When Catha and Caroline Mullen were growing up in Bronxville, getting involved in the coffee business probably wasn’t in their sights. But the twins, graduates of Bronxville High School (class of 2003), Princeton University and currently in their first year at Stanford Business School, have launched “Farm to Cup,” selling coffee online direct from farms in Guatemala.
“Stanford has a Global Experience Requirement,” Caroline Mullen said. “Catha and I were both put on a trip to Guatemala, and the focus was coffee. But we wanted to be really engaged in what we were doing and thought, ‘Why don’t we go down there with the express goal of setting up a business, capitalizing on opportunities and trying to make actionable progress?’”
They learned that Guatemalan coffee farmers didn’t have access to the end consumer and, in the coffee supply chain, retailers capture most of the value, with only 3-5 percent of the retail value earned by the farmers, according to Catha.
“The farmers don’t know what it tastes like, they don’t know marketing,” Caroline said. “They’re not sophisticated enough to engage in the exporting process.”
So when they returned to school in January, Caroline and Catha, joined by B-School classmates Monica Lewis and Paige Rossetti, decided to move forward and set up a website to market coffee, direct from the farm, without the middleman. They’ve partnered with one cooperative of approximately 300 farmers in a region of Guatemala called Antigua.
A chart on their website illustrates how the farmers earn $4/lb. from Farm to Cup, while the average Guatemalan coffee farmer earns $1.10/lb.
Launching the business hasn’t been easy, and they are amazed by the amount of red tape to start a company. But the Stanford network has been a windfall, they say, connecting them to resources at the university and beyond, including publicity and marketing, legal assistance, social innovation review and more.
Still, Caroline estimates they've spent $3,000 out of pocket between the legal, website, inventory and logistical costs, and they’re finding it difficult to obtain economies of scale in a small business enterprise.
“California has a franchise tax for any business, about $800,” Catha said. “If we want to get a credit rating as a small business, we have to sign up to get a Dun and Bradstreet number, another $300-500.”
While running their coffee business, they are also deciding on summer work plans before returning to business school in the fall. Caroline is considering opportunities in San Francisco and Washington, DC, while Catha hopes to stay in the Bay Area training for the Olympic Trials. She’s already qualified for the marathon trials, scheduled to take place in January 2012, but hopes to also quality for the 5K and 10K, and those trials will be held in July 2012.
For now, they’re focused on getting through the semester while expanding the coffee business, but plan to be diligent about with whom they partner and ensure that the money is going toward good ends, such as improving the lives of people in the community while investing in a more sophisticated coffee growing enterprise.
“We want to make this the best business model possible,” Caroline said. “We want to make sure we’re equitable and true to our mission of bringing more value to farmers.”
To find out more and to order coffee, go to: www.from-farm-to-cup.com.