Creating shared value for the long term
Nespresso CEO Jean-Marc Duvoisin used his time at Shared Value Leadership Summit held in New York City on May 13th to explain how Nespresso has been creating shared value for farmers within its supply chain for more than 12 years to help sustain the business for the long-term.
Speaking to delegates at the event hosted by the Shared Value Initiative, he said that his company’s AAA Sustainable Quality™ Program is helping more than 63,000 farmers in coffee-producing countries to improve the quality of their produce, boost productivity and deliver a range of social and environmental benefits. “It is a strategy that is embedded into our business, giving us access to the best coffee and adding value differentiators between us and the others,” said Duvoisin.
"It is about securing the future of the farmers we work with and ensuring they run sustainable businesses, so we can deliver on our brand promise to our customers."
Jean-Marc Duvoisin, CEO of Nestlé Nespresso
Nespresso's approach to working directly with farmer communities with the AAA Program, created in 2003, is a response to its rapid growth since the 1990s, particularly in Europe, he added. Just 1-2% of the world’s coffee meets the quality and aroma profiles required for Nespresso Grand Cru coffees, so “we needed to make sure the supply of coffee grew as our company grew”.
“It is about securing the future of the farmers we work with and ensuring they run sustainable businesses, so we can deliver on our brand promise to our customers,” he added.
Partnerships are key to success
However, Nespresso’s success to date in sourcing high quality sustainable coffee could not have been achieved without working in partnership with others to make change happen on the ground, acknowledged Duvoisin in front of a packed auditorium inside New York’s Conrad Hotel. Chairing the session, former US Secretary of Agriculture and former Executive Director of the United Nations Children’s Fund (UNICEF), Ann Veneman noted that “partnerships between the private sector and civil society are not always easy”. So how has Nespresso succeeded? Duvoisin responded, saying: “We work with many partners that have expertise we don’t have. In order to create shared value, we need partners on the ground to work closely with farmer communities to implement our approach.”
One such partner is TechnoServe whose CEO, William Warshauer, joined Duvoisin on stage. His non-profit has been working with Nespresso for about 10 years in select projects, mainly in Africa, helping farmers to build resilience and bring them out of poverty by improving their productivity through agronomy training and enabling access to finance.
Creating new value for the people of South Sudan
The partnership has been crucial in building coffee production from scratch in South Sudan, a project the two organizations embarked on in 2011. “It is a perfect example of creating new opportunities and GDP through a shared value approach,” said Warshauer. “Coffee will soon become South Sudan’s second biggest export after oil.”
He added that the partnership was successful because of the “clear and complementary” roles played by each party. “In South Sudan, there is an opportunity for all to win which is something strongly embraced by Nespresso as a progressive company.”
Having created the first co-operatives there, Nespresso is now buying from about 300 farmers. “We want 2,000 farmers in South Sudan producing coffee for us,” added Duvoisin. “We are helping to restructure how the farmers work to get higher quality production and have less of an environmental impact. They are being rewarded quickly – not just economically, but in learning to work together better.
"In South Sudan, there is an opportunity for all to win which is something strongly embraced by Nespresso as a progressive company."
William Warshauer, CEO, TechnoServe
“It is also about bringing value to consumers and giving them special experiences. South Sudan is where the coffee plant originates from, so it’s a fascinating story for customers.”
A long-term approach
Veneman wrapped up the session by asking the Nespresso CEO to reveal the obstacles that remain in building more sustainable and value-adding business models. “With such volatile coffee prices, taking a long-term approach that adds value to farmers, and takes them out of poverty, is key,” he said. “And we need a sustainable price which allows everyone to benefit from.”
Watch the full discussion here:
Shared Value and the Food & Agriculture Value Chain
Shared Value Leadership Summit 2015 | Business at its Best
