Sustainability, Growth in a Challenging MarketBy Cinthya Alaniz Salazar | Wed, 08/03/2022 - 10:00
Q: What differentiates Estado Natural from other companies offering natural foods and sustainable products in Mexico?
AG: Estado Natural was the first store of its kind in Mexico City. Its business model is premised on providing fresh, quality products and ingredients through a unique shopping experience at our online and physical stores. Since then, while some businesses have attempted to replicate our business model, we have steadily grown into a chain that will soon expand into neighboring states.
Our main market differentiator is our product catalog, which is unique and would be incredibly hard to replicate elsewhere. The average shopping cart of our customers showcases the business relationships we have built over time to provide the unrivaled selection we offer today. We have aimed to negotiate as closely and directly as possible with the best producers and suppliers, thereby reducing the final cost of the best ingredients and products in the market.
SK: We provide costumers with an extraordinary service during their shopping experience. We want them to feel at home, which is a sensation we attempt to replicate in all of our business decisions.
Q: What role has Estado Natural played in supporting small producers in Mexico throughout the COVID-19 pandemic?
SK: Small producers were strongly impacted by COVID-19. Many of them, like department stores, hotels and restaurants, lost many costumers following the mandated lockdowns. Estado Natural was lucky to continue operating and growing as our customer base expanded. The growing demand allowed us to augment the size and frequency of our orders, an important lifeline to suppliers who lost most if not all of their costumers . The prolonged shutdown and consumer-led lifestyle changes sustained the demand that our suppliers needed to survive and grow alongside Estado Natural.
This a complete turnaround from when Estado Natural was first founded and struggled to source and then maintain business ties with small suppliers. At first, we were forced to rely on large distributors but as our purchasing power grew, we were finally able to maintain and grow our business ties with small suppliers. Of our 350 products, 50 to 100 are produced by small or very small suppliers.
Q: How is the company making its products accessible to low-income individuals and families?
AG: This is a top-of-mind priority in the context of an economic reality that is hurting the purchasing power of individuals and families. It is undoubtedly our biggest challenge today because we need to balance prices so that they remain accessible but at the same time, as a company, we are also facing increasing costs across the board due to supply chain disruptions and the ongoing Russia-Ukraine war. We have attempted to balance these opposing forces by being cautiously selective about any price hikes, focusing on ingredients and products where we can afford to compete. We are not mindlessly passing price hikes onto our customers; we are strategically choosing products on a case-by-case basis.
Another strategy has involved changing our catalog, namely replacing our more expensive ingredients and products with cost-effective alternatives. However, we are not compromising on quality. We are communicating these changes with our customer base directly, offering them “guest products” as an alternative until supply and prices stabilize.
Q: What role does the company want to play in Mexico’s path to sustainability?
AG: Estado Natural runs many educational campaigns on social media, where we have a robust presence. We also provide incentives to encourage participation in green and sustainable efforts, such as extending a discount to customers that bring their own containers as a means of generating foot traffic while also raising awareness about this important cause.
SK: Additionally, we have an alliance with the Mexican organization Ecolana, a directory for depositories where people can recycle their waste. We have been working with them for over four years, choosing a different material to recycle and using our store locations as drop-off zones.
Q: What objectives does Estado Natural plan to tackle in 2022-2023?
AG: June was an important month for Estado Natural because it marked the first time we opened a store outside of Mexico City. With the inauguration of two stores in Puebla and one in Queretaro, Estado Natural has begun its national expansion. We plan to open two more this fiscal year. Estado Natural passed a significant milestone that not all startups reach: celebrating its 5th birthday, which we intend to honor by expanding our catalog.
Estado Natural, founded in 2017, is a natural foods and sustainable products chain with 20 branches in Mexico City and shipping capacity throughout the country.