How to Value Sustainability while Desiring Growth? – Case Study

The question to tackle is:

How can you as a company that started small and founded itself on core sustainability principles scale up and maximize your profits?

After all…isn’t that the sole aim of why businesses exist…or that’s passe! Let’s see…

But first, a very short background:

Phoenix Organic started in 1986 by making a single drink called the Ginger Beer in the bathtub made from natural and organic ingredients.

Over time it became New Zealand’s leading manufacturer of premium certified organic and natural beverages. The founders had the vision to make healthy alternative to the existing drinks – but with a premium edge.

The Phoenix Organics’ case study is a classic example of a niche small scale businesses looking for growth opportunities and the struggles associated with it – all the while keeping the values and sustainability principles intact.

Here’s how they did it.

The company took some strategic decisions that allowed them to scale their growth in a market dominated by the bigger players (keep in mind that the company was small and smart enough to be flexible and innovative to fill the niche)

Key decisions

  • Pasteurization not only quantified its brand portfolio but also increased its sales many fold taking their business in other markets.
  • The company re-branded themselves and exited from the ginger fizz market as it needed to reflect its knowledge in other drinks as well.
  • Phoenix positioned itself as “something new, something different” – pitching themselves to the cafés in New Zealand, thereby taking advantage of the growing café culture in the country.
  • When the “Organics Wave” hit the country, Phoenix was well placed to take the advantage of the market shift, as they had always been in organics.
  • Selling to bigger supermarkets and changing their packs to big sized 1 liter bottles

Where’s the challenge?

Certifying a company as “organic” is not an easy task. Organic ingredients are expensive and seasonal and that translates into charging a huge price premium…but, often markets don’t allow more than 20%.

And this was a significant challenge…

How a company that was founded on core sustainability principles, even though unaware at the time, keep growing in the financial sense and still maintain its values?

Some of the steps that the company took are in developing sustainability strategies were:

  • Building long term relationships with their suppliers
  • Working more efficiently and smartly than its competitors
  • Increased employee engagement
  • Keeping focused on core areas and not spreading too thin
  • Reduction of fossil fuel use
  • Saying ‘No’ to some products, like the plastic bottled water category

Shortly after 2007, Phoenix Organics was bought by Charlie’s Group, which is one of New Zealand’s leading premium beverage manufacturers.

So, one of the ways that Phoenix avoided losing its sustainability focus was to sell its business to a bigger brand that had the necessary resources to keep the original vision intact – selling up may not necessarily mean selling out.

Here’s a point worth repeating:

Selling up may not necessarily mean selling out

Implications and Conclusion

Building a company on sustainable practices is as hard as keeping it on the same path and growing at the same time. Balancing commercialization and values is a fine art which very few companies are able to pursue. The values often fight a loosing battle to economic growth.

Most of the companies in this space are smaller niche players that are privately owned and have not gone public. Perhaps that is the way these companies have found to keep their values in place. But if these companies were to look at massive exponential growth in the conventional business sense, then, some of those values have to be given up as the market conditions don’t allow enough leverage.

Such companies grow enough to inspire the bigger players to change and develop a loyal following of consumers that define the green consumer market. Perhaps that is the kind of holistic growth the business world must look and not just financial numbers.

What in your opinion can keep sustainability intact while desiring growth?

Other case studies:

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