Sourcing Communities

Lokta Bark Paper—Getting It Right

In our 2013-2014 ECC Report [include link]), we described our decade long purchases of lokta bark paper for holiday gift set boxes through Himalayan Bio-Trade Pvt. Ltd (HBTL), the processing and marketing agent for a consortium of community-based forest product enterprises in Nepal. These purchases helped increase food security for over 2,400 families and better provide for their families’ futures. We had been steadily increasing purchases, but in 2015 bumped up against circumstances that occasionally happen when a supply relationship is based on lead times as long as two years. Gigi Abbadie, Aveda’s Global Marketing Executive Director for Brand Mission, Gifting & Institutes, picks up the story with Melissa Chelminiak, Aveda Director of Mission, Partner and Stakeholder Engagement:

Gigi: “We originally got started with lokta paper as a result of our partnership with the Asia Network for Sustainable Agriculture and Bioresources (ANSAB) and EnterpriseWorks/VITA, a division of Relief International. With funding from USAID, these groups sought to conserve biodiversity in western Nepal by promoting profitable, conservation-based management of the area's forest and pasture resources. Bark collected in 2006 was delivered to vendors in 2007 and made into boxes that Aveda purchased in June of that year for use with the holiday season gift sets.[1]”

“What began as a small program slowly grew into substantial purchases of 300,000 sheets of lokta bark paper by our box vendor. Because we based our box purchases on forecasts made nearly two years in advance of the holiday season in which the gift sets would be sold, we found ourselves in a situation where we forecasted a need for 394,000 sheets in fiscal year 2014 in anticipation of sales growth in the fiscal year 2016 holiday season. However, the intervening holiday season sales did not meet forecasts and, consequently, we found ourselves with an excess of inventory of paper and boxes, which we used to make gift sets in 2015, and we reduced our new box purchases to just 105,000 sheets, nearly a 75% reduction.”

Melissa: “We don’t purchase lokta paper directly from HBTL, but we work with HBTL to identify how much paper is needed to make the boxes we will purchase from our box supplier. We’d like to be able to purchase directly, but doing so is difficult for small, community-based suppliers that are not experienced with our Code of Conduct requirements (see section 1 on ELC COC [link]) and do not have extensive resources available to go through the long and tedious process of becoming a certified vendor in the Estée Lauder Companies system. That system is very valuable in helping us meet our Mission commitments, but we recognize that it creates some complexities in how we do things with our supply chain.”

“What might otherwise be a straightforward business decision to cut purchases to match sales became a source of concern that we would damage communities that had made strides to improve their quality of life and continue to depend on Aveda for the vast majority of their business. After a lot of discussion, we decided to donate $200,000 to HBTL[2] that would be an advance on a future purchase and we set in motion training to get certified by Institute of Marketecology (IMO) for their Fair for Life fair trade program as a way to get experience that would be useful in becoming certified as an Estée Lauder Companies supplier.”

“We are dedicated to maintaining a long term and mutually beneficial relationship with HBTL and the communities that source and manufacture lokta bark paper, and have signed what we believe is a first-of-its kind formal Letter of Intent (LOI) from a global brand to a community sourcing partner to ensure that Aveda does not inadvertently undermine the progress made through our purchases with large fluctuations in our demand. The LOI captures in writing our intent to provide timely and accurate forecasts of demand for lokta bark paper and establishes our commitment to limit any decline in purchasing to a maximum 25% decrease from previous year purchases. This would effectively create a “soft landing” over multiple years and enable communities to plan if we were to ever have to end our use of their paper.”

Gigi: “We’ve also been working very hard to increase our use of lokta bark paper by creating notebooks for our sales meetings and testing various products including notecards and a gratitude journal in a few of our retail stores.  We rolled these out in 2016 to all Aveda retail stores supplementing our purchases via the gift set boxes. We also worked with our packaging experts, Deb Darling and Nicole Call to redesign the gift box to reduce the cost, to improve its aesthetics, and to make it easier to assemble and to reuse. In addition, three new bags were developed for use in Aveda retail stores that incorporate the lokta bark paper and we are producing the box in three colors for the 2017 holiday season.”

 “Aveda’s commitments to the Nepal communities where we work extend beyond biodiversity conservation and economic stimulation. Following the 2015 earthquake affecting nearly 30% of Nepal’s population, Aveda quickly donated water-related emergency relief funds from our Donor Advised Fund with Global Greengrants, and continued to raise money in 2016 through the sale of our Renewal for Your Journey gift sets. These sales raised $123,000 for earthquake recovery via Global Greengrants. When added to generous gifts from Aveda guests, total Aveda network donations reached $150,000 in 2016.”

Vanuatu

The Republic of Vanuatu, translated as “Our Country Forever,” is a South Pacific Ocean nation made up of roughly 80 islands lying north to south along the Coral Sea between the Solomon Islands and Fiji. Vanuatu boasts a robust cultural vitality with more than 120 languages actively spoken, but is also considered one of the poorest places in the world. Ninety percent of the nearly 280,000 inhabitants live in rural areas, making a living as subsistence farmers, artisanal harvesters, and fishermen.

Aveda sources two types of oils from Vanuatu that are pressed from the nuts of tamanu and nangai trees. Tamanu is a functional botanical ingredient and has been used for centuries in India and other places for its healing properties. Aveda uses it in the Outer Peace™, Aveda Men Pure-FormanceÔ, and Smooth InfusionÔ product lines. The nangai nut has some characteristics similar to macadamia nuts and while it has long been used for food in Vanuatu, attempts to export it as a food were not successful. The use of nangai oil in the beauty and cosmetics industry is relatively new, and will be available in Aveda’s Damage Remedy™ Split End Repair starting in 2017.

John Frankenfield, Director of Indigenous Raw Materials, Organics, and Essential Oils, shares how Aveda is helping the native people of Vanuatu trade local resources sustainably without endangering their unique culture and way of life.

            John: “I source a lot of the botanical ingredients for Aveda and travel to the areas where they are grown.  On my first trip to Vanuatu, I was hesitant and concerned about the possibility of encountering an exploitative situation for the remote villagers, but I quickly learned that business like this is a valuable opportunity for the local people to earn revenue for basic necessities like healthcare, food and clothing. Medical care was traditionally hard to find. They had to travel two to three boat rides away to a different island, which cost money they didn’t have. Due to the small-scale of the cash economy in Vanuatu, any new revenue streams for the community can be particularly meaningful.”

“Indigenous groups that we do business with benefit financially and through technical assistance. And because the nuts are harvested from native trees that do not require watering and are not cut for timber, these oils are sustainable. The advantage for Aveda to source from places like Vanuatu is our ability to positively influence the health of the Earth and the health of local communities, two things we care about very much. Aveda is committed to teaching local communities how to sell specific commodities to us and to others.”

Aveda is able to access these oils thanks to a supply chain of caring partners. Alain Jacobé, whose family started Tebakor Island Products Ltd., a processing company and exporter in Vanuatu, grew up on the island of Malekula where the oils are sourced and knows the people very well. He works to bring economic development opportunities to these remote villages and spends about three months of the year organizing the communities to collect, dry and transport the nuts and oil.

After the nangai nuts are hand-picked from wild trees they are dried in newly installed solar dryers. These small built-in place units are owned by Tebakor, but operated by the villagers free of charge. Each nasara (extended family or clan from their own section of the village) is assigned a week to harvest and dry nuts, a process that complies with the ILO Declaration on Fundamental Principles and Rights at Work and local Vanuatu laws. The dried nuts are bagged and sent to Tebakor’s processing facility where they are pressed into oil. The work for the local inhabitants isn’t significant in scope, but it’s an important contribution to their livelihoods. In addition to paying individual villagers for the nuts they gather, Tebakor also makes a payment to the village for collective needs, such as the construction of a community kitchen used for festivals.

John: “Cindy Angerhofer, Aveda’s Executive Director of Botanical Research, travels around the globe looking for potential raw materials in remote indigenous regions. When she finds a possible source, we need a skilled interface with technical capabilities for quality assurance and direct relationships with the local community to help bring production processes to scale and to manage logistics in conditions where humidity and potential contamination are critical concerns. In 2008, we started working with Concentrated Aloe Corporation (CAC), a Florida-based company that develops strong supply chains with a focus on product traceability and organic certification. The small indigenous communities of Vanuatu are able to provide consistent quality and supply, something that’s difficult even for advanced and large industry players, thanks to CAC. Each raw material shipment to Aveda must conform to stringent corporate quality and purity standards before it can be used. CAC has been an essential partner in our supply chain because of their success working in developing countries and bringing sophisticated laboratory processes to indigenous products. This is something locals can’t do alone.”

“As a customer, I don’t want to be the supplier’s only buyer. By partnering with a supplier like CAC we can prevent the sourcing risks and uncertainties in demand and supply of materials. A robust supply chain with several customers ultimately protects the harvesters. And Aveda can have more confidence that raw material supply shortages will be minimized.”

            Beyond providing a source of income to the local communities and enhancing the economy Aveda is also working with Global Greengrants Fund (GGF) to extend the benefits of our trading relationship by supporting projects to supply drinking water in two villages and help them protect coastal resources critical to their survival.

Island Reach operates a mobile conservation work platform aboard their research vessel Llyr in Vanuatu, working to build links and direct-action plans from ridge-to-reef that protect watersheds and reef ecosystems while strengthening community resilience and capacity for climate change adaptation. A series of grants from GGF is funding this work in the villages along the coast of Malekula where Aveda sources the tamanu and nangai nuts.

GGF grants have also been used to help fund rainwater catchment systems to provide drinking water in two of the Malekula villages, where the only available water sources had been contaminated shallow wells and springs located very far away. These projects were done by New Zealand-based Children’s Health and Education Trust, which has worked in this part of Vanuatu to address concerns such as lack of clean water, basic sanitation, changing weather patterns, and the risks that climate change poses on local water sources in Vanuatu. Their successful projects include the installation of a solar powered desalinization plant, teaching local women to make and sell palm soap, and training men in building water systems and rainwater collection tanks.

John: “We have high hopes for the financial benefits the local people will see from new and growing trading relationships such as tamanu and nangai-based products, but we also know that the path to sustained profitability won’t be easy. Opportunities depend on vagaries of the marketplace and market prices. We will continue to pursue a series of successful products over time with the intention to indirectly strengthen Vanuatu’s economy and improve their quality of life.”

 “Just like all businesses, we have to make money. There are easier ways to make money than to invest in indigenous communities, but we believe this way is more genuine and far more rewarding. It’s woven into the fabric of the way we do business and our mission. It’s not a marketing strategy; it’s critically important to Aveda and to our culture.”

Yawanawa—Building Capacity in the Supply Chain

Our relationship with the Yawanawa goes back to 1992, when Aveda’s founder, Horst Rechelbacher met Biraci “Bira” Brasil, the chief of the Yawanawa tribe, at the 1992 Earth Summit in Rio de Janeiro. Historically a nomadic tribe, the Yawanawa evolved into an agrarian community. With Aveda’s support, they began growing uruku (Bixa orellana), which is the source of urukum, better known as annatto, an orange-red pigment derived from the seeds of the plant, which is widely used in food, cosmetics and other products as a colorant and flavoring.

The Yawanawa had traditionally used wild-harvested uruku to paint their bodies and faces for ceremonial purposes. The new trading relationship required them to learn how to cultivate uruku in village gardens, and as they became successful they were able to add a variety of subsistence food crops to their gardens. However, the Yawanawa had difficulties getting the dried seeds into the supply chain at a consistent quality and as a result were only able to provide an uncertain amount of urukum.  John Frankenfield, Director of Indigenous Raw Materials, Organics, and Essential Oils commented on the recent developments that allowed them to attain the consistent quality required by Aveda:

John: “Our relationship with the Yawanawa has long been an example of how we use our resources to achieve both commercial and non-commercial goals. Aveda has supported the Yawanawa with grants to help them maintain their traditional culture and to establish a means for a self-sustaining economy. We have also been an indirect customer for uruku seeds, which are processed to get two uruku colorants that we use in several products. After becoming aware of the quality problems, we asked one of our key suppliers, Beraca, to see if they could help the tribe improve the quality of the uruku seed they deliver so that Aveda could consistently use it.”

“Working with Beraca and a sustainable agriculture consultant who had previous experience in the Yawanawa community, we found that the biggest sources of the quality problems were the storage of the seeds and long shipping times. Partly because of the conditions in the village and partly due to difficult transportation logistics, the seeds ended up sitting in storage and being in transit long enough to end up damaged in the tropical climate. Based on these insights, we were able to help them take action to solve these problems in part with a solar dryer that could reduce the water content of the seeds to a consistent level and a simple vacuum bag technology that protected the dried seeds from the insects and the humidity. The biggest factor was that they figured out how to shorten the transportation logistics to minimize damage while in transit.”

“Beraca is now been able to provide uruku based ingredients with 100% of the seeds again coming from the Yawanawa. While the income earned through selling uruku seeds has always been a relatively minor aspect of our long partnership, we are very pleased that we can maintain a trading relationship, which is symbolically very important to the Yawanawa. ”