[case by case #14] Malongo: When CSR enables David to take on Goliath

Nestlé, JDE, Lavazza… The coffee market exemplifies a classic balance of power. A handful of international groups wield considerable influence in terms of branding, innovation, distribution and communication.

In contrast, Malongo operates in a different league. The French company generated €120 million in turnover in 2023, whilst the Italian group Lavazza, for example, recorded €3.1 billion in revenue. But the French challenger is seeking to carve out a different niche for itself, particularly by differentiating itself on the basis of sustainability (e.g. products, suppliers and innovations).

This situation raises a question that extends far beyond the coffee sector: how can a medium-sized company build a competitive advantage when it cannot rival the market leaders in terms of resources?

The answer may lie precisely in not seeking to imitate them. Our case study entitled “MALONGO: standing out through commitment” (1) can be compared with research in marketing and corporate social responsibility (CSR), and it highlights several lessons presented here.

Not all CSR policies lead to differentiation. The work of Dekhili, Merle and Ochs (2) on the strategic integration of CSR into marketing makes it possible, in particular, to distinguish between peripheral CSR and CSR that is deeply integrated into the business model.

In the first case, the company adds environmental or social initiatives to a business model that remains fundamentally unchanged. In the second, these issues directly influence product choices, suppliers, pricing, innovation, distribution and communication.

The Malongo case illustrates this second approach. Fair trade, long-term relationships with producers, the development of organic coffees, compostable and biodegradable pods made from natural fibres, and even the relocation of the production of certain machines back to France: these initiatives take place at various points along the value chain.

CSR becomes strategically significant when it ceases to be a collection of individual initiatives and instead becomes a coherent system.

Second lesson: being responsible is not enough to build a competitive advantage.

Porter and Kramer (3) have, in particular, demonstrated the value of linking social responsibility and strategy rather than treating CSR as a sphere separate from economic activity.

In Malongo’s case, responsibility serves to reinforce other aspects of the brand: coffee quality, expertise, authenticity, product origin, relationships with producers and local roots.

Kapferer’s identity prism (4) helps us to understand this coherence. A brand is not based on a single characteristic, but on a set of mutually reinforcing dimensions.

A commitment to responsibility therefore appears all the more credible and distinctive when it is consistent with the brand’s history, culture and personality.

The nature of management issues then changes. It is no longer a question of asking, ‘What CSR initiative could we launch?’, but rather: ‘Which commitments sufficiently reinforce our identity to make a lasting contribution to what sets us apart?’.

This line of thinking also leads us to revisit a central concept in marketing: value creation.

Traditionally, marketing seeks to offer superior value to the consumer whilst enabling the business to create economic value.

Sustainable marketing broadens this perspective. Bascou and Moutot (5) propose, in particular, thinking in terms of a triple bottom line: economic, social and environmental.

When applied to coffee, this framework fundamentally changes the analysis. The value of a cup of coffee no longer lies solely in its taste, price or convenience. It can also be assessed in terms of producers’ remuneration, agricultural practices, biodiversity, packaging and the externalities generated throughout the supply chain.

We are thus moving from a customer-value approach to a broader value approach. The company seeks to create value not only for the consumer and for itself, but also within a much wider ecosystem.

The stakeholder theory, developed in particular by Freeman and further developed by Mitchell, Agle and Wood (6), allows us to take this a step further.

Producers, suppliers, employees, distributors, NGOs, associations, local communities, public authorities and research institutions can all contribute to - or hinder - the company’s strategy.

From this perspective, the producer is no longer merely a supplier of raw materials: they potentially become a long-term partner. An NGO is no longer merely an external actor likely to criticise the company: it can contribute to the development or credibility of a project. Employees can become agents of change. Distributors can play a part in educating consumers.

CSR is thus changing the very concept of marketing: a brand’s performance also depends on its ability to build a coherent ecosystem of stakeholders around its value proposition.

This chain allows us to put forward a particularly interesting hypothesis for SMEs. A competitor can quite easily lower a price, launch a promotion or replicate certain product features.

It is much more difficult for them to instantly replicate several decades of relationships with producers, a corporate culture, expertise, a reputation or the trust built up with various stakeholders.

Competitive advantage therefore does not stem from a single CSR initiative. It results from the accumulation over time of tangible and, above all, intangible resources that reinforce one another.

This observation is particularly important for an SME. The aim is no longer necessarily to have more resources than multinationals, but to develop different, coherent resources that are difficult to replicate. Quantitative weakness can then, under certain conditions, be offset by qualitative distinctiveness.

But the stronger the promise, the greater the risk. The more a company bases its differentiation on its commitments, the more demanding stakeholders become regarding consistency between words and actions.

A contradiction that might go relatively unnoticed for a conventional brand can prove particularly damaging for a brand that has built its identity on responsibility.

Research into responsible communication highlights the importance of evidence, transparency and authenticity in this regard. Labels, certifications, traceability and verifiable information are therefore not merely marketing tools. They help to substantiate the promise.

Finally, there remains one crucial question. An SME that succeeds thanks to its uniqueness will naturally seek to expand: greater distribution, brand awareness, more customers and, eventually, international markets. But growth can undermine the very characteristics that have built its competitive advantage.

How can it maintain close relationships with producers as volumes increase? How can it expand its distribution network without diluting the brand’s distinctiveness? How can it ensure traceability as the value chain becomes more complex? How can it reach more consumers without diluting its market positioning?

Perhaps the real challenge lies here: David does not necessarily have to seek to become Goliath. He must learn to grow whilst remaining David.

The Malongo case thus leads to a conclusion that clearly extends beyond the coffee industry.

When faced with competitors with considerably greater resources, CSR does not automatically constitute a competitive advantage. It can become one under three conditions: it must be integrated into the business model, be consistent with the company’s identity, and create tangible value for stakeholders. Under these conditions, corporate social and environmental responsibility ceases to be merely a response to society’s expectations. It becomes a marketing strategy.