Liquid Thinking

Black-owned businesses face greater challenges to come to market, and have suffered disproportionately during the pandemic economy. As restrictions ease, and the economy starts to bounce back…what next?

There’s no doubt that the tragic and brutal murder of George Floyd in May 2020 started a global movement against, and conversation surrounding the systematic racial inequality suffered by black people.

Alongside widescale protests surrounding police brutality, came greater social and corporate introspection concerning the economic and social structures that continue to support racial injustice.

In short, as consumers became more aware of the power of their purchasing choices in the wake of the Black Lives Matter (BLM) movement, black owned businesses were championed, not least through initiatives such as Black Pound Day. Numerous publications have also called-out black-owned businesses to support, including drink businesses. While a number of global drinks companies also pledged to do more to support black entrepreneurship.

Barriers to business

Yet the reality is, these businesses remain few and far between, aside from some notable examples such as Uncle Nearest Tennessee Whiskey, Ten to One Rum, and McBride Sisters Wine. Financial backing and credit is much harder to secure for non-white entrepreneurs, while access to top contacts, and the ability to secure notable listings is also much more difficult. According to the Cornerstone Report, in 2019 only 3% of founders in the UK who raised venture capital funding for their start-ups identified as black, 7% as Asian, and 3% as mixed heritage.

They have also faced greater hardship during the pandemic. US business information platform, Crunchbase, reports that in 2020 alone, 41% of black-owned businesses have been forced to permanently close their doors, compared to less than 20% of white-owned businesses.

Yet since last summer there have been a large number of new initiatives aimed at helping black business owners enter the drinks industry, from companies large and small.

New initiatives

In May 2021, Diageo US announced a new 10-year initiative to bring more diversity into the drinks industry. Pronghorn sees the company partner with spirits industry innovators Dia Simms and Erin Harris to create a new standalone business to address what is describes as a “lack of equitable representation among the black community in the spirits industry”.

According to Diageo, the black community represents 12% of US alcohol consumers, but is under-represented within the industry when it comes to employment and brand ownership. Pronghorn aims to drive long-lasting change by helping support a new generation of founders, executive leaders and entrepreneurs, “disrupting [the industry] from within”, and helping participants within the black community achieve the goal of generating US $2 billion in economic value in the US.

Increased representation

It has also pledged to increase representation of global leaders from diverse backgrounds to 45%, and enhance diversity and inclusion of previously excluded groups by 2030, as part of its Society 2030: Spirit of Progress plan.

In June 2021 drinks accelerator, Distill Ventures also launched an accelerator project. The Pre-Accelerator Programme is dedicated to supporting early-stage founders from underrepresented groups. It plans to invest US $5 million in drinks entrepreneurs over the next 12 months through the initiative, and will provide access to funding, help develop business plans, and for some, agree long term partnerships with itself and funding partner, Diageo. It says since 2015, just 2.4% of venture capital financing across all sectors in the US has gone to black and latinx founders according to the 2020 Crunchbase Diversity Spotlight Report.

And earlier this year, the Black Bourbon Society launched a non-profit, called Diversity Distilled, that will consult with large drinks companies on how they can drive diversity internally, on their executive teams, and across their supply chains.

US driven

However, it is clear that the US is currently taking the lead when it comes to addressing such disparity. While these global entities of course have operations in the UK and Western Europe, it is in the States, where systematic racism is perhaps most overt, that efforts are focused. But of course, the issue is universal. So why aren’t businesses and brands this side of the Atlantic doing more?

UK-based not-for-profit accelerator ADD Psalt is working to increase diversity in the retail sector, providing industry expertise and guidance to black-owned brands, helping to turn ideas into fully fledged businesses. Described as an industry-first, and backed by retailers including Tesco, Sainsbury’s, Waitrose and Ocado, alongside industry experts and in-house management teams, its 18-week process gives founders access to industry experts, mentoring, investor pitching, and feedback.

Supermarket chain Sainsbury’s has also become a vocal advocate of racial equality in business. Its pledge to improve representation within its business, and support black communities across the country has so far seen it become a member of the business support group, the Black British Network, publish a gender and ethnicity pay report, and most recently, donate £1 million to support black communities and social enterprises.

Future diversity

The result of these initiatives of course, will be felt further down the line. But with racial injustice still dominating headlines, consumer awareness of and engagement in addressing systematic injustices, and championing change is strong.

Will black-ownership continue to be a selling point and a key part of marketing for such brands? That remains a personal choice of brand owners themselves. Whereas it can certainly bring positive attention to a brand, some owners may wish to be known for their product first and foremost.  

However, the industry needs to remain engaged and dedicated to championing a new wave of entrepreneurs from a greater diversity of backgrounds, even if, or once the momentum surrounding BLM subsides. Efforts must be genuine, extending beyond being a good PR story – and beyond the shores of the US alone – and be aimed at supporting long term change.

Interested in finding out more about what this might mean for you and your business?

Please contact us at hello@thecabinetagency.com or 0207 101 3939