Coffee startup BLK & Bold’s cofounders on incorporating social impact into the business model
This is an installment of Startup Year One, a special series of interviews with startup founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.
BLK & Bold was founded by childhood friends Pernell Cezar and Rod Johnson, who grew up on the same block in Gary, Ind. They launched their independent coffee and tea brand from their headquarters in Des Moines after stepping back from from established careers in higher education fundraising and retail merchandising.
BLK & Bold, the first black-owned, nationally distributed coffee brand, is celebrating its second anniversary in June, and the cofounders spoke with Fortune this week about their business model and future trajectory, why social impact is at the core of their business, and how they are navigating a pandemic while combating racism.
This interview has been lightly edited and condensed for clarity.
Fortune: What inspired the launch of BLK & Bold?
Cezar: I began my career at Target Corp. in Minneapolis, in August of 2010. Much of my background is in retail merchandising. I was initially drawn into retail via my interest in Target and its high responsibility, high-speed culture. Yet I quickly became fascinated with the art of influencing and building brands at scale, whether startups or multinational brands. I oversaw national retail accounts sales and business development as senior director of sales for Sundial Brands, the makers of Shea Moisture and Nubian Heritage. This included launching the brand at Ulta, developing and managing the sales partnerships for Sally, Walmart, Target, Kroger, regional grocery chains, and specialty beauty chains.
Johnson: Since July 2010, I’ve been a professional fundraiser for academic and health care institutions nationwide. From working behind the scenes as a strategist to a frontline fundraiser, I’ve been fortunate to help raise millions of dollars for academic scholarships and health care research.
Cezar: Like many people, coffee has fueled myself and my adult career. After learning of what better coffee could be as a consumer, I became continuously curious about the product I was spending so much money consuming and didn’t really know much about. That curiosity created more love for the product but also personal disconnect with the lack of representation and non-community-focused values reflected within the industry.
Johnson: Real change comes when common people can unite over common things to make uncommon progress. Our focus is to normalize how everyday people contribute to the benefit of their communities via connecting common purchases back to relevant impact. Coffee is the second-highest-consumed beverage in the U.S. (after water), and millions of people partake in daily consumption, all that fall short of making a positive impact back to their communities. We want to ensure that our communities and consumers are being supported and respected via the coffee businesses and retailers that market to us and are located on corners of our communities across the U.S.
Our vision is “local impact, at scale,” which is why we did not want to take an independent coffee-shop business model approach. As manufacturers and suppliers, we are empowered to help businesses and consumers across the U.S. extend their social impact footprint without changing their competitive business economics or their consumer behavior.
The landscape for culinary and beverage businesses has seemingly exploded over the past couple of years. Why do you think that is so? How does BLK & Bold stand apart?
Johnson: As people from all parts of the world share pictures of their food, coffee, and dining experiences, the shared knowledge and palate is growing the culinary and beverage industry. Much of the [coffee] industry is becoming as much a part of pop culture and entertainment as movies and music. This newfound knowledge also grows the purchasing habits of the consumer. But beyond, well-plated food and Instagrammable “#morningcoffee,” consumers care about what the brands are doing beyond that.
As consumers become more savvy in their purchasing habits, it opens the door for brands like ours to be considered. The idea of conscious consumerism is one that more people are adopting at scale as they expect the goods they purchase from today’s companies to embody what’s important to them—whether that be sourcing, community impact, and/or nuanced flavors. BLK & Bold is very deliberate about the decisions it makes across the spectrum, which ultimately appeals to today’s consumers. One of the biggest drivers of our business is the social impact model embedded at the core of why we exist. By making it easy for people to support their local and domestic communities by way of checking something off their grocery lists, we stand apart from others in the industry.
What were some of the biggest hurdles you faced in the past year? What surprised you the most?
Cezar: The biggest hurdle was preparing our small business to accommodate national distribution via our retail partnership with Target, which included scaling operations, securing inventory, and reimagining workflow and work/life balance.
The pandemic has impacted us both negatively and positively. The pendulum has swung from the two extremes in a matter of 90 days: The business did not look like it would survive initially, only to recover tremendously due to increased online foot traffic. Considering we are location agnostic, in addition to having committed retail partners like Target and Whole Foods, our business ultimately was well positioned to embrace this new normal.
The biggest surprise has been our resilience and innovation in ensuring the business exists now and in perpetuity.
What kind of feedback have you received from your customers, and have you (or will you) apply that feedback to how you sell your products in the future?
Johnson: The feedback we receive from customers has been overwhelmingly positive considering they were introduced, through our company, to higher-quality products. As a specialty beverages brand, our products live up to what’s implied by the word “specialty.” We intentionally source coffees and teas that rate higher on the spectrum.
In addition, many consumers ask questions about how and if they can use BLK & Bold coffee with their existing appliances, i.e. Keurig, asking about pods; and Nespresso machines. This further showcases how everyday consumers are continually choosing convenience. From this, we want to further showcase and market how BLK & Bold can fit into their already existing routines.
Obviously, amid the coronavirus pandemic, consumers’ purchasing habits and practices are going to change. At the same time, fortunately, coffee is a recession-proof product. Does BLK & Bold plan to adjust its business plan for the immediate future?
Johnson: If anything, we are pacing toward introducing more coffee- and tea-based beverages now that we feel comfortable with where we are with our dry-goods products. As we move into a larger commercial space next month, we will be in a better position to accommodate demand and service our retailer partners appropriately.
At the same time, how has the economic shutdown affected the future of the business, from product development to raising capital?
Cezar: Raising capital has been a challenge considering we’ve bootstrapped to this point. Our mindset in the pandemic hasn’t shifted much as we will continue to be scrappy in building our brand. Product development has slowed, but we have the opportunity to double down on product innovation that we already have in the market, i.e., Steeped Coffee. While we are delaying a timeline on bringing new ideas to the forefront, we will spend time educating our consumer base on this single-serve product form.
One benefit that will help in that regard is we have relationships with key retailers who believe in us, so we don’t have to worry about finding new partners to help us disseminate that info and bring it to market at scale. Considering there’s so much upside with the retail partners we already have, through both brick-and-mortar and dotcom, we are increasingly optimistic.
Over the past several days, there has been a concerted effort on social media to push consumers to support black-owned businesses. At the same time, there is the worry that while this might offer a much-needed sales bump during an economic downturn, nonblack consumers will not commit to this effort in the long term. What can other members of the business community—from owners to investors to marketing agencies—do to amplify and sustain support for black-owned businesses?
Johnson: It’s been an incredible outpouring of support for sure; we saw a jump in sales directly from Twitter, upwards of 4,000%. Instagram followers doubled to nearly 20K over the course of a few days.
Luckily, coffee is an everyday product, and with this, we are able to leverage that this isn’t a one-off purchase. A lot of our social media comments have mentioned that they have purchased an ongoing coffee/tea subscription and are referring to us as their “new go-to brand.”
Coffee [or tea] is one of those products where, if you enjoy it, you’ll buy it again when you see it, and BLK & Bold also benefits from being found in retail (Target, Whole Foods, and Amazon). Consumers don’t necessarily have to come back to our site to purchase, this increase in engagement and sales really equals more brand recognition that will continue to boost sales even after the initial excitement to support black-owned business. In order to amplify and sustain, we really want to lean toward more company collaborations, once that makes sense and resonates with our core values.
Social impact is at the core of your business model. Could you describe what that means, how that is structured, what groups you have supported and are looking to work with, and how other businesses could follow suit?
Cezar: We hope to inspire businesses to support and reinvest in the communities of their consumers, especially domestically. There are voids that exist in our own backyards that are often overlooked despite how loyal that consumer base is in patronizing said businesses. It’s time to reciprocate the efforts and commitment of consumers so they understand the relationship is more than transactional.
Looking beyond the post-pandemic era, which could be anywhere from a year to a few years from now, how do you plan to grow BLK & Bold, and what do you want the business to look like five years from now?
Cezar: Continue to lean in on our social impact model. Making that a normalized dynamic for consumers. This was at one point only done by shopping local, but we are trying to do local at scale. Continue to be good stewards of conscious consumerism in the packaged goods arena in an industry that we already love as consumers.