Making innovation generate cold, hard cash

My Business chats to the two Melbourne siblings behind KeepCup about how solving a problem for their small cafe chain led them to develop a much bigger and more profitable business.

The sheer numbers are staggering. Those in the know say that around the world about a million disposable coffee cups are being thrown away every minute – or more than a billion daily. And do not be confused – the ‘paper’ cup you drink your coffee from in most cases is not actually recyclable because it is lined with a plastic coating to make it waterproof.

The bottom line is, you don't have to be channelling your inner greenie to realise that the amount disposable takeaway coffee cups we collectively churn through is a concern. It is an indictment of the culture of convenience that has become so ingrained in modern society.

Now, imagine if you were the one on the other side of the counter handing out the coffees, as Jamie (pictured left below) and Abigail (pictured right below) Forsyth were. The siblings started a café, Bluebag, in 1998 and in a few short years expanded to running half a dozen successful cafes around Melbourne.

Jamie and Abigail Forsyth, KeepCupConscious of the volume of packaging waste they and their customers were consuming, the Forsyths sought out alternative, reusable coffee cups, but existing options did not fit the bill.

“We got to a point where we felt really uncomfortable about that. We felt that there would be a solution, so we went out to the marketplace and looked at what was available.”

They were not practical for baristas, and they were not aesthetically pleasing for customers. Jamie and Abigail soon realised the solution was to create their own bespoke reusable cups with a focus on sustainability.

“When you go one step back from that and you look at it from a café level, as we did, we weren’t seeing the few hundred cups that one person might throw out in a year. We were buying hundreds of thousands of paper cups just to supply our six stores,” says Jamie.

“We tried to source things that were in paper and could be recycled and we tried to reuse a lot. But takeaway in itself has a lot of packaging, and there is not a lot of design around actually trying to reduce that impact.

“We got to a point where we felt really uncomfortable about that. We felt that there would be a solution, so we went out to the marketplace and looked at what was available.”

Fast forward a few years and in June 2009 Abigail and Jamie launched their own business, KeepCup, with Abigail as CEO and Jamie as chief operating officer.

KeepCup manufacturers and sells a range of uniquely designed reusable coffee cups that look good and have a minimal environmental footprint, with a typical lifespan of three to four years under reasonably heavy use. There is enough plastic in 28 disposable cups to make one small KeepCup, a claim verified by RMIT.

Exporting a great idea

With Melbourne renowned globally for its coffee and KeepCup involved in major industry events such as the World Barista Championships, it was not long before Abigail and Jamie had an overseas market for their product.

To better service their blossoming export markets and build a strong local presence, in 2012 the pair opened a KeepCup warehouse in the UK to service all of Europe, followed by another in Los Angeles in 2013 that now services all of North and South America.

“We had an inkling that it could be a really big seller and really have some global traction. And fortunately we turned out to be right. But you would not believe how many naysayers there were!”

“Obviously it’s really inefficient to ship from Australia, so we decided to create a hub and spoke sort of business,” says Jamie.

“We send the cup there unassembled – it’s all nestled together, so you get high packing density – then in the warehouses they put the cup together based on the requirements of the customer, box it, and it does the last leg as a fully assembled product.

“Moving to those environments, part of it was we wanted to grow the business and service those markets, part was that we were just starting to get demand and we had to try and find an efficient way to meet that demand. And the other thing was about creating shipping efficiency.”

In five years, Abigail and Jamie have sold an impressive three million KeepCups in 32 countries. But both siblings admit that such rapid global growth has come as a surprise – particularly considering how many doubters their idea had at the start.

Jamie Forsyth, KeepCup“I remember in some of the initial idea conversations between Abby and I, we said, ‘You know, this could be nothing, or it could actually be pretty big’,” Jamie says.

“Sustainability was becoming more of an issue globally – the whole world drinks coffee, and the takeaway market was just growing exponentially.

“We had an inkling that it could be a really big seller and really have some global traction. And fortunately we turned out to be right. But you would not believe how many naysayers there were! ‘What? A cup I’ve got to buy? And then I wash it? And I take it back? Are you serious?’. There actually wasn’t that many people who said, ‘That’s a really good idea’.”

Abigail says their exporting success has been a mixture hard graft coupled with some surprising wins.

“It’s been really hard work setting up in the UK and the US, but we had one woman we met at a trade show who had some cafés in Ukraine,” she says.

"She bought 50 cups, and then she called up and said, ‘They sold really well – I’ve actually got 50 stores and now I want to buy 15,000’. We just never would’ve targeted [Ukraine] or dreamt that that would’ve happened! The world is a big place, and it’s been a really incredible journey.”

Jamie adds that KeepCup does well in locations that favour design, sustainability and coffee, such as New Zealand, Sweden and Canada.

“Big markets like the US and the UK, we do sell a lot of units there but I think our penetration is smaller because those things don’t carry the same value as they do in those other countries,” he says.

“Also, we sell quite a bit in a lot of Asian countries, which is something you don’t often put on your business plan, mainly because they’re so culturally different that you’ve got no idea whether you’re going to hit the mark. But we’ve done well in China, Taiwan, Japan, Singapore, and all those markets are growing.”

E-commerce the exporting gateway

Abigail and Jamie are in an enviable position in that their customer base is a diverse mix. KeepCups are sold direct to café owners, who on sell them to their customers; to large corporates who use them for branding, promotions and as part of their own corporate sustainability programs; and to individual coffee drinkers through the KeepCup website.

The duo have worked closely with PayPal on their e-commerce solution from day one and with PayPal are continuously tweaking their e-commerce shopping cart. Jamie says that selling KeepCups online has always been an important channel to market for the business.

“Growing our web store is a big goal for us.”

“Because we always saw ourselves as a global product, we went to quite a lot of effort to try and promote it and sell it internationally,” he explains.

“We actually sell in seven currencies – like, in the actual currency – through our website. So you can buy in US dollars, Yen, Canadian dollars, Euro and other currencies all through our website.

“We actually accept those currencies, so the user at the other end, they don’t get charged with a conversion and they actually get charged in their own currency. This allows us to stabilise the price in that local market, rather than having it float against the Australian dollar, which is chaotic. PayPal offers all that functionality, and fairly simply.”

Abigail Forsyth, KeepCupAbigail adds that giving overseas customers the ability to shop and make purchases in their own currency localises their online shopping experience while making online transactions more convenient for the buyer.

“It makes it easy and it makes it local. It’s really localising the experience in different countries, and that’s really going to be part of what we’re trying to do online,” she says.

“Growing our web store is a big goal for us, so we’ve just spent a lot of money updating the shopping cart and streamlining that communication.”

Being able to sell their products in local currencies also enables Jamie and Abigail to exchange the currency gained from overseas sales into Australian dollars when it is convenient for them and at wholesale rates, which has the added benefit of providing some insulation from oft-volatile exchange rates.

“The thing is, you do have to invest a lot of time and a lot of money into it,” Abigail says of e-commerce platforms.

“We’re about to change the shopping cart for the first time since we launched. We’re going to an open source, platform, which will give us greater flexibility in how we market in different regions using PayPal.”

A message to market on

Abigail says the virtuous message of sustainability translates in any language, which makes it easy to market KeepCups overseas and cultivate export markets.

She believes that the notion of sustainability – and demonstrating sustainability – will only become more important for business owners moving forward.

“If people really understood the consequences, they would think, ‘Oh, it’s not so hard to bring in a reusable bag or a reusable cup’. It’s behaviour change.”

“I think that sustainability has been a message that we can market on, and in five years time it’ll just be a pre-condition of being in business,” she says.

“You’ve got to be able to prove your product design first and foremost, and then sustainability has got to underpin what you do.”

Abigail likes to think of KeepCup as, “a campaign supported by a product”, and that part of what her and Jamie are passing onto their customers is an education on how to reduce the consequences of convenience behaviour.

With that in mind, they have just launched Reuse HQ, which compiles data on their website that allows customers to track how many disposable cups they’re not using by instead choosing a KeepCup, painting them a picture of the broader effect of many small acts.

“There’s a lot of money being made in convenience. Convenience has been marketed to us as something we need because we’re so busy and we’re so important and we need to have it,” Abigail says.

“Whereas I think if people really understood the consequences, they would think, ‘Oh, it’s not so hard to bring in a reusable bag or a reusable cup’. It’s behaviour change.”

Jamie adds that he hopes the sustainability ethos that drives KeepCup will encourage other business to consider sustainability in their own industries.

“KeepCup is all about reducing disposable cup use, but I like to think that the idea about just reusing and considering how much waste you might create flows onto other businesses and other sectors where people start to consider what they do in their environment,” he says.

“We love the fact that we’ve got a cause and we are absolutely genuine about that cause. But we are also very commercial people, and part of that cause is to make it successful, and to make people go, ‘You know what? KeepCup launched a product that was all about reducing disposable cups – and they made money. So maybe I could do something [environmentally friendly] around what I’m doing.”

Countering copycats

a KeepCupAbigail and Jamie have had their fair share of counterfeiters trying to piggyback on the success of KeepCup. Despite owning the trademark ‘KeepCup’ globally and also owning the wordmark ‘KeepCup’, which means that their would-be competitors cannot use the word at all, the Forsyths haven’t been immune to people ripping off their idea.

Abigail says that the copycats are constantly appearing.

“They exist in the background – they come up on [online shopping portal] Alibaba and I go on and log a complaint, and then the next month there’s another few that pop up. They’ve done it in Australia too – [counterfeiters] are trying to make “keepcup” a generic word for reusable cups. I mean, that’s been good and bad for us.”

The pair agree that getting set up on the ground overseas early has helped ward off counterfeit products in export markets.

“The name is a bit synonymous now with actually any reusable cup, so that has been a blessing and a problem at times,” says Jamie.

“We certainly created our own little niche with this market and we’re the first one in there. And we’re fairly well established in a lot of these foreign markets now.”

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