The case reviews the rise of Guayakí, a company that sells energy drinks produced with leaves from Yerba Mate trees, and a significant decision it now faces. Guayakí’s drinks offer a natural alternative in the energy drink industry, which is dominated by large players selling products mainly made from water and chemicals. The company started very small, had several “near-death” experiences, but eventually thrived, reaching $27 million in sales in 2014. Its products are highly differentiated in the energy drink industry.
From the beginning, Guayakí has had a commitment to social justice and environmental restoration in South America. Mate is grown best under the canopies of rainforests. Difficult to cultivate, it is found natively in a region where Argentina, Brazil, and Paraguay meet. Guayakí has engaged with several local communities that live in or near rainforests, to try to create a downstream market for mate that they harvest. The company’s goal is to create 1000 jobs in this region, and to restore 200,000 acres of rainforest by 2020.
The case provides information that can be used to analyze the energy drink industry, and to appreciate the depth of Guayakí’s commitment to social and environmental goals. The key focus, however, is on the company’s supply chain. As Guayakí has grown and begun to require increasing amounts of mate, its model of social engagement with communities is coming under pressure. How can it acquire enough mate to fuel its growth and yet still retain its social and environmental programs? The case identifies and provides significant information on three options open to the company: continuing as now and scaling up via organic growth; purchasing land to secure its supply of mate, which might require restoration prior to the growing of mate; and collaborating with a land owner that shares its view of social and environmental stewardship.
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