While the subscription model is still experimental, it is a great way for new businesses to look at finance, and that, having been involved in supporting many such operations, he can’t see a downside to the model. When new businesses are starting, he said, they either put their hands in their pockets, as in they risk their own capital, or they go cap in hand to a local bank. This model means you tie your customers in. He told me that the approach has also been used by beekeepers, cheesemakers, and is being looked at in relation to woodlands as well.
Excerpted from a report by Rob Hopskins on how the Community Supported Agriculture model can be used in other sectors :
1. Bakeries: the Handmade Bakery in Slaithwaite
“It is a fascinating example of applying the concept of Community Supported Agriculture to a different enterprise. Dan and Johanna started small, doing their first baking in their oven at home. They began building a base of subscribers, who paid for two loaves of bread a week, which were collected from a local pub. They observed that most bakers get up at 3am to bake, something, with a small child, they were understandably keen not to do. They also observed that most people make toast with bread in the morning, which can be done with staler bread, and the time you actually want fresh bread is at lunchtime.
They wanted to expand the business, but no premises and no big oven. Then, ingeniously, they approached a local pizzeria, whose oven was only used during the evening, and came to an arrangement to use their oven in the mornings. For two days a week they baked bread for their subscribers, and every Saturday morning the pizzeria became an impromptu bakery where people could drop in.
Then a grocers shop in Slaithwaite was in danger of closure, and Transition Slaithwaite and others took the shop over as a Customer Co-op, and so after 6 months, the Handmade Bakery left the pizzeria and took over its own premises in the back of the shop. It is an ideal partnership, supporting both businesses. They are now baking 1200 loaves a week, most of which are sold within 7 miles of the bakery, and employ 9 part-time staff. 30% of what they sell is sold through the shop, the rest through other outlets and direct to subscribers. The benefit to subscribers is that they get a discount on their bread, they are able to collect it whenever is convenient for them, they know they won’t turn up to buy bread and find it has sold out, and they are emailed options for what they would like baked the following week.
Dan told me that for him, the CSA/subscription based approach is best at the earlier stage of the business. When they started, 100% of their business came from subscribers, now it is more like 10%. The advantages, he told me, are that you build instant customer loyalty and create many champions in the community, and it takes a lot of the risk out of starting a new business. Amazingly, many of the initial subscribers signed up without even tasting the bread!
When I spoke to Dan, he told me that the business has grown so well, that he is now planning on using the subscription model a second time, as a way of financing the business’s move to larger premises. The Handmade Bakery also runs courses in breadmaking and how to start your own bakery, which have become wildly popular. So, in order to have a new larger space for baking, training, and for community events, they need to raise £20,000. The idea is to invite investment as 3 year rolling loans offering 7% interest, but with the interest paid in bread. This, for the business, is a very attractive rate to borrow money at.”
2. Breweries: Topsham Ales
“The Community Supported Agriculture model, of communities buying shares in new local food ventures, can also be used for projects other than farms. One example is in the establishment of local breweries. Setting up a microbrewery can be an expensive businesses, so the story of Topsham Ales in Devon is very useful here. Transition Topsham held a few meetings, often in their local pub, which had been voted one of the ‘Top 5 Real Pubs’ in England. Their engagement efforts included reviving the Wassail tradition which hadn’t taken place in the town since 1936, and holding an Apple day and planting a new community orchard (sponsored by Bovril, as odd a matching of funder and recipient as I have yet come across in any Transition initiatives!). Then, at a meeting, the idea emerged of creating a community brewery as a project that brought together all the strands the group was interested in: localisation, community ownership and social enterprise. The fact that one member already brewed beer on a small scale helped. They saw a brewery as a great tool for deep engagement across the community, as a passion shared by most members of the community, something attractive to both sexes, something tangible and a great way to demonstrate Transition in action.
The idea was discussed at one of the local pubs and met with a very positive response, so a meeting was held where a wide range of skills were discovered among those who attended, including someone who knew someone who was trying to sell microbrewing equipment at half price. This offer, and the deadline attached to it, focused the mind of the group, and it became, all of a sudden, a real project. The group began meeting more regularly, and identified a potential site for the brewery at the back of Globe Hotel.
The group contained people with many useful skills, a solicitor, someone with experience of planning, and someone with lots of experience of setting up co-ops. The Topsham Ales Co-operative was then set up, its first committee was voted into place, a 3 year business plan was created which was circulated around everyone, and then the issue of membership was addressed. The idea was that the project needed to raise £35,000 in order to get the business going, and would invite members who would each invest a minimum of £500, in return for which they would get one vote and an annual dividend (to be agreed by the members). There was also an opportunity for people to become ‘Friends of Topsham Ales’ for a small fee, in return for which they receive regular updates on the project’s progress.
Within 2 months, and with very little marketing other that word-of-mouth, all the £37,000 of shares were sold to 56 members, and there was a waiting list of people wanting shares. Much of the work done to get the brewery established was done by volunteers, but some professional work was paid for with shares.
The building work was done on the brewery space, the equipment was purchased, the barrels were purchased and the first attempts at brewing were undertaken. At the time of writing, the brewery is still refining its brewing, ready for a launch in February 2011. It plans to sell through 3 Topsham pubs, and a couple in Exeter, as well as, in time, producing bottled beers. It will produce 3 main beers and some one-offs, and is getting ‘Topsham Ales’ pint glasses produced. They are keen that the beer be a celebration of Topsham, what they term “drinking the view”, and have done a lot of research into local history when designing the names of the beers.
Topsham Ales sees itself as the opportunity to model localisation in practice. It gives its spent yeast to a local baker, its spent hops are fed to local pigs, it will do its local deliveries by bicycle and trailer and it is sourcing an increasing amount of its hops from a grower in East Devon.”