If you survive, you thrive: Guayaki yerba mate’s slow-burning success

By Maggie Hennessy

- Last updated on GMT

Guayaki founders, from left to right: Michael Newton, Steven Karr, Chris Mann, Alex Pryor and David Karr
Guayaki founders, from left to right: Michael Newton, Steven Karr, Chris Mann, Alex Pryor and David Karr

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In the hyper-competitive beverage world, it’s hard to imagine a brand pioneering a new beverage category using a mission-driven business model aimed at restoring the rainforest would still be around 20 years later, let alone growing at an average rate of 45%.

But in the past two decades, yerba mate maker Guayaki has seen the market for this naturally caffeinated beverage flourish amid growing awareness—culminating in 2014 sales topping $27 million and the product now being sold everywhere from Whole Foods to 7-Eleven.

As it’s grown, Guayaki has maintained its core mission of restoration through scale—whereby its customers power its business model of supporting rainforest conservation and community development through fair-trade pricing.

“Eventually if you survive, you thrive,”​ co-founder David Karr told FoodNavigator-USA. “We’re thriving now. Wanting to build our business in a certain, fairly progressive way, we were on the bleeding edge for a long time. But a lot of things have converged in our favor​.”

People buying mate are younger, seeking ‘healthy’ energy drinks

Guayaki only branched out of the natural foods channel five years ago, when it debuted Guayaki cans, which helped catapult the brand into the mainstream. It now has eight canned varieties—including mint, berry, orange, lemon, sparkling classic and sparkling grapefruit ginger—which are catching up in sales to its longtime glass bottles.

“Things started changing when we launched the cans in 2009 and 2010 because we realized the people buying this are younger generally or don’t want to drink energy drinks that are ‘unhealthy,’”​ Karr said. “We started going further into convenience and grocery where there are fewer organic products but more people are wanting to buy them because they’re authentic, natural and healthy.”

Following soon after with a line of four mate shots, Guayaki looks to pull even more consumers from the massive, $10 billion U.S. energy drink market—which is expected to continue its growth through 2019 despite being entangled in litigation and negative publicity in recent years, according to Mintel.

“A lot of our growth is coming from people leaving the artificial energy drink segment,”​ Karr said. “We don’t even market ourselves as ‘energy drinks’. That’s too simplistic of a definition. We’re about clarity of mind, energy, well-being and health. We’re very focused on just the yerba mate itself.”

Pioneering a market has resulted in many other firsts for Guayaki beyond blazing new product format trails, Karr said. It was the first mate manufacturer to achieve fair-trade certification—a process that took a few years of working with the Institute for Marketecology (IMO) to create the standards so that yerba mate could get certified fair trade. Guayaki was also the first mate maker to achieve biodynamic certification.

New-Cans-Guayaki

Stronger than tea, ‘cleaner’ energy than coffee

But mate was largely unknown in the U.S. when Guayaki first hit the market in loose-leaf form in 1996. Rainforest mate—whose leaves and stems are harvested from South American shrubs—has been drunk for centuries out of large gourds for its communal and health benefits. Mate contains 24 vitamins and minerals, 15 amino acids and “abundant” antioxidants, according to Guayaki.

Although it has about the same amount of caffeine per serving as coffee, mate isn’t oily or acid forming, so it’s less likely to cause the stomach issues or jitters some coffee drinkers get. And unlike tea, mate leaves are low in tannins so can be steeped for long periods without becoming bitter.

About 90% of the roughly 1 billion pounds of mate harvested commercially each year is sun-grown, which results in faster, bigger yields. But because mate is native to the rainforest, shade-growing it helps restore the natural canopy of the rainforest and bring back biodiversity.

Karr’s fellow co-founder, Alex Pryor, is a native of Argentina, which makes up a portion of the now 93% depleted South American Atlantic Rainforest (also encompassing Paraguay and Southern Brazil) where mate grows wild. So the two sought out only those grower-partners who were willing to cultivate organic, shade-grown mate, offering a fair price (roughly two or three times market price) in return.

Guayakiyerba mate leaves

A solution for the ‘big vision’-minded

By 1998 three more seeders had joined them—Michael Newton, Steven Karr and Christopher Mann—all of whom still work for the company. By leveraging its business model, Guayaki aims to restore 200,000 acres of Atlantic Rainforest and create 1,000 living wage jobs by 2020.

Guayaki bottles

Working so intimately with grower-partners means that the brand has maintained strategic control over sourcing and its relationships through a team of about 15 on the ground in South America.

But because so many of the potential mate growers are small farmers and indigenous communities under pressure to feed their families, sometimes the quick fix—cutting down trees to plant genetically engineered soybeans or raise cattle—is more appealing than adopting a 10-year strategy of growing biodynamic- and organic-certified mate.

“Our business model is more of a medium and long-term solution,”​ Karr said. “In the short term, it makes more sense for a lot of people to cut down the forest and get money for the wood, go raise cattle or plant crops. In the medium and long term, it makes more sense to grow mate, which they get to keep as an asset and create value for generations to come.”

And despite all its mainstream expansion, the still-private company has never attracted much institutional money, relying instead on high-net-worth private investors, largely because the founders have no exit strategy.

“Our goal is to create a legacy business in so many senses of the word—which for our industry is a new paradigm,” ​Karr said. “Being not for sale puts us in a different category of fundraising. We’re not turn and burn; we offer real value for the long-term, big vision-minded candidate.” 

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