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In 2011, Jose Manuel Moller along with university friends (Universidad Católica, Catholic
University in Santiago) moved to one of the poorest areas in Santiago (Santiago is industrial
and financial center of Chile and generates 45% of the country's GDP) to experience the
realities of these communities in order to understand how to help improve their
circumstances (Ashoka 2016). For over a year and half, he lived a very humble life and faced
the same problems as most of his neighbors: the budget was not sufficient to cover the
household’s basic daily needs. This realization led him and his business partner Salvador
Achondo to launched Algramo in 2013. The entrepreneurs have identified that there is a
large demand for the business enterprise that would deliver sustainable, high-quality
essential groceries such as rice, beans and sugar at an accessible price to the poorer areas of
Latin America (firstly – to the outskirts of Santiago in Chile) by selling exactly the same
products as supermarket chains in smaller quantities through the vending (dispensary)
machines. With resources from contest-based funds from Universidad Católica and through
the government sponsored innovation contest Desafío Clave 2012 (Key Challenge 2012), he
obtained the funds necessary to build the first operational machine. This business model
creates alternative, non-traditional way to ensure basic needs of people with less financial
and social in various local communities, socially excluded regions and countries in Latin
America. Currently, with 474 stores, 56,880 benefitting people and 113,760 kilos of reduced
waste, Algramo is indeed one of the best innovative businesses available in Chile now, with
plans to expand to Perú, México and Brazil (Bongat 2016).
How does Algramo value creation business model work? Algramo activities focus onvending
(dispensary) machines that work as normal dispenser, only instead of pouring money and
leaving treats, the machine will dispense rice, lentils, chickpeas, detergent, cooking oil and
other products of the basic basket into sustainable disposable plastic tubs. This reduces
their costs up to 40% by saving the distribution and packaging costs. The machine is simple
to use: place a reusable container on a ledge, insert coins, and wait for the product to
dispense. The first purchase is free for the consumer and includes a reusable container that
can be refilled in future purchases. This system encourages the use of returnable containers,
where buyers may return the empty container for recycling after use. This sustainable
business scheme allows reusing packaging and avoiding 2 kilos of waste per month per
family. Furthermore it also contributes to reducing the carbon footprint (see Figure 4).
Figure 4. Economic, environmental and social impact of Algramo business model (composed by authors).
When launching Algramo the entrepreneurs had to be creative to find an innovative ways to
reach poorer communities that are usually seen as dangerous for other companies and
sustain the relationships with them. Firstly, the Algramo connects with local grocers and
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