Case
| HBS Case Collection
|
September 2020
Algramo
Michael Chu, Monica Silva and Mariana Cal
Founded in 2013 by José Manuel Moller in Chile, Algramo first became known for addressing the “poverty tax” (the surcharge paid by lower income families for staples sold in smaller sizes) through specially-designed dispensers in low-income neighborhood grocery stores that offered bulk purchasing in reusable containers, while allowing consumers to buy exactly the amount they wanted. The savings that came from eliminating packaging, sometimes the single-largest cost component in small formats, was passed on to the end-user. The company’s innovative approach was widely recognized, both locally and internationally.
In 2018, Moller was invited to join a prestigious NGO focused on the role of the private sector, which led to an invitation by Unilever Chile’s CEO to join forces to meet a corporate-wide Unilever commitment: a 25% reduction by 2025 of the plastics it put out into the world. One of the most efficient ways of doing so was the replacement of single-use plastic packaging by reusable containers, but the challenge was to make consumers remember to take their empty containers with them when shopping. With the insight that people never forget to take their wallets, Moller’s response was Packaging-as-a-Wallet (PaaW), a reusable plastic container imbedded with a Radio Frequency Identification (RFID) chip that, through Algramo’s smartphone app, could also become a digital wallet. At the same time, the app allowed the user to order the exact amount desired and have it home-delivered by electric tricycle. In January 2020, following a successful pilot test, Unilever Chile and Algramo rolled out PaaW across Santiago, Chile’s capital. With plastic pollution a highly visible global issue, Algramo’s efforts attracted wide international attention and recognition. Several leading FMCG multinationals and environmental NGOs approached Algramo to explore potential partnerships.
For many years, Algramo’s financing came through awards and prizes, friends and family and benefactors. At the end of 2019, Algramo completed its first institutional capital-raise in a round led by New York-based impact investor Closed Loop Partners. That relationship opened the doors to projects that would take the Algramo model to New York City.
In March 2020, Algramo’s board approved a joint venture with a Dutch NGO to deploy Algramo in Indonesia, the world’s second-largest source of plastic leakage into the oceans. That same month, Chile registered its first Covid-19 case. By the end of May, the number of Covid-19 cases in Chile surpassed the official number of cases recorded in China. This came on top of a deep social turmoil that had rocked the country since October 2019, with street riots shattering Chile’s long-standing image of stability and development. In the face of this grave crisis that would surely get worse, one of Moeller’s close advisors advocated setting aside the company’s international commitments and to focus Algramo’s efforts solely on Chile. Moeller must decide what to do.
Keywords: Packaging-as-a-Wallet;
Plastic Waste;
business at the base of the pyramid;
reusable packaging;
Alliances with FMCGs to meet ESG goals;
Social Entrepreneurship;
Environmental Sustainability;
Strategy;
Value Creation;
Goals and Objectives;
Business Model;
Consumer Products Industry;
Latin America;
South America;
Chile;
Citation:
Chu, Michael, Monica Silva, and Mariana Cal. "Algramo." Harvard Business School Case 321-079, September 2020.
View Details
