Innovation

The innovation at Varraco Inc. emerged through their commitment to reviving Kapeng Barako in the Philippines healthily and sustainably. "Philippine Liberica is known locally as Barako/Baraco, a coffee bean that produces a distinctively robust and powerful cup. The bigger cherries and beans are a staple in the Philippine coffee scene, primarily grown in the provinces of Batangas and Cavite" (Philippine Coffee, n.d.). They focus on empowering farmers by providing them with the tools and knowledge needed for safe and quality farming practices. Mr Asilo expressed, "We have a unique strategy because we are a unique social enterprise that not only sells coffee but we are also focusing on improving the production of coffee." Through "micro weather stations," Varraco Inc. supplies farmers with accurate data on soil quality, temperature, and rainfall, enabling them to improve their crop yields and adapt to climate changes effectively. This innovative approach not only enhances the quality of Barako coffee but also ensures that farmers have a sustainable livelihood. Through these efforts, Varraco combines technology and social responsibility to bring back a beloved local product while supporting the agricultural community.

Composed of the production team, processing and operations team, and store team, along with BIMP EAGA, the Global Green Institute of Korea (GGI) of Korea, University of the Philippines - Los Baños, and more, Varacco maximises its resources and impact to the world one coffee cup at a time. By providing coffee to consumers healthily and thoughtfully, Varacco is fulfilling its motto. As mentioned by Mr Asilo, "Our motto is We make Happy Happen, and our vision is We see a smiling and colourful world, giving happiness in every home and every soul." Therefore, it empowers local farmers and gives them a platform to highlight local Filipino products to a broader audience.

In the interview, Varraco Inc. emphasised how their innovative approach has profoundly impacted local farmers. One quote highlighted the transformation in farmer confidence, attributing it to empowerment through advanced technology. This empowerment has allowed farms to double in size and honed farmers' skills, enhancing their agricultural practices. As a result, there has been a significant increase in farmers' incomes, reflecting the tangible economic benefits of Varraco's initiatives. Moreover, the quote underscored the broader social significance of their work, viewing coffee not just as a beverage but as a catalyst for social connection, environmental stewardship, and sustainable development goals. This holistic perspective aligns with Varraco's mission to improve livelihoods and enhance agricultural productivity while fostering a more interconnected and sustainable community.

Inspiration

Varacco Inc., a social enterprise founded by Mr. Aries Asilo and his team, emerged from their previous experience working with farmers through their non-governmental organisation called MinndMap. Through MindMap, they recognised the need to provide farmers with business development services to help them create project proposals, write business plans, compute expenses and income, and more. “Nakita namin noon na kailangan naming bigyan ng business development services ang mga farmers.” While working with farmers, they also noticed the abundance of wasted coffee rotting in the backyards of Batangas.

The farmers expressed that their primary need was not loans but improved roads connecting them to the markets from the mountains. “Sabi ng mga farmers, ‘hindi namin kailangan mangutang sa bangko, ang kailangan namin ay kalsada’.” To resolve this issue, the company acquired a $2 million loan from the World Bank to construct the "Farm to Market Road," located in Barangays Olo-Olo, Mabillog na Bundok, and Nagtaluntong, which ultimately uplifted 1,784 households from the community out of poverty.

Since its inception in 2019, Varacco's business model has evolved through four phases. Phase 1 focused on product development, while Phase 2, which occurred during the peak of the COVID-19 pandemic, centred on digitalisation. Phase 3 involved the acquisition of a physical store, and Phase 4 introduced the "Internet of Things" innovation to monitor crops remotely during the lockdown.

Overall impact

Varacco's micro weather stations have significantly impacted the business, society, and environment, furthering the company's vision and mission through the collected data on soil quality, temperature, rainfall levels, etc. Varacco gains insights into the optimal growing conditions for their crops. This information can be used to adjust irrigation practices, fertilisation schedules, and planting times, ultimately leading to improved crop yields. Furthermore, the business benefits from the micro weather stations by identifying ideal crop-growing conditions that translate to higher-quality products more attractive to customers. The data from micro weather stations helps farmers reduce waste from inefficiencies like overwatering and optimising their operations.

Varacco's technological innovation has also significantly impacted society. Farmers gain confidence and empowerment through the micro weather stations as they are equipped with the knowledge to make better farming decisions. This can lead to more sustainable farming practices that reduce reliance on chemicals and protect the environment. Moreover, as mentioned earlier, better data-driven practices allow Filipino coffee farmers to produce higher-quality coffee beans. This benefits society by elevating the reputation of Philippine coffee in the global market and increasing the availability of high-quality coffee for domestic consumption.

The company's innovation has multiple environmental impacts. Micro-weather data enables precision agriculture, reducing fertiliser and pesticide use and environmental pollution from runoff. Furthermore, farmers can use soil moisture and temperature data to create precise irrigation plans, saving water, especially in drought-prone areas. Varacco's data-driven approach also promotes soil health practices such as crop rotation and cover cropping, leading to healthier soil that acts as a carbon sink to mitigate climate change by sequestering atmospheric carbon dioxide.

"So one significant impact we have, as a person, socially, is the confidence. Economically, they increased their income during and after we intervened. And pangatlo, gumanda ang ani nila, kasi alam na nila ang gagawin.” - Mr. Aries Asilo

Overall, Varacco has substantially affected its business operations, society, and the environment. However, when asked what the most significant and fulfilling impact of their innovation was, owner Mr. Aries Asilo found great value in being able to help Filipino farmers. He emphasised that through the micro weather stations, these farmers who grew up with limited access to education are empowered and confident to make the right farming decisions. Not only is the innovation impacting their livelihood, but it is also affecting the farmers' self-esteem and perception. These initiatives inspire and allow Varacco to continue its business operations.

Business benefit

Varraco Inc.'s innovative approach using Internet of Things (IoT) technology, like micro-weather stations to collect environmental data and provide data-driven insights to coffee farmers, allows them to achieve their organisational goal of driving value for their stakeholders. "You can judge us not on the number of cups we sell or the number of brands we have, but on the number of advocacies and initiatives we do." Varraco Inc. looks beyond profits by providing their coffee farmer suppliers with the resources and support they need to be productive and efficient in their production processes. In return, this enables the business to explore new opportunities, such as working with large retailers and malls to gain a competitive advantage in the market.

The business can thrive and compete globally by optimising profits for the community while maximising stakeholder impact. Varraco's CEO quoted John Kennedy, saying, "Ask not what your country can do for you; ask what you can do for your country." This drives their commitment to creating a long-term impact on their stakeholders in a socially and environmentally responsible manner rather than simply for profit.

Social and environmental benefit

“We see coffee as more than just a drink. It is socially connected to society, the environment, and the SDGs.” This powerful statement from Mr. Aries Asilo, owner of Varacco Inc., encapsulates the brand’s commitment to positively impacting beyond just serving a great cup of coffee. Varacco’s innovative business model and technological advancements significantly benefit society and the environment, especially with its ambitious yet thorough sustainability roadmap demonstrating a holistic approach to addressing the coffee industry's critical environmental and societal challenges. The business’ five-pronged strategy tackles pressing issues such as, but not limited to, water consumption, sustainable sourcing, carbon emissions, farmer income, and plastic waste. By setting concrete goals like reducing water usage to 100 litres per cup by 205 and increasing sustainably sourced coffee to 50%, Varacco is moving toward a more environmentally responsible coffee production process.

Moreover, Varacco’s dedication to enhancing farmers’ incomes by 15% by 2025 addresses the crucial social issue of poverty among coffee farmers in the Philippines. This goal, together with their aim to minimise single-use plastic waste by 50% by the end of 2034, demonstrates Varacco’s deep understanding of the relationship between environmental sustainability and social responsibility. As such, Varacco is setting a commendable example of how coffee brands worldwide can contribute to a more sustainable and equitable future for all stakeholders in the coffee supply chain.

Interview

Mr. Ariestelo Asilo, Founder and CEO

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