Main products/services: Yerba mate products (carbonated yerba mate drinks and loose-leaf yerba mate)
Highlight of their unique approach
Guayakí Yerba Mate sources shade-grown, certified regenerative, organic, and fair-trade mate from smallholder and Indigenous producers that help conserve and restore the Atlantic Forest in South America.
Highlights of their unique design
An ambitious mission focused on the conservation and regeneration of the South American Atlantic Forest from the start
An aspirational business model called 'Market Driven Regeneration' that aspires to create a net positive impact in the world throughout its operations and supply web, starting at the source.
a Regeneration Advisory Committee as part of the Board of Directors
Social Purpose Corporation (SPC) registration in Washington State
Early growth financed by patient capital (SBA loan and raising small amounts from family, friends, and aligned angel investors)
Yerba Mate drinks, and the growers
02 | Founding Story
Yerba mate (or mate) is a traditional plant that usually grows under the canopy in the South American Atlantic Forest. According to the traditional knowledge of the Guaraní Indians, the leaves are dried and then infused to produce a drink with numerous health benefits.
Guayakí started by selling loose-leaf yerba mate and has diversified over the years to distribute bottled and canned carbonated yerba mate drinks as well as energy shots across the United States and Canada.
Guayakí was founded in 1996 after a chance meeting by two students, David Karr and Alex Pryor, at Cal Poly University in California.
Alex (Argentinian by birth) offered a taste of infused mate to his new acquaintance David during a friendly get-together. David fell under the spell of this product and was drawn to its energising properties. As he likes to describe it, yerba mate has “the strength of coffee, the benefits of tea and the euphoria of chocolate.” Indeed, this hot, infused drink is rich in vitamins, antioxidants and anti-cancer phenolic compounds and may also enhance mental clarity.
Together with three other friends, they decided to launch a company that would bring mate to the American market. However, mate is only produced 8000 kilometres south (in Paraguay, Argentina, Uruguay and Southern Brazil), so their first decision was where and how to source mate.
Traditionally, mate grows in the shade of the Atlantic Forest canopy. The combination of shade and humidity allows mate to develop special organoleptic properties, but the production is labour intensive at every stage of the plant's growth and harvest.
Industrialisation and massive production have led to intensive monoculture in open fields outside of the Atlantic Forest. These techniques produce a bitter mate, lacking nutritional qualities. Nonetheless, fulfils a need for an inexpensive product to meet the growing demand in the South American market which is dominated by large and consolidated companies.
With a mix of intuition and strong convictions, they made their first commitment to buck the tide and reverse the mainstream dynamics of the mate supply chain.
Guayaki Yerba Mate staff
04 | Regenerative & Distributive Strategies, Actions, and Impact
Seeking to both counter the effects of deforestation and obtain a better-quality mate, Guayakí decided from the start to source its mate solely from small, local producers who grow mate under the canopy using traditional methods from the Guaranís. Our analysis is that this required a more patient and committed approach towards its suppliers, which likely incurred additional costs and risks than a typical start-up brand would be willing to take on.
The company has developed long-term partnerships with 269 Indigenous Peoples and Local Communities (IPLC) families that grow mate under the shade of native trees, using less water than conventional agriculture and helping to regenerate and conserve the land. These smallholder farmers receive a fair and premium price for their green leaf yerba mate, meeting the Fair for Life Fair Trade standard.
As a result, cultivating mate is more economically appealing than degenerative alternatives, such as using the land for cutting trees to sell timber or for conventional agriculture. The strong principle “astanding tree has more value than a cut one” is embedded in Guayakí’s economic model. The impacts are tangible: over 30 000 native and diversified trees have been planted and 45 water sources conserved in yerba mate’s producers’ areas.
This has restored biological corridors and 800 species of plants, mammals and birds have been observed in harvested and cultivated areas, including 35 rare and endangered species, including a jaguar that had never been seen in the region before and is a keystone species providing numerous benefits for biodiversity.
Organic shade-grown yerba mate has also shown to be more resilient and abundant than the sun-grown monoculture variety. Guayakí has gone one step further by supporting its mate suppliers to achieve Regenerative Organic Certified™ Gold certification. These regenerative agricultural practices require more manual labour, leading to job creation for the cultivation and harvest of yerba mate. Additionally, community-driven projects have come to life thanks to fair trade funds, improving the quality of life of around 1,500 people in those remote areas.
Finally, Guayakí is supporting research in partnership with local institutions to honour and respect traditional yerba mate cultural practices from the Guaranís and inspire and build awareness amongst global consumers.
Agricultural product
05 | How Deep Design Enables Strategy and Action
Since its creation in 1996, Guayakí's mission has been to “sustain and restore 200,000 acres of rainforest and provide at least 1000 living-wage jobs by 2020.”
This focus on conservation and regeneration of the Atlantic Forest has been at the heart of Guayakí's business model, subsequently named Market Driven Regeneration™.
The more consumers buy and consume Guayakí's products, the more high-quality shade-grown yerba mate is produced, the more local farmers can regenerate and preserve the forest in South America. It's a positive regenerative dynamic embedded in Guayakí’s economic model.
However, Market Driven Regeneration™ goes beyond Guayakí’s business model. It is a long-term aspiration and a collaborative journey which aims to create a positive impact on the whole ecosystem and communities in which they operate.
Internally, the management team has established a Regeneration Advisory Committee as part of the Board of Directors to support decision-making towards environmental and social purposes. “Regeneration Team Guidelines” have been defined and cascaded to internal teams to be incorporated into their goals and day-to-day practices. Further analysis of the workings of this advisory committee is needed to clarify the role and process around it. For instance, the authors of this case study weren’t able to clarify how individuals are selected to the committee, the extent to which they are able to represent the interests of nature and producer communities, and their ability to argue for regenerative strategies where there may be trade-offs with commercial interests.
To influence agricultural practices beyond yerba mate crops and drive change amongst its cane sugar suppliers, Guayakí has joined the Green Cane Project initiative, one of the largest regenerative sugar farming programs in the world. This has pushed Guayakí’s cane sugar suppliers to achieve Regenerative Organic Certified™ Gold certification, enabling higher carbon capture and water retention in the soil, as well as richer biodiversity in the crop areas.
Beyond its supply chain, Guayakí is also stewarding the global and local regenerative movement, with active involvement in several progressive professional networks including B Corp, Fair for Life, and climate action campaigns.
Along with the ambitious approach to regeneration, Guayakí’s ownership model has evolved over time to align more closely with their long-term mission. Guayakí was registered as a Social Purpose Corporation (SPC) in Washington State, the first US state to pass a law for social purpose corporations in 2012. An SPC is a for-profit company that also commits to social and environmental missions and is legally obligated to consider the impact of their decisions on society and the environment, alongside shareholder profits. In 2023, Guayakí updated and enriched its formal purpose statements to embrace an even broader mission and goals.
Finance is another key enabler for the ambitious regenerative strategy that Guayakí has put in place. In the beginning, the founders’ objective was to minimise capital dilution while finding investors who genuinely believed in the mission.
Attracting patient capital was the only way to go. Their first source of funding wass a Small Business Administration (SBA) loan. Then, the team brought in equity capital from family, friends, and aligned angel investors, by raising small amounts between $250K and $500K.
When times were difficult (2000’s), they had no choice than to be extremely frugal in all operations. It reached a point where “it didn’t matter how big and how fast, what mattered was to survive until you thrive,” according to David Karr.
The negative business trend reversed in 2011. Since then, the business has been profitable, attracting diversified investment.
The business is also able to direct some of its profits towards its social and ecological goals. In 2023, $145,000 was donated to support producer communities in Brazil, Paraguay and Argentina and nonprofits in the US. The author was unable to get further information on the process around the use of profits, and further analysis would help uncover the role of this layer of enterprise design in shaping its regenerative policies. For instance, it would be interesting to learn whether the allocation of profits for social and ecological goals is locked-in or is discretionary and how decisions are made. There is a potential role for this model of profit sharing to foster greater ambition among decision-makers in shaping strategies, partnerships and projects related to their social and ecological goals.
In recent years, significant business expansion has required major investment. Its capital sources have diversified towards more traditional venture capital investors. It remains to be seen whether the arrival of these new investors will alter Guayakí's alignment and commitment to its mission.
06 | Reflections and Lessons for other Businesses
Since the beginning, Guayakí's activities, from the sourcing of yerba mate to its distribution, have generated positive environmental, cultural, and societal impacts. Thanks to their innovative Market Driven Regeneration™ business model, Guayakí has driven change in their supply chain and inspired agriculture, food, and other sector players with innovative practices and strategies.
In recent years, along with changes in the management team, the business has significantly grown with massive distribution of yerba mate cans throughout the United States and Canada, well beyond health stores and organic grocery shops: Guayakí drinks are now available at convenience stores and online retailers, such as Amazon.
In researching and writing this case study, the company was able to provide some input but was unable to make the time to provide some additional insights around the specific role that its enterprise design plays in shaping its strategies and actions. Some of the remaining questions to explore include the process around the Regenerative Advisory Committee, and the approach to profit sharing with communities - especially in the way these help raise the ambitions of the company.
The company continues to generate a positive impact However, their more recent endeavours also generate negative impacts, such as the CO2 emissions and pollution from the cans’ aluminium packaging (i.e.). This expansion leads us to ponder the question of a growth threshold beyond which an excess of production and consumption generates more social and ecological costs than economic benefits. At this point, a moral imperative should drive one to stop or change course. This is known as the ‘counter-productivity threshold,’ a term popularised by Austrian philosopher Ivan Illich. Will the new management team embrace this challenge with honesty and integrity?
This case study was researched and written by Asuncion Aguilar of TerrAsun Lab in collaboration with DEAL.
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