The Chufly Impact Thesis
Chufly Imports is an impact wine and spirits company. Our thesis is simple: wine and spirits can drive sustainable socioeconomic development.
Since we launched Chufly Imports (pronounced choo - FLY) a few years ago, we have been on a mission to prove our impact thesis in Bolivia, which is home to a centuries-old winemaking tradition that could catalyze an economic transformation in South America’s least-developed country. If successful, we believe our thesis could apply to dozens of other developing countries with rich vinicultural traditions.
I came to believe in Chufly’s impact thesis after more than a decade of experience in international affairs and economic development. My field work in Tanzania and Bolivia led me to understand the importance of market-oriented development initiatives — profitability more than charity was critical to sustained growth. My graduate studies taught me how commodity dependence could pose a risk to long-term development. And as a diplomat, I saw how well-intentioned development initiatives often fail to deliver lasting change.
Chufly got its start in Bolivia because of my personal connection to the country — my father is Bolivian — and because of the remarkable potential for wine and spirits to drive meaningful impact.
For centuries, Bolivia has suffered from commodity overdependence. First, the Spanish empire extracted vast amounts of silver during the colonial period, leaving behind little lasting industry, expertise, or value following Bolivian independence in 1825. Later, tin exports dominated the economy for nearly a century until global prices collapsed in 1980, leaving thousands of mining families destitute and, again, creating little shared economic value for most Bolivians.
Natural gas has been Bolivia’s top commodity export over the past two decades, making up more than 20 percent of the government’s income in 2013. Since then, Bolivia’s natural gas production has fallen by more than a quarter, as has the demand. Its main export partners — Brazil and Argentina — are developing their own gas resources. Like silver and tin before, natural gas’ reign as Bolivia’s top commodity will leave little socioeconomic value and high income inequality for future generations. And, with Bolivia eyeing the massive lithium reserves sitting atop its splendid salt flats, it seems this landlocked country will be destined to relive its commodity-dependence saga once again.
So, how can wine and spirits help Bolivia break from this commodity overdependence and the resulting development trap? There are three reasons: product differentiation, value creation, and cluster development.
First, in Bolivia’s case, the unrivaled high-elevation vineyards, high-quality product, centuries-old winemaking tradition, and potential to drive impact set its wine and spirits apart from competitors. Bolivian wine and singani, a native unaged grape brandy, are unique goods and serve a market niche. Its uniqueness will allow us to set our own reference price and escape the competition trap posed by other undifferentiated commodities. These demand-oriented qualities are crucial when evaluating a good’s ability to drive sustainable socioeconomic impact — if there’s no market, there’s no impact.
Second, wine and spirits allow local producers to capture more of the value added (measured as the share of the final consumer price) than typical commodities. The value chain does not stop with the hand-picked grape. The grapes are de-stemmed, pressed into juice, fermented into alcohol, made into wine, and distilled into singani. Dozens of Bolivian hands add value throughout the process before it is bottled and shipped to our warehouse in the United States. One study concluded 10 families are lifted from poverty for every 25 acres of grapevines planted for wine and singani in Bolivia. Chufly is committed to passing back a share of any additional value we generate in our market. That is to say, if we are able to garner a higher premium price for our wines and singani, we will voluntarily pay a correspondingly higher price on our next purchase of the same good. This value creation bolsters higher wages and fights income inequality by allowing Bolivians to share in the financial upside of their hard work.
Third, the wine and singani sector will boost cluster development — the ecosystem of industries and companies that spring up to support wine development. By encouraging the use of as many locally made inputs in our wines and singani, we are catalyzing this ecosystem. Industries as diverse as printers, graphic designers, bottle-makers, packaging firms, and tourism operators are poised to take advantage from the commercialization of Bolivian wine. Chufly regularly contracts with a family of Bolivian artisans, the Huallpas, to sew custom wine gift bags using traditional, vibrant Andean textiles. This concept, known as cluster development, also creates greater opportunities for upward social mobility. For example, while a young girl’s father might pick grapes, she might grow up to work in the bottle manufacturer that is expanding its facilities to accommodate rising wine and singani exports.
An important caveat: please do not confuse our impact model with “fair trade.” You can have fair trade quinoa or coffee, but that does not mean you are driving durable growth or upward mobility for the farmers and their communities. I am not knocking the importance of fair-trade initiatives. But the broader point remains that commodities alone, whether fair or not, are unlikely to drive transformative and lasting economic impact.
A good way to describe our impact thesis is by paraphrasing an old adage: we aren’t here to give a man a fish, nor are we here to teach a man how to fish. Instead, we aim to create the marketplace in which people can sell their fish. After all, you cannot pay for your children’s education, clean water, or housing with fish (or wine). So, we are establishing a market for impact wines and spirits, where winemakers and distillers from the developing world are able to differentiate and grow their value-added goods.
We are confident in our impact model because it addresses the fundamental flaw of so many failed development initiatives — Chufly is a market-oriented, sustainable business. We built our model around our customers’ tastes and preferences.
Perhaps most exciting of all, if our ambitious impact experiment in the high-elevation valleys of Bolivia is successful, then we can apply it to the dozens of other lesser-known, underdeveloped winemaking regions in the world.
Alright. Enough with the wonky economic jargon. Time to pick up a glass, pour with purpose, say salud!, and make a lasting impact on the world.