Peace Coffee Perfectly Times Its Pandemic-Fueled Growth

The retail news is full of companies that have made brilliant and sometimes dramatic pivots to catch up with the shift to Digital 3.0. But sometimes the pre-pandemic plans work out just fine.

Such is the case with Minneapolis-based Peace Coffee. Before the pandemic, it was a strong regional brand that combined conscious capitalism with direct-to-consumer (DTC) capabilities, with four popular retail locations, a rabid fan base and solid retail distribution for its whole-bean blends.

As CEO and “Queen Bean” Lee Wallace and her team headed into the beginning of 2020, the company had ambitious goals, which included getting its product into Kroger and Target, and also expanding its regional footprint into more midwestern metro areas. And although the pandemic and local civic unrest threw it some curveballs, Peace Coffee has made good on its plans. Last week, it announced that its products would expand beyond the Twin Cities to Madison, Milwaukee, Chicago and (in September) Denver.

“I think we placed our bets in the right places before the pandemic,” Wallace said. “So when we look back at where we did well and where we’re positioned to continue to grow, we placed our bets on further expansion in the natural foods channel and in specialty grocery, and also on continuing to build our eCommerce business. So I joke that we kind of accidentally built a COVID business – and it just so happened that all of our bets worked out as we thought they would before the pandemic.”

Not that everything has been easy for the company. All four of its physical locations were locked down and have not yet reopened, and its newly opened and expanded headquarters has been empty due to remote working requirements. But for a company that started as a small nonprofit (it is still a B-corp), Peace Coffee is thriving beyond Wallace’s expectations.

The company started as the Institute for Agriculture and Trade Policy (IATP), with a mission to help American farmers during the family farm crisis of the mid-1980s. It quickly grew to include other countries with rich farming cultures. As the changes from the North American Free Trade Agreement (NAFTA) kicked in, the group became interested in taking its work to Mexico. Some of the staff from IATP took an initial trip in 1995 to survey the situation, and found that local coffee farmers were the most educated about their current situation. A year later, the group started a for-profit coffee company with Mexican farmers. It expanded to Guatemala in 1997 after a partnership was formed with Nobel Peace Prize winner Rigoberta Menchu. The original name was Guatemalan Peace Coffee, and “Peace Coffee” stuck.

Over 24 years later, Peace has purchased more than 10 million pounds of coffee from small-scale farmer cooperatives in more than 12 countries. In 2019, 98 percent of its coffee came from cooperatives that Peace Coffee has worked with for more than five years. It contributes three cents for every pound purchased into the Carbon, Climate and Coffee initiative, which supports coffee farming communities.

While this move has its altruistic merits, it’s also good business. With supply chain problems plaguing most every business during the pandemic, the bond between Peace and its farmers is based on more than just money.

“There obviously are curveballs and things that that can happen,” Wallace noted. “But we’re in very regular communication with the organizations that we buy coffee from. We work hard to understand the impact of the pandemic in those communities. We have an impact fund for every pound of coffee we buy, and we’ve made all of that money available to help mitigate the impact of the pandemic in these communities, because that’s a big threat to our supply chain.

“Obviously, what’s going on varies country by country,” she continued. “But because we have such close working relationships with these organizations, we don’t worry that we’re going to be the people who get told that we can’t ship customers’ coffee.”

Peace Coffee hasn’t seen any other dramatic effects from the pandemic, outside of a healthy bounce in its eCommerce business. While Wallace and her team will continue to build that channel, she expects that recent retail successes will carry the year. She is also interested in continuing to build a place for the company within the local Twin Cities community, and is currently on the team working on grants for small businesses in the Lake Street area, which was badly damaged in the civic unrest that hit the city.

The phrase “conscious capitalism” is perhaps overused – but it fits Peace Coffee’s mission and business model well.

“The sweet spot for me has been this notion of getting a business aligned with the fact that the more we grow, the more we can have impact,” Wallace explained. “I think a lot of mission-based businesses get hung up on trying to do more than they can reasonably do right. We want to grow as much as we possibly can, in order to quantify our impact through the money we put back into the coffee-growing community. When we talk to coffee farmers, we ask them what we can do to help – and they simply tell us to grow.”