Framed by the Andes mountains and the Pacific ocean, the Chilean valleys are a prime location for agriculture, the main source of income for the nation’s rural population.
Recently, the livelihoods of millions of smallholder farmers in Latin America have been threatened due to supply chain disruptions caused by global conflicts and the COVID-19 pandemic – farmers are paying higher production input prices but receiving less for their crops.
Keeping true to its vision of helping Chilean farmers access fair income while protecting the environment, Fresh & Co. has transitioned into a new business direction as Savia.
In the past few months, Nils Lindeen, founder of Savia, identified new trends and business opportunities in light of the changing international context, which propelled the company’s strategic pivot.
“We intend to help improve the situations of local agricultural producers by first helping to minimize the environmental burden of their practices. We are very committed to this task and we want to do it well, for this we need to continue growing, and growing also means being able to focus.
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Fostering business differentiation and sustaining growth
Savia joined the NESsT and IKEA Social Entrepreneurship Latin America Accelerator in 2021. With support from NESsT Portfolio Managers, Savia’s co-founders realised that in order to take their company to the next level, they needed to build expertise within their best-performing sales channel.
To do this, Savia sought to shorten its production chain, connecting small and medium producers directly to restaurants, coffee shops, hotels, and convenience stores throughout Santiago.
The pivot has seen initial success. To date, Savia has incorporated 100 restaurants and hotels. The social enterprise achieved this by shifting its focus from its business-to-consumer channel (B2C) and toward its business-to-business channel (B2B). By honing in on its strongest channel, Savia is able to better differentiate itself from its competitors and improve its value chain, saving costs to secure higher incomes for smallholder farmers.
A new face that aligns with its purpose and connects with its roots
A new business strategy requires a new brand statement. Savia, which means “Sap” in English, is the lifeblood of a plant; it is the thick substance that distributes nutrients throughout the plant and gives it the ability to grow.
The social enterprise plays a similar role throughout its value chain – Savia strengthens the community by creating decent jobs with higher incomes and environmentally-conscious innovation that compounds local economic growth.
“Savia is an element that gives life to a material or immaterial thing, and this new name better represents the impact we want to achieve in the food value chain, ensuring fair trade for all actors while reducing waste.
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The new brand solidifies Savia’s values as a fair-market company – “Savia uses technology as a vehicle to promote fair trade. At Savia, quality and locality are closely related.” adds Nils.
Collective farmers are at the core of Savia’s brand strategy
Farmer well-being is fundamental for Savia. The enterprise encourages its farmers to collectivize so they are able to access stable prices for their products.
In Latin America, collective organizations such as cooperatives help smallholder farmers to improve production quantity and quality, supporting them to access better prices for their products. When bonded together, farmers have greater influencing power and can leverage economies of scale to reduce supply costs and transaction costs associated with certification, standards, and procurement procedures.
Farmers gain a 30% - 50% income increase by working with Savia. In addition to offering higher prices than conventional markets, Savia also supports farmers with product collection by sending a fridge truck to carry out the first mile of collection, helping them to further reduce expenditure.
“This new name generates greater affinity with our Spanish-speaking community since our goal is to replicate our model in Latin America. With Savia, we will improve the situation for farmers, we will increase access to fresh products of known origin to gastronomic businesses in the city, and we will reduce food waste in Latin America.”
Photo: Nils Lindeen, CEO of Savia
Raising awareness about conscious consumption
In order to remain competitive in a mostly industrialized agriculture market, small farmers today need to access training to stay abreast of evolving organic farming techniques. They also need to obtain certification from the government to demonstrate the authentication of their organic products.
To address this gap, Savia will provide organic farming training to its farmers, ensuring that they create products that are safe for their consumers’ health and the environment.
“We believe that there is an excellent opportunity for organic and agroecological agriculture, which will not be so affected by the increase in the price of synthetic chemical inputs and will be very competitive in the coming seasons.”
Food waste reduction is another one of Savia’s major priorities. Its food chain currently generates less than 5% of food waste, compared to 40% in the conventional industry. Businesses that are sourcing from Savia are adding agroecological and fair trade products to their menus, increasing their appeal to the growing population of conscious consumers worldwide. By the end of 2022, Savia plans to reach over 150 restaurants and hotels in Santiago.
Laying the groundwork for its next stage of growth
Photo: Savia team
NESsT portfolio managers worked closely with Savia on this rebranding, helping them to refocus their business model. To ensure the long-term sustainability of Savia’s new model, NESsT will provide continued support to the enterprise on team growth, commercial strategies, and financial planning.
NESsT and IKEA Social Entrepreneurship are also supporting Savia to deepen its impact model, generating productive alliances with small and medium farmers that allow them to reduce their production, financial, and commercial risks.
The social enterprise is finishing Startup Chile’s incubation program, through which it is able to access a broad network of social impact investors that can help it to further consolidate its position in the agribusiness sector.