El Conquistqdor Francisco de Orellana

El Conquistqdor Francisco de Orellana
The Conquistador who put the Amazaon baisn "on the map"....Francisco Orellana

Thursday, January 12, 2012

A Brooklyn Tea Company Backed by a "Socialist" President

Forget its mild-mannered reputation: tea is not for the faint of heart.  Last year, the United States tea industry brought in $6.5 billion thanks to a roster of heavy hitting, fiercely competitive brands, ranging from Honest Tea to Tazo and old-time stalwarts like Lipton.
So what are the chances that Runa – a start-up company peddling an obscure Amazonian leaf called guayusa – can elbow its way into this already crowded scene? Combine seemingly long odds with Runa’s unlikely provenance: In 2008, a pair of Brown University undergrads, one doing linguistic research in the Amazon, the other studying marine biology, rerouted their career paths to become entrepreneurs after encountering the caffeinated guayusa leaf, which steeps into a potent brew, and realizing it hadn’t yet been commercialized.
Founders: Former classmates Tyler Gage and Dan MacCombie, both 26, founded Runa and are the company’s president and executive vice president, respectively.
Employees: Runa has 5 full-time employees in Brooklyn, 30 in Ecuador.
Location: Headquartered in Brooklyn, N.Y., with Ecuadorian offices in Quito and Archidona.
Pitch: “We’re a beverage company that creates livelihoods for indigenous farmers in the Amazon,” Mr. Gage said, “and we produce beverages made from guayusa tea, which has more caffeine than any tea and double the antioxidants of green tea. It’s an energy offering in the tea space.”
On top of providing income to some 1,000 farmers, Mr. Gage said Runa puts money into a “social premium fund” the workers can tap collectively to finance local development projects. “Runa” means “fully living human being” in Kichwa, an indigenous language spoken in Ecuador and Colombia.
Traction: Runa’s first big boost came in 2009, when the company won two contests in quick succession: a business plan competition at Brown University’s Entrepreneurship Program, and the Rhode Island Business Plan Competition, bringing in more than $70,000 in cash and services.
Runa’s tea bags and loose tea went on the market less than a year ago and are now available at some 1,200 stores nationwide, including Whole Foods, Kings, the Vitamin Shoppe and Wegmans. Runa also sells loose tea to larger companies — Stash and Oregon Chai, to name a couple — that use the leaves in their own blends. In March, Runa plans to introduce a line of bottled beverages, focusing at first on the New York and Boston markets.
Revenue: Runa’s revenue for last year was $277,000, according to Mr. Gage. He expects Runa to surpass $1 million in sales for 2012.
Financing: Runa has received grants totaling $500,000 from the United States Agency for International Development and Corporación Andina de Fomento, a Latin American development bank. In November, the company closed a $1.6 million round of angel investments. Now, Mr. Gage is seeking $2 million in a Series A equity round, which he hopes to close by the end of the fiscal year’s second quarter.
Runa’s most unusual backers so far? The government of Ecuador, led by socialist president Rafael Correa. In October, the country’s Ministry of Production put $500,000 into the company through a national investment program.
“The social aspect of the company’s business model — the high wages to farmers, the social benefit fund, and support for sustainable farming — are the real reason Ecuador is wise to play venture capitalist to a Brooklyn business,” wrote Alex Goldmark, a GOOD magazine contributing editor, in a recent post about the unusual investment.
But the government’s direct influence, Mr. Gage said, is limited.  “They’re very much in the backseat,” he said. “They have one of six board seats.”
Marketing: “We sponsor a lot of events, everything from design challenges to fundraisers, anywhere we can donate tea,” Mr. Gage said. The company targets young professionals with “office drops” of product samples and holds frequent tastings in grocery stores, along with guerilla offerings at concerts, in parks and on the street.
Competition: Though Runa claims to be the lone exporter of guayusa, the company faces stiff competition from purveyors of other kinds of tea, along with energy drink manufacturers and companies selling yerba mate, another South American tea-like caffeinated beverage.
Challenge:  “The biggest challenge right now is marketing,” Mr. Gage said. “We’ve actually done more than we expected in terms of getting the product on the shelf. It all comes down to getting people to try it.”
With so many teas and energy drinks already on the market, do you think Runa can build – and keep – a niche of its own?

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