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    Karen Lynch

    Karen Lynch

    People — 2 January 2015

    Karen Lynch:
    After the City

    She transformed a loss-making water company – now Belu’s CEO Karen Lynch is using it to boost the philanthropic business sector

    Words: James Medd; Photography: Trent McMinn

    It’s an unusual ambition for a CEO, but Karen Lynch hopes to go out of business. ‘That would be lovely,’ she says. Belu, her company, produces bottled water with the aim of destroying, or at least disrupting, the market. ‘We mean it: if you can drink tap water, it’s better for the environment.’

    So far, so Russell Brand, but Lynch is a businesswoman not a comedian, and pragmatic. ‘You must work with the market to make it happen,’ she says. ‘Campaigning won’t make this market disappear – too many livelihoods are dependent on it.’ And it’s working very nicely. Lynch took over Belu in 2010 from a background in publishing and finance, and turned a failing philanthropic gesture into a social enterprise that this year turned over £4.7m and made a profit of £600,000. With this, it will easily surpass its minimum pledge of £100,000 per annum to WaterAid, the charity that receives all its post-reinvestment profits.

    Meeting Lynch, it’s apparent that energy is her greatest asset, but another might be timing. She left two industries at the right time – publishing in 2003, as digital threw it into disarray, and finance just before the 2008 crash. At magazine specialist EMAP, she rose from selling advertising to general manager of the Active sector (Practical Photography, Bird Watching, etc) in 14 years, leaving when her marriage to WHSmith’s head of magazines created a conflict of interest. An old colleague then lured her to Barclays to head up proposition development, tasked with shaping customers’ engagement with the bank’s products.

    The combination of experiences gave her the capacity to take on Belu. ‘Publishing made my heart sing, but I learnt most from finance,’ she says. ‘My years at Barclays were hard, but I definitely developed a sense of purpose. I couldn’t run Belu if I hadn’t worked in such a complex business.’

    Her move was inspired by a desire for what she calls ‘emotional reward’: ‘I didn’t know what I wanted to do but I knew I’d never find it unless I left Barclays.’ Her husband, then at Amazon, took a sabbatical and they sailed round the Caribbean. After a stint at Audi, she saw the advertisement for the role at Belu. She was shocked by what she found on arrival: ‘It had lost £1.9m, but there was no plan to do anything.’ Hired as marketing director, she wrote a bullish proposal for saving the company. It involved ripping things up and starting again. To her surprise, the board went for it, including the existing founder-CEO, who had to step down to make way for her.

    Her first move was to reduce margins by shifting the emphasis from consumer sales to wholesale, supplying hotels and restaurants. Belu also supplies businesses with water-coolers and in-house catering, and is sold in Sainsbury’s, where margins are lower but made up by the increase in consumer awareness. Recent innovations include a collaboration with Cobra Beer’s sales team to sell Belu into ethnic restaurants, and a glass bottle that’s 18 per cent lighter, saving 850,000kg of materials a year and allowing an extra pallet-load per lorry.

    Belu also sells this bottle to its competitors – a quirk of a company the sole purpose of which is to do the environmentally right thing. While this offers opportunities, it also means everything comes with an extra layer of compliance. Staying carbon-neutral is vital, so water is sourced from different springs – Sainsbury’s, for example, uses Iceni Waters in Cambridgeshire to be near the supermarket’s distribution point, and there are others in Powys and Shropshire. Expansion plans will involve not export but franchising. Rather than publishing annual reports, Belu issues an impact report that documents what it’s doing and why.

    The job does, however, fulfil Lynch’s needs, including shaping a new business sector. ‘When I joined Belu, no one talked about social enterprise,’ she says. Now she finds herself discussing it with government and trade organisations: ‘Along with Divine Chocolate and Jamie Oliver’s Fifteen, we’re one of the larger companies, so part of the dialogue, which is very exciting.’

    There’s also a campaigning aspect to the job. ‘We have to tell people that Fiji water comes from Fiji and Evian from France,’ she explains. ‘Statistics prove we don’t think about things like that until we’re given a reason to, but then we change our behaviour.’ This runs into the self-destruct model of the business, the latest part of which is to work with restaurants on filtering their tap water using coconut husks. And after that? Lynch is already on the case. ‘The Belu model could apply in many categories,’ she says. ‘There are ideas around lots of products, but they haven’t had airtime yet, because we’re too busy.’ Count on it being sorted.