Should Fighting Hunger Be a Franchise Business?
Despite the occasional controversy, two social enterprises are using the Coca-Cola model to fight hunger in Africa.
A child in El Salvador holding a Plumpy’nut meal
The idea of a business franchise is more likely to conjure an image of a Happy Meal than a famine food ration, but what if the same system that makes McDonald’s globally omnipresent could do the same for food aid or poverty-fighting?
Consider Coca-Cola. The company delivers its lineup of soft drinks to the most remote villages in just about every country on earth. Its network is so effective that it's been tapped to carry anti-retroviral drugs to places aid agencies can't reach affordably. The company does it through franchises, finding local solutions with training, monitoring, and logistical support from the high-tech Coke HQ.
Now, two aid-focused companies are trying something similar—though on a much smaller scale—to get starving children the nutrients they need.
Acute malnutrition is the severe but temporary form of hunger that afflicts 20 million children younger than 5 each year, especially during famine, war, or crop failures. Aid agencies treat the condition with hospitalization or ready-to-eat therapeutic foods. Plumpy’nut, the most well known RUTF, is something of a wonder food. It's a nutrient fortified, peanut butter bar-like food packet that requires no water and no refrigeration and has a shelf life of two years. Groups like UNICEF buy the packs in bulk and distribute them to parents to build a starving kid back up again.
Because moms can easily administer the treatment themselves, Plumpy'nut can reach 100 times more children than comparably effective hospital treatments, according to Nutriset, the company that makes Plumpy’nut. And it's much cheaper: A two-month ration costs about $60, metaphorical as well as literal peanuts compared to the alternative: hospital care.
In the early 2000s, Nutriset was looking to expand production from their French plant to countries like like Mauritania and Niger. The company's general manager, Adeline Lescanne, says the market (the number of kids with acute malnutrition) wasn’t big enough to justify a local factory, but shipping is costly. Lescanne and the rest of her family, who own Nutriset, wanted an alternative. “We reviewed our model and got to something close to a franchise,” she says. “The idea was to transfer the same technology and get the same final product to a different part of the world where there was a need.” She wanted to find a local producer to set up Plumpy’nut production. That started in 2005.
Along the way, Nutriset took some serious heat for patenting Plumpy'nut. In 2010, two NGOs challenged the monopoly. Patenting life-saving innovations doesn't sit well with development experts in general, though controversy most often arises with drugs. Nutriset argued that the patents were necessary to make franchising work, which would create local jobs and more lasting sustainable impact. Plumpy’nut already reaches about 7 percent of children suffering from acute malnutrition, mostly through French production, which is about 2.2 million tons a year. After the patent controversy, production from franchises shot up to 900,000 tons in 2011 compared to just 1.1 million tons between 2005 and 2010 combined.
Though Nutriset prevents other companies in the developed world from shipping in Plumpy’nut or a copycat product, local producers can set up a franchise for a fee that amounts to a gift: 1 percent of sales must be donated to the French Institute of Research for Development, which co-owns these patents. In exchange, franchisees receive technical assistance and support, in the same way that the Coca-Cola corporation would assist its bottling plants and distributors. “What is important is to find a real entrepreneur who wants to feed children from their country,” Lescanne says. Often the winning candidate is someone “who already has a business who wants to give back to the country.”
Plumpy’nut’s new global franchising system, called PlumpyField, has 11 manufacturing partners operating in Burkina Faso, the Dominican Republic, Ethiopia, Haiti, India, Madagascar, Mozambique, Niger, Sudan, Tanzania, and Uganda. It could spread to anywhere with starving children and the right climate for growing peanuts.
Lescanne argues that using patents this way allows the company to protect local manufacturers as they get on their feet. It also allows the company, rather than aid agencies, to control how the life-saving food is made and administered—which almost certainly means higher prices in some local markets, at least in the short run. Some people think this kind of live-saving food aid should just be donated, not sold and certainly not patented.
As TOMS Shoes' buy-one-give-one model rose in prominence, aid worker have protested the idea of giving things away to the poor when there’s a way for those products to be produced locally. Why not do the same with food aid, Nutriset says?
But while that strategy can help with the acute and temporary hunger that Plumpy’nut is designed to fight, persistent hunger is a far more deadly scourge. Charles Slaughter, the founder and CEO of Living Goods, says that in Uganda 60 percent of the deaths of children under five years old are related to malnutrition. Families may only have access to one kind of grain and thus can't get a mix of nutrients.
That’s why Slaughter’s company deploys Avon lady-like battalions of door-to-door saleswomen, each of them their own business, pushing healthy living and anti-poverty products to places in Uganda where big companies fail to tread. By franchising out small sales ladies, Slaughter says Living Goods chips away at that issue.
“Consumers living on a dollar or two dollars a day are willing to pay for just a little bit more to buy grains and cooking oils and sugar that's fortified [with nutrients],” Slaughter says. That becomes a high-volume, high-profit, high-impact product, with its reach dependent on micro entrepreneurs working for their own franchises.
Living Goods' direct sale, Avon-style franchise is different beast than Nutriset’s, but the idea is similar: Local entrepreneurs and local resources can be tapped to create a broader distribution mechanism for lifesaving products. These aren’t the only companies or nonprofits trying the idea, but there's plenty of room for growth. It's not clear that patents or trademarking are needed to make these kinds of franchising models work, but some technology transfer and training are certainly required.
Nutriset says it will support local companies in distributing the product and devote the French company’s focus to research and development for new products, like RUTFs for annual or predictable shortage periods like before harvest, or for pregnant mothers.
A Nutriset product for treating diarrhea, ZinCfant, is also getting the franchise treatment now, with two partners so far. The PlumpyField network has created 343 jobs, about three times the number of French employees at Nutriset.