Last Friday afternoon, as my mind started to venture off and focus on my plans for the evening, I ran across an interesting article posted to my Twitter feed by the @FastCoExist handle. It was about beer, so given the point in the week, it was bound to grab my attention. The tweet read, "Why this Minnesota beer company is giving away all of its profits," and included a link to an article with the same title by Ariel Schwartz. Following is my summary of the fantastic read and three key takeaways I was left with after reading the article.
Executive Summary
Author Ariel Schwartz describes the business model of Minnesota's fifth largest beer brand, Finnegans, which uses all of its profits to purchase produce from local farms and gardens and then donates that locally grown produce to local food banks and food kitchens, who in turn, feed the hungry. From a beer production and selling standpoint, Finnegans operates just like any other for profit, mid-size craft brewery does. On it's own, Finnegans is a for profit beer company, but the twist comes in when it comes to what it does with its profits. Every cent of profit that Finnegan's makes is donated directly to the Finnegans Community Fund, a nonprofit that uses Finnegans beer sales proceeds to make a double local impact by purchasing local produce and then donating that local produce to help feed those in need. In 2012, Finnegans made enough money for its Community Fund to purchase and donate a whopping 110,189 pounds of produce.
The article tells the story of Finnegan's founder, Jacquie Berglund, who left a job with the OECD (the Organization for Economic Co-Operation and Development) because she feels the "major impact is happening at the grassroots level." After moving back to her home state, Minnesota, Jacquie took a job as the director of marketing for her friend's chain of two pubs. She hatched the idea for Finnegan's after hearing anti-hunger advocate Billy Shore give a talk about the possibility of creating for profit businesses to fund nonprofit organizations.
The article illustrates that growing Finnegans into a sustainable venture hasn't been easy for Jacquie. She founded Finnegan's in 2000 and was the lone (unpaid) employee until 2009. As craft beer picked up in popularity in the last five years, Finnegans has seen 30% annual growth in its sales, and its impact on the local community has clearly grown at an impressive clip. Jacquie says that,"the thing that I'm most excited about is that the business is sustainable." She believes that it's key for any business pursing a model similar to Finnegan's to focus on creating a valuable product or service, saying "if I was trying to save the world and my beer was crap, it would never work."
My Three Takeaways
1. Crack a cold one, feed the hungry. How cool is that? I'll freely admit that I like to enjoy a beer or two from time to time. Drinking is frowned upon by some, but how can you argue with buying a beer that helps feed the hungry? Reading this article got me thinking: what if the proceeds of all activities that have somewhat of a bad rap (drinking, gambling, smoking, etc.) were used to fund nonprofits that better society? It's a really cool concept that has the potential to create great positive impacts. If I had the choice at my local convenience store to buy a six pack of regular beer or a beer whose proceeds fund nonprofit activities like Finnegans, I'd definitely buy the Finnegans beer. Heck, I'd even pay a little bit of a premium for the Finnegans, and anyone who knows me will tell you that's a big deal for me. I'm traditionally what one would "cheap." I like to think of myself as "frugal" but that's beside the point. I think there is a considerable market of people out there who are similar to me and would be interested in being customers of companies that are about more than making money. Anyone interested in this model should also check out the Oregon Public House, a bar in Portland, Oregon that donates all its profits to nonprofits as well.
2. Does this model have the ability to be successful at a large scale? While I love the Finnegans model, its definitely reasonable to question whether or not it has the potential to compete with public beer companies like Anheuser-Busch or MillerCoors. If Finnegans' ultimate goal is to create the largest possible impact in the hunger space, then it needs to scale and make as much money as possible. To do so would require it to retain greater portions of its earnings and/or secure capital investment to make the proper investments in attracting top talent, launching marketing campaigns, expanding its product lines, and the like. Organic growth through retaining greater portions of its earnings would be one route, though it'd be a long, arduous fight to the top, and Finnegans would have to sacrifice much of its short term social impact. Many promising companies gain the ability to grow rapidly and scale through securing big time rounds of capital investment. The problem for a company like Finnegans is that there's no real upside for high worth individuals and institutions to invest because they won't see a financial return on their investment. There is a small, growing pocket of high worth individuals who are investing in socially focused companies, but it's not huge. Ultimately, I think successful companies operating under a model similar to Finnegans are destined to hit a ceiling about where Finnegans finds itself- a small to mid-size company that can create significant local impacts, but not global impacts. On the big stage, I think capitalism will rule out, but I don't think that's such a bad thing. There is a place for companies like Finnegans, but capitalism has shown to lead to greater productivity and innovation, which also lead to great societal impacts. That's just my feeling though. I'd be interested to hear what other have to say.
3. Jacquie Berglund must be one tenacious woman. She left a lucrative gig overseas because she wanted to make a bigger impact personally, and then spent nine years growing Finnegans without paying herself for her efforts. The article sites that her hardest financial times building Finnegans also coincided with her divorce. I'm sure there were plenty of times when it would have been easy to throw in the towel, but she kept pushing. It's awesome to see that Finnegans is now creating the impact she envisioned 14 years ago. I have to think that the only thing that kept her going was her passion and conviction for what she's doing. It's pretty inspiring to read about the grind she's overcome to help other people. Shoutout to you, Jacquie Berglund. Thank you for making the world a better place.
This blog post is by CAUSE president Zach Fiegel. You can contact him at zfiegel9 at gmail!