May 1, 2006
Drinking For A Cause
By Lori Dahm
One of the distinct aspects of Ethos Water Co. is that the cause behind the company actually mirrors the product being sold. Co-founders Jonathan Greenblatt and Peter Thum formed Ethos Water Co., Santa Monica, Calif., in 2003 with the vision of raising awareness and generating funds to bring safe, sanitized water to children in developing countries.
“More than one billion people, nearly 20 percent of the world’s population, lack access to safe drinking water,” says Greenblatt, who also served as vice president of consumer products at Starbucks, but announced he was leaving the coffee company this month. “The crisis spans across all developing countries and is concentrated in Sub-Saharan Africa and Asia. By purchasing Ethos Water, customers can be a part of a unique opportunity to make a difference in the lives of children and communities who need access to clean water.”
The other notable aspect of Ethos Water is that it was purchased by Starbucks in April of 2005, and this transaction generated a lot of media attention and buzz because of what it represented for both entities. For Ethos Water, the purchase opened access to all Starbucks’ company-owned franchises, the Starbucks distribution network and the financial support of a mammoth company like Starbucks. For Starbucks, the opportunity to support a cause such as safe water for developing countries aligns with the company’s objective to help the world’s impoverished populations.
“It was exciting for us to expand Ethos through Starbucks Coffee Co. after our acquisition in April 2005,” says Thum, also a vice president for Starbucks Coffee Co. “Starbucks is a company with a long history of integrating a social conscience into all aspects of its business. Starbucks is not only selling Ethos in its stores, but the company has increased Ethos’ investment capability significantly and made an extraordinary commitment to the cause of helping children around the world get clean water.”
Birth of a noble notion
Clean and safe water is a necessity that most Americans take for granted. But in many other parts of the world, particularly in poverty-stricken areas of Asia and Africa, clean water is unavailable and the death and disease that results from an absence of sanitized water is overwhelming.
The Ethos Water vision came about while Thum was working on a consulting project in South Africa in 2000 and 2001. He was overwhelmed by the severity of the water crisis in South Africa, and came back to the United States inspired to start Ethos Water. His intent and vision was that the company’s profits would help support water projects in developing countries.
“Water is our most basic requirement for life. Seeing people who lacked clean water changed the way I thought about things,” Thum says. “I was motivated by both the desire to create a self-perpetuating platform that could help these people directly by financing, and helping to organize resources for clean water access.”
Thum asked Greenblatt to join forces with him; the two had become friends while completing their Master’s in Business Administration degrees in Chicago. Greenblatt’s personal interest in the Ethos Water goal was spurred by his work with the Clinton Administration, which involved developing economic policy focused on emerging markets in Asia and Latin America and economies-in-transition.
“I have met with families in remote villages and urban slums in countries such as Ethiopia and Honduras, and seen firsthand how their lives have been dramatically transformed by access to clean water,” Greenblatt says. “I joined forces with Peter in 2002 to start the business. I was truly excited about the opportunity to use business as a means to enable social change on a global scale by engaging consumers and empowering them to make a difference.”
Today, funds from the sale of Ethos Water are supporting water projects in Bangladesh, the Democratic Republic of Congo, Ethiopia, Honduras, India and Kenya.
For the cause
For every bottle of Ethos Water purchased, $0.05 goes toward the cause of safe water for children in developing countries. Starbucks has a goal of donating $10 million dollars over the next five years toward non-profit organizations that are helping to alleviate the world water crisis. In addition, at the time of the Ethos Water Co. purchase, Starbucks pledged to meet Ethos’ previously stated goal of donating $250,000 by the end of fiscal year 2005, and Starbucks also vowed to donate an incremental $1 million by the end of 2006.
“On a per-bottle basis, the $0.05 is about 2.5 times what we had originally projected we would be able to donate as an independent business,” Thum says.
The purchase by Starbucks generated a lot of buzz from official media circuits, but also in Internet dialogues and conversations among consumers interested in green causes and aware of the original Ethos vision. Concerns were that Starbucks wouldn’t uphold the vision of Ethos, or that Starbucks was actually making a significant profit from sales of Ethos Water. However, more money is already being funneled toward water projects in parts of Asia and Africa since the purchase.
Ethos Water generally costs about $1.80 per bottle in Starbucks stores, compared to an average of $1.75 for in-store competitor Crystal Geyser. For consumers looking to make a purchase that has a higher purpose, the choice to reach for a bottle of Ethos is simple.
“Starbucks always will donate $0.05 per bottle,” Greenblatt says. “This contribution per bottle combined with Starbucks’ extraordinary brand awareness, strong loyal customer base and broad market reach has accelerated our ability to realize Ethos’ vision on a massive scale. The relationship also has facilitated our ability to educate consumers about the world water crisis, leveraging the stores as a platform to raise awareness about the issue.” BI