term issues to deal with and the grant cycle does not match,” said Water for People CEO Ned Breslin to Humanosphere. “We have been looking for ways out of that funding cycle.”
While the partnership is being placed under the one-for-one column for TOMS, it is not quite that neat. The money will be used based on the needs of Water for People’s programs. Rather than making immediate changes, spending will be driven on what comes in from the sales of the TOMS coffee. That way the organization will continue to be able do to its work, whether or not the coffee sales succeed.
“If $100,000 comes in through coffee, we have a program in place that needs the funds. Everything can use boosts and we will plug it into those places,” explained Breslin.
He received a call last year from Mycoskie, out of the blue. The TOMS founder wanted to know a bit more about how organizations determine the exact amount of money that is needed to bring clean water to a single person. With the marketing need to quantify donations, organizations have attempted to peg a dollar amount to question, but there are a lot of different answers.
The answer that Mycoskie got was that it depends. Water for People does not make claims about how much clean water money can buy. He says that best estimates show an up-front cost of $90 to $120 per person followed by $3 a year to keep the clean water flowing.
“I was honestly thinking he was finding a way to make a donation,” said Breslin about the initial conversation. “I had no idea he was thinking anything about this new venture, he was curious.”
TOMS has managed to win over supporters in college campuses across America. It’s shoes make their way into many a classroom and beyond. The 10 millionth pair was sold last Spring and business continues to be good. Meanwhile, the company expanded into the eye wear game, matched with delivering eye care, that has led to more than 150,000 pairs sold.
While garnering media praise, TOMS has come under considerable criticism from the aid workers. Critics argue that giving away shoes is at best only a temporary fix to much deeper problems and at worst damaging to local businesses.
“TOMS Shoes is a good marketing tool, but it’s not good aid,” said former aid worker and blogger Saundra Schimmelpfennig.
“[I]t has become clear as of late that while the company can certainly craft a stylish shoe, their proficiency in the aid realm is a bit lacking. Actually, to speak frankly, it’s downright detrimental,” blogged Lafayette College student John Favini for WhyDev.
Breslin was aware of the arguments, but had a more neutral view on the organization. That was until he learned of TOMS’s eye work through the Skoll World Forum. Both Breslin and Mycoskie have worked with the organization, led by entrepreneur Jeff Skoll, that brings together and supports the world’s leading social entrepreneurs.
“When I saw that they were not just giving people glasses – they were supporting cataract surgery – I thought they got it,” said Breslin.
Water for People, led by Breslin, puts its stake in creating long term water solutions. Rather than have splashy celebrations when ground is broken or a well is completed, the organization sees the starting point as the moment when water begins to flow. Community buy-in is necessary and must come in terms of finances. The organization insists that villages and national governments transition over time to take full financial responsibility.
They are also not afraid to make mistakes and fix them. Field Level Operations Watch (FLOW) uses Android-enabled phones to track and report on projects. That data is then made publicly available for anyone to see. There are plenty of projects that are succeeding, but not every single one is coming along as Water for People would like.
“We mess up and we have done some stuff that have not worked out. We are not purists,” said Breslin. “Our transparency is off the charts because we are not afraid to say, “Holy shit we suck at this.””
— Sheila de Guzman (@SheiladeGuzman) March 12, 2014
In addition the the new source of funding, Water for People hopes to learn more about the marketing and storytelling aspect of doing good. Breslin admits that Water for People is great at speaking at a room full of United Nations workers, but not so much when it comes to non aid workers.
“I think the way they are going to help us craft a message that is sophisticated and honest, that can talk to people as if they are not idiots,” he said.
The coffee already hit store shelves, including the second TOMS store location in Austin. There, visitors can immerse themselves in all things TOMS while enjoying a coffee-filled TOMS-branded cup.
Expansion of the cafes will reach cities like New York soon, but TOMS says it is not trying to compete with Starbucks. Working with TOMS has left Breslin impressed with his new partner. He described the feeling that Water for People staff could easily be working for TOMS and vice versa, when he first visited the TOMS offices outside of Los Angeles.
“I gotta tell you, Blake is very smart and he has surrounded himself with people who are very smart,” said Breslin.
The jury is still out as to whether TOMS coffee will work, but the company has won over its partner and hopes to change the social sector.