Fairer than fair trade

Today’s consumers want CPG companies to do things that impact the world, and to be part of brands that make the world better. Ignoring this new emphasis and continuing to focus on product itself will only lead to a loss of market share.

That’s the position of Sundial Brands and its CEO Richelieu Dennis, the pioneering vision behind the concept of the New General Market consumer. Sundial not only has made an impact on how retailers merchandise their stores and what they buy for their shelves, but the company’s efforts go well beyond the four walls of a store. Sundial has built and operates according to a community commerce model that centers on investing in the communities from which it sources its raw materials.

At the third annual New General Market Summit, co-hosted by Drug Store News and Mack Elevation in April, Dennis talked about the evolution of Sundial’s community commerce model, and how the concept is not only improving its own business, but is helping to benefit thousands of lives in one of the poorest places in the world.

Under Sundial’s original and long-standing community commerce model, the company purchased raw ingredients — shea nuts and moringa harvested by women in Ghana — from West African traders. Because of a lack of infrastructure, these women and their families, Dennis explained, were caught in an unending cycle of poverty, forced to accept the lowest prices traders would offer; their daughters were unable to attend school because they needed to help their mothers haul water for the harvest. Sundial made a decision to affect change by finding a way to be “fairer than ‘fair trade’ and more ethical than ‘ethically sourced’ — [not to mention] sustainably break the cycles of poverty and put an end to unnecessary loss of life through innovative business practices and commerce,” he said.

Five years ago, Sundial partnered with Target to raise the ante on the model. It began to establish self-contained shea butter- and soap-producing cooperatives in Ghana, providing them with training, equipment and running water. Also, it put in place a plan for reinvesting 10% of the profits from products sold in Target stores into building the communities’ infrastructure. The model has since been expanded, with 15 farming cooperatives in operation and 10% of profits from Sundial products sold to all retailers, not just Target, now dedicated to infrastructure improvements and maintenance.

Sundial’s community commerce model has had a significant impact on the lives of the women in the cooperatives, as well as on the lives of their families. As its business has grown, so has its impact on these communities. In 2014, Dennis said, Sundial purchased 71,428 kilos of certified Fair for Life Trade shea butter from the cooperatives; in 2016, it purchased 270,000 kilos of the ingredient. Some 14,500 households now are benefiting from the existence of the cooperatives, their infrastructure and the increased incomes they afford, up from 4,000 in 2014.

Since 2014, the number of communities with access to fresh, piped water has increased from zero to 13, school enrollment of shea butter processors’ children has increased from 37% to 97% and the average annual income of a shea butter processor has risen from $184 to $1,700 — enough to comfortably sustain their families. And the number of shea butter processors registered for health insurance more than doubled between 2014 and 2016, from 48% to 99%.

Moreover, under the aegis of the model, all 15 cooperatives were able to establish individual savings and loan associations from their own earnings. As of the date of Dennis’ presentation, savings accrued totaled $127,511. A total of 256 members have opened accounts and procured loans for other economic investments and income-producing endeavors.

Sundial’s vision for community commerce ties in quite well with the mission of its brands, modeled around the idea of cultural competence, which is defined as “understanding what’s happening with our consumers culturally,” and “disrupting the marketplace by knowing and engaging the New General Market consumer faster and better,” Dennis said. It also means recognizing “what she’s doing and what is influencing her decision to buy and engage with our brands.”

This means addressing the multicultural character of the market rather than “over-delivering to the greatest common denominator,” and engaging consumers with “digital excellence … at shelf and wherever they work and play.” It also calls for embracing a new consumer mindset that prioritizes concern not about what products do, but how they impact others — i.e., their overall purpose. Sundial will continue to pursue initiatives that impact the lives of others and fulfill consumers’ push for positive change in the world, Dennis said. “The journey toward transformative performance, inclusion and purpose never ends.”

(Click here to view the full Special Report: New General Market Summit 2017.)