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Algramo

A packaging & distribution system for BoP communities to reduce the cost of life's essentials, eliminate packaging waste & build community.

Photo of Brian Bauer of Algramo

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Explain your project idea (2,000 characters)

LATAM's BoP spends 27.5% of their income to feed their families-IDB2015. This is due to the BoP having low & volatile incomes, forcing them to buy in small portions (increasing cost on a per unit basis), from family owned neighbourhood stores (FONS)–expensive due to poor distribution & excessive middlemen. The high costs of this consumption, not only entrenches families in poverty, but also has excessive packaging that often leaks into the environment. Algramo has been refining a bottom of the pyramid (BoP) business model that empowers FONS, so they can sell life's essentials to marginalized low-income families for about 30% less, while virtually eliminating packaging waste. We do this with vending machines/reusable packaging & a simple exchange system of trading an empty container for a new container filled with product. Algramo's distribution now reaches 1,700+ stores & over 270k customers. We now have a LATAM FMCG co-branding their products with Algramo. We are in early discussions with values aligned FMCG with global distribution who are interested in helping Algramo launch its distribution system into global markets. If funded, we will export Algramo to 1–3 coastal cities & seed our awareness with likely the world's 1st vehicle that distributes food & cleaning products at local farmers markets (ferias), into reusable containers. In Chile, over 80% of all households (>% for lower incomes), buy products in ferias, on a weekly basis. With 1 customized vehicle to dispense our products in ferias, per city, we can potentially reach ~1,400 people/day/7 days a week=>500k contacts per year. This mobile, feria, distribution system offers an effective way to promote awareness about responsible consumerism, recycling & ocean plastic. The economic savings & connivence will solidify our customer base. We see this trans-Chilean expansion as a critical step in validating our distribution system and business model to enable global expansion with a FMCG.

Who are the beneficiaries? (1,000 characters)

Algramo's social mission is to reduce the cost of life's essentials for BoP families, with a sustainable distribution system. Chile has 9.7 million BoP people. In Santiago, our network of 1,700 FONS reaches ~272k people. The 1,700 FONS+68k families we serve = main beneficiaries. Our FONS are owned by >70% women, we are proud to benefit women entrepreneurs. We are optimizing our technology+business model in Chile, so we can soon expand internationally. We benefit our customers, FONS, by selling them quality healthy products & providing them with free technology like our vending machines. Our reusable packaging & short supply chain save BoP families ~30% on life's essentials. Our reusable packaging virtually eliminates packaging waste, potentially averting ~2kg of plastic waste/family/month. This equals 136 metric tons(Mt)/month, @4,000kgCO2/Mt (aprox CO2 savings of not producing new plastic) we can avert 544,000Mt of CO2/month in just Santiago=huge CO2 emissions reduction for humanity.

How is your idea unique? (1,000 characters)

Algramo's main strength is the strong social licence & support from our network of 1,700 stores. Algramo/its founder have won dozens of prestigious international awards for their socio-enviro benefits, including: Ashoka & TED Fellows, World Economic Global Shaper Designation, Expo 2020 Dubai Global Innovators, Ellen MacArthur Foundation & United Nations awards. A key distinction we have is our human centred business model customized to supporting the FONS that serve BoP families. With this we create major economic savings (~30%), while providing major environmental benefits. All of this helps enrich the social fabric of highly marginalized communities and enables us to address market failures that result in excessive prices for the most impoverished families, with a distribution systems that virtually eliminates the flood of packaging waste that typically inundates emerging economies. This has attracted FMCG brands to partner with Algramo to help us spread our innovation and impact.

Idea Proposal Stage (choose one)

  • Full Scale Roll Out: I have already tested and scaled this idea significantly with the intended user base.

Tell us more about your organization/company (1 sentence and website URL)

We erode a market failure that inflates the cost of life's essentials for low-income families, we do this with a distribution and packaging system that virtually eliminates packaging waste-we aim to partner with global brands to export our technology, packaging and distribution into global markets so we can amplify the impact we create. Our website: https://www.algramo.com

Expertise in sector

  • 3-5 years

Organization Filing Status

  • Yes, we are a registered social enterprise.

In 3-4 sentences, tell us the inspiration or story that encouraged you to start this project.

Algramo's Founder had moved out of his upper income family home into a low-income area to live with his friends while completing his economics degree. They bought food like millions of LATAM families, daily, in small amounts from local family owned stores. He realized he was paying ~30% more for this food, due to buying in small portions & the food having excessive middlemen and packaging-he termed this the "poverty tax". Algramo exists to be a market-based solution to reduce the poverty tax.

Please explain how your selected topic areas are influenced, in the local context of your project (1,000 characters).

PROSPERITY-we help 1,700 stores, 70%+ women led, be more competitive so they can better serve their marginalized customers. Lower prices mean families can increase disposable incomes & not be forced to spend 27.5% of incomes just to eat. This leads to PEACE-If families are stuck in poverty traps, poverty fosters crime & violence-which are too common. Also, BoP neighbourhoods often lack any significant place to gather–for people to connect. Algramo helps build the social fabric of marginalized communities via FONS. PLANET-our innovative packaging & distribution system using reusable containers, reaches 1,700 FONS, it has potential to avert 136 tons of packaging waste/month! To our knowledge, no other company has this scale/impact with reusable packaging. This has attracted a regional FMCG to co-brand products with Algramo-global FMCG also interested in Algramo. We support local smallholder bean farmers. By lowering cost of beans we allow vegetarian food to replace low quality meat.

Who will work alongside your organization in the project idea? (1,000 characters)

We have worked with Jpal (povertyactionlab.org) in the past. If funded we would try & have them assess impact. We want to work with TriCiclos (www.triciclos.net/en/) to develop our vending machine technology & leverage their expertise in circular economy engineering. We will work with Talking Stickers (also in BB Challenge) by connecting them to FONS in areas with high densities of Haitians so they can promote their app. Now working with Deloitte (D2i Fellowship) = US $600k+ in pro bono consulting to help us scale & optimize supply chain & business plan. LATAM based FMCG who will be selling cobranded products in Q3 2018-soon FMCG will be public. Also, we recently spoke with global FMCGs interested in working with Algramo to support our efforts to expand our impact beyond Chile. We are also interested in working with other social enterprises who share our values and are keen to be change makers and help make the world a better place. If this is you, please contact us.

Please share some of the top strengths identified in the community which your project will serve (500 characters)

Chileans are proud to support Chilean innovation. Algramo has had 350+ media features: Forbes, Fast Company, CNN, most Chilean TV stations/newspapers, Ashoka, Nestle & UNEP. This fosters support & eases entering into new markets by the 'the people' embracing us. We have had discussions with global FMCGs who are keen to work with us, as they see Algramo as a made in global south solution, to critical challenges facing the global south-we created this with a scalable BoP centred business plan.

Geographic Focus

2013-18-Santiago, reach 2,000 stores 2018-National expansion 2019-20-Start expansion beyond Chile

How many months are required for the project idea? (500 characters)

This depends on funding. Depending on potential award allocation, 9 months to 2.5 years. Approximately: 100k would be 9 months; 200k 1.5 years; 500k 2.5 years.

Did you submit this idea to our 2017 BridgeBuilder Challenge? (Y/N)

  • No
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Team (2)

Brian's profile
Brian's profile
Brian Bauer

Role added on team:

"I work with both Talking Stickers (TS) and Algramo. Initially, I had not thought that there could be synergies between the two social enterprises, however, I realized that Algramo's 1,700 stores spread across Santiago's BoP can offer contact points for TS to reach areas with high densities of Haitian immigrants. In turn, TS can provide modest income generation opportunity to storekeepers who promote TS. I talked with both CEOs and they both really like the idea of collaborating."

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Attachments (2)

National Geographic 2018.png

Packaging accounts for almost half of all plastic waste & much of this waste is used for minutes or hours-compared to other plastics that are used for years, even decades. UNEP notes that plastic use currently uses ~8% of world's oil use & costs US $80 billion in negative externalities. Without change, by 2050, plastic will use 20% of world's oil. For our climate & oceans, plastic use must change-Algramo's distribution system focused on reusable packaging is the type of solution we need.

20 comments

Join the conversation:

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Photo of Jaci Braga
Team

Buenos tardes Brian,
Su proyecto es muy interesante! Seria excelente si Algramo puede usar un tipo de "plástico" que realmente es orgánico y biológico, como um plástico natural de yucca o algas que también puede ser reusable e que nunca va adicionar mas plástico en el medio ambiente. Buenas suerte!
https://challenges.openideo.com/challenge/bridgebuilder2/ideas/etiv-environmental-justice-league

Photo of Brian Bauer of Algramo
Team

Jaci Braga Muchas gracias por su comentarios!
Algramo shares your views and we are dedicated to optimizing the sustainability of our plastic use. But for now, we have not been able to find bioplastics that meet our needs for an acceptable price to our BoP customer base. There are some really exciting bioplastics that are being developed and are on their way to being on the market at scale. Two really exciting alternative plastic companies I know about are Full Cycle Bioplastics (feedstock is very broad compost) and Mango Materials (feedstock is methane). For now, I think our best option is reusable containers that are designed for hypo-durability-so they are reused as many times as possible-but are still recyclable at the end of the containers service life. If we found a bioplastic with great longevity for a low cost, we would definitely be interested in doing an LCA type analysis of the material to best understand the materials environmental costs and benefits.
Algramo has some exciting news the United Nations has selected our CEO as a regional finalist for Latin America for Young Earth Champion Award...if you like Algramo's work, please vote for José Manuel for the UN award, you just need an email and your name. If your willing, here is the link: https://web.unep.org/youngchampions/2018/bio/latin-america-caribbean

Photo of Jaci Braga
Team

Dear Brian,
Thank you for your thoughtful response. I suppose moving into some of the bioplastics is tough to start, but will hopefully become easier as they become more affordable. Good luck and best wishes!

Jaci

Photo of Magui Trucco
Team

Great project!

Photo of Brian Bauer of Algramo
Team

Magdalena Trucco Thanks a lot! Your project also looks really interesting and impactful!
I have some exciting news to share about Algramo...our CEO is a Latin American regional finalist for a UN Young Earth Champion Award...It would be greatly appreciated if you voted for José Manuel-muchas gracias! Best of luck with the challenge! Best, Brian
https://web.unep.org/youngchampions/2018/bio/latin-america-caribbean

Photo of Magui Trucco
Team

Done! Congratulations to the entire ALGRAMO team! good luck!

Photo of Brian Bauer of Algramo
Team

Thanks a lot Magdalena, really appreciated!

Photo of Socialab Colombia
Team

We love your idea!

Good luck :)

Photo of Brian Bauer of Algramo
Team

Muchas gracias! Me encanta el trabajo de Socialab!
Por favor considere votar por Algramo por este Premio de las Naciones Unidas
https://web.unep.org/youngchampions/2018/bio/latin-america-caribbean

Muchas gracias y Best of luck in the challenge! Brian

Photo of abubakar Mbarak
Team

This is a very good initiative.
promoting awareness about responsible consumerism and recycling is the best way to go green.
keep it up

Photo of Brian Bauer
Team

abubakar Mbarak Thanks a lot for your kind words and support for our proposal.

Algramo agrees recycling is important. However, we prefer to first 'reuse' as many times as possible and at the very end of the packaging's life, then recycle it. Algramo has a small deposit on its reusable containers, about US $0.30. This small deposit is very strong motivation for our low–income consumers to reuse our packaging. When a container eventually no longer can be used, due to being broken, etc, we allow the customer to exchange the container for a new container. This old broken container then comes back to Algramo and we ensure the containers get recycled. Essentially, by putting a small deposit on the container, we create a bounty on the plastic used for our products and this virtually eliminates our packaging from polluting the environment. If other companies used plastic like Algramo does, there would be a lot less plastic waste in our oceans and communities and we would burn a lot less hydrocarbons producing plastic.

Best of luck to you in the challenge! Brian

Photo of abubakar Mbarak
Team

Basically you guys are raising the value of the plastic containers so that customers rather reuse that throw it away and get another one. i believe if all over the globe people adopted this we would beat plastic pollution.

Photo of Brian Bauer of Algramo
Team

Absolutely Abubakar that is the idea. Algramo firmly believes this and it is our mission to help low income families buy life's essentials for lower prices, by promoting this type of consumption. The really exciting thing is that some large global brands have started to take note of Algramo and how we are selling our products in reusable containers and they are interested in supporting our efforts. This type of product distribution is not possible for all types of products, but it is viable for a lot of day to day products that we commonly consume. If implemented on a large scale it would definitely greatly reduce plastic pollution. Best, Brian

Photo of Brian Bauer of Algramo
Team

Abubakar, I see you are from Kenya. There has been some really interesting ideas coming out of Kenya, like the mobile payment system M-Pesa. I believe technologies like M-Pesa can have a lot of value for social entrepreneurs.
I am curious if in Kenya, low-income families buy most of their food from small family owned neighbourhood stores, like occurs in Chile. Or do they buy most of their daily food from larger corporate grocery stores? As well, where you live are small family owned neighbourhood stores common or uncommon. Thanks a lot for addressing these questions and best of luck with the Bridge Builder Challenge! Brian

Photo of abubakar Mbarak
Team

Brian, Kenya being a developing country a large portion of the population live on spending less that a dollar a day. We have very few large corporate grocery stores but the numbers have been increasing rapidly lately but most people buy from family owned small stores since it is both convenient and cost effective.
our government recently banned the use of plastic polyethene bags so it has been hard adjusting from that and i believe if Kenya can implement Algramos idea we can also move towards prosperity regarding environmental well being. Maybe if you can elaborate more to me as to how you guys do it maybe i can be the ambassadors of spreading that message in my home country and help as achieve that.
you can reach me on my email : abubakarmbarak99@gmail.com

Photo of Brian Bauer of Algramo
Team

Hi Abubakar, Thanks for all your input and feedback! In Chile we are also implementing a plastic bag ban, I believe the first nation wide ban in Latin America. You say it has hard adjusting to the ban, I am curious what has been the hardest part? One challenge I see for myself is what do I put my garbage in? I live in an apartment and my garbage goes down a shoot, so having it contained is important.
A comment about Algramo's distribution. I had limited space to explain this, but Algramo has vending machine distribution, but we also have a much simpler system where the customer pays an extra 30 cents for the product the first time they buy our product, then after that, they bring back the packaging and pay 30 cents less for their product. The storekeeper holds the container and gives it back to us, we clean the container, refill it and then deliver the container/product back to the store-the deposit ensures the containers are reused and not garbage and the cost savings keeps the customer coming back to us. You could try the idea on a fairly small scale with a few local family owned stores, a few hundred reusable containers and a local farmer who can provide a bulk food that is commonly consumed-we sell rice, lentils, donkey beans and garbanzo beans. Hope that helps, best of luck with the challenge! Brian

Photo of abubakar Mbarak
Team

Hy Brian,
The hardest part about adjusting to the ban was mainly the cost of new form of packaging, plastic bags were relatively cheaper and had a proper penetration to all parts of the country. Now the new carrying bags are quite expensive since few rich merchants imported these recyclable bags in large amounts and are actually controlling the market prices, also they are not accessible to remote areas in the country, some commodities are hard to carry or package with the new bags like meat,fluids and food stuff leading to difficulty in adjusting by these industries. i hope that explains it well.
About Algramos distribution, i think i have a clear understanding of it now. it works like the cocacola glass bottles policy where when you go to buy a new bottle of soda you take back the old used one to exchange for the new one you receive and if you dont have one you have to pay a small fee for it.
i believe this can be implemented easily in my locality on a small scale and later grow its outreach, me and my team will discuss about it and begin working on it, Thank you for the vivid explanation.
i will keep you posted on our progress and how we will be moving from here and i hope you will be advising more on the same if we would need clarity anywhere.
Good luck on the challenge

Photo of Brian Bauer
Team

Hey Abubakar, Glad to hear you understand Algramo better and are interested in an Algramo like solution for Kenya! Definitely keep me updated and let me know if you have any questions or just comments you want to pass on. Good point on the Coke analogy, our exchange system is just like that. Best of luck with the Challenge! Brian

Photo of Sophie Lyman
Team

Brian, this sounds like a fantastic, ground-breaking initiative. "Reaching the last mile" is a challenge in all aspects of international development, and your solution will not only help isolated communities get the basic staples they need, but at a lower price, helping them to escape poverty. I wonder if "ferios" and other similar methods could also eventually deliver health and education products such as medications, books, or even clean cookstoves, at an affordable rate, perhaps made possible by increased communication and access to knowledge through fast-growing telecommunications networks, reaching even rural areas.

Photo of Brian Bauer of Algramo
Team

Sophie Lyman Thanks for your support for Algramo and your astute comments/observations. One thing I did not have space to address in the challenge is that Algramo is developing IoT connected vending machines which give us real time sales. This gives us the ability to only deliver product when the supply levels are at critical levels-which reduces the complexity of costly last mile distribution.
The mobile distribution that we are developing will be focused on Algramo's primary offerings, life's essentials (basic food & cleaning products) but we could definitely sell other high impact products as you suggest. Also, the nature of ferias are such that they provide a good opportunity to communicate and engage with people, making it easier to promote products/services with high impact.
In virtually all emerging economies, the lowest income segment (the BoP) spend huge percentages of their incomes just on food-typically 25 to 60%+ in areas with very acute poverty) so a very fundamental key to helping families out of poverty is lowering the cost of food, so they have increased disposable incomes that can be used to help them climb out of poverty-this being a key reason Algramo is dedicated to lowering the price of food in the BoP.
Anyhow, thanks for the interesting discussion and best of luck with the challenge! Brian