Starbucks: Fair Trade or “Tradewash”?

August 1, 2008

Posted by Chris O’Brien

The Organic Consumers Association (OCA) is telling consumers to turn up the heat on Starbucks and pressure them to take Fair Trade more seriously.

According to OCA, many customers mistakenly assume that all Starbucks coffee is fair traded, but in fact just 6% of the company’s coffee is certified Fair Trade.

OCA is asks consumer activists to take these steps:

1) Sign OCA’s 2008 petition to Starbucks demanding that all espresso drinks be both 100% certified Organic and Fair Trade.

2) Make a free call to Starbucks’ Customer Service line and let them know how you feel. (800) 235-2883. Click here for a sample script.

3) Sound off on My Starbucks Idea, Starbucks’ public forum. We have an idea for you Starbucks, its called Fair Trade!

4) Find a non-corporate café near you using the Delocator.

Is the “all Fair Trade espresso” demand impractical or too idealistic? Not really. Dunkin’ Donuts, the world’s largest coffee and baked goods retailer, already does just that. Even McDonald’s sells all Fair Trade coffee in their New England stores and in the U.K.

So what’s up Starbucks? Why not empower farmers by supporting a minimum price per pound and buying from democratic cooperatives?


600 Stars Bucked: Starbucks to Close 600 Stores

July 1, 2008

By Chris O’Brien

600 Stars Bucked

According to Bloomberg.com, Starbucks will close 600 stores within the next nine months and eliminate 12,000 jobs. For some perspective, that’s about 7% of its global workforce. At the end of March 2008, the company boasted 16,226 stores -just over halfway to CEO Howard Schultz’ stated goal of 30,000 outlets.

The company says most of the stores slated for shuddering are near other Starbucks locations. So, maybe opening two or three Starbucks on a block isn’t such a great business plan after all? Or is it actually a very sly strategy designed to bully smaller competitors out of business?

Starbucks Chief Financial Officer Peter Bocian admits that the stores targeted for closure were cannibalizing 25-30% of the sales of other nearby locations. But here’s the kicker. Starbucks stocks rose 4.5% immediately after the announcement.

Follow the logic here. Starbucks opens stores that it can’t afford and then closes them and gets a boost on Wall Street. Meanwhile, local competitors are put out of business while Starbucks carries the unprofitable stores. Once competitors are closed, Starbucks closes its redundant stores. That leaves the other one or two nearby Starbucks perfectly positioned to not just regain the customers from the other Starbucks but also to gain all the customers from the closed down competitor.

Maybe I’m just paranoid. Or maybe a company aiming for 30,000 stores is a beast that someone needs to slay.


Corporate Coffee Responsibility Ratings

June 25, 2008

Posted by Chris O’Brien

Co-op America (my former employer of nearly seven years) runs a program called Responsible Shopper that provides corporate social responsibility news and ratings about companies and whole industries. Here are their comparative ratings of the biggest coffee companies.

Co-op America\'s Resposnible Shopper Coffee Scores

Notice in the small print that the color scheme ranges from green to yellow to orange to red in descending order of ‘responsibleness.’ Now notice that none of the biggest companies in the coffee industry earn a yellow score or better. Kraft and Starbucks fall in the orange sector while Sara Lee, Proctor and Gamble, and Nestle all deserve the red zone of corporate malfeasance.

Co-op America’s conclusion for how to be a ‘Responsible Shopper?’ Buy fair trade, organic, shade grown coffee.


News from Fair Trade: FLO’s Pricing Announcement, Market Forces & Peru

December 16, 2007

 Last Week, the Fairtrade Labelling Organizations International (FLO) announced a long-awaited decision to increase the Fair Trade certified minimum price for washed and unwashed arabica coffees. The press release is here: FLO Price Increase Release

For washed arabicas the minimum price per pound bumped to $1.25 per pound (up from $1.20) and for unwashed the price increased to $1.20 USD per pound (from $1.15). The FLO increase translates into a base price of $1.55 for organic fair trade washed arabica coffees. ($1.25 minimum + $.20 organic premium + $.10 fair trade premium).

FLO’s press release states that market pressures didn’t warrant a price increase for robusta coffees.

This announcement follows on a decision made in June 2007 when FLO conceded a modest increase on both the organic and fair trade premiums by 5 USD cents each under  pressure from producers, ATOs (alternative trade organizations) and allies. 

For many ATO’s and trade allies, FLO’s decision to increase pricing is too little too late. For several years now, alternative traders and small scale producers have attempted to engage FLO on the minimum price issue. How are Fair Trade cooperatives supposed to secure coffee in a market when, on one hand, the global commodity market prices are reaching those of the Fair Trade minimum and, on the other end of the spectrum, elitist coffee importers are offering exhorbitant prices to indiviual farming families for a year’s entire harvest?

So, while FLO’s price increase may be vital when the world’s coffee prices spiral downwards once again, it is unlikely that small scale farmers will see much benefit in 2008 from the recently announced price increase.  In 2007, importers of specialty coffee were forced to pay prices that far exceed fair trade minimums in order to secure high-quality coffee. 2008 promises to be yet another year of increasing prices in the specialty market.  The Oromia co-op from Ethiopia, for example, recently announced they expect approximately $2.50 per pound USD on 2008 contracts.  

The increase in coffee prices, whether dictated by FLO or a result of demand for specialty coffee, is a victory for small scale producers. Alternative traders and allies have long advocated for severing ties with the commodity markets and, instead, create pricing structures based on the cost of production plus differentials related to quality, cost of living, isolation of the farmers and inflation in the country. It remains to be seen what our market in the States will bear as increasing prices get passed along to roasters, retailers and consumers. The value of currency will be another factor to watch in 2008 because buyers from Europe, New Zealand and other countries, with their currencies becoming stronger and stronger against the dollar, have more flexibity to deal with increasing prices in their respective markets.

 Finally, it’s important to note that healthy trading relationships shouldn’t be relegated to pricing alone. Small scale coffee growers from Peru circulated the following letter (linked below), admonishing FLO for their acceptance of Perales Huancaruna into the FLO certification program. They assert that Perales Huancaruna, the biggest coffee exporting corporation in Peru,  has a long history of disenfranchising small scale growers in order to make a profit.  They fear the entrance of Perales Huancaruna into FLO’s system will be the demise of the fair trade certification system for small scale growers in Peru. Read the letter by clicking below

Letter from the National Association for Small Scale Producers in Peru


Who Owns My Coffee?

November 25, 2007

Posted by Chris O’Brien

As I research the practices of various coffee companies, one of the challenges is to establish who owns each brand in the marketplace. It’s one thing to talk about Starbucks’ business practices, but when we do, we also need to realize that appear in the marketplace under different brands, such as Seattle’s Best.

So, in an effort to follow the tentacles to the heart of the beast, I’ve started a modest little list here of coffee companies and the brands they own. I’ll update this as I get new information – please comment if you have something to add.

Underneath the bold corporate name are some of the company’s relevant brands and principal products:

STARBUCKS
Starbucks
sugar, milk, coffee
Seattle’s Best sugar, milk, coffee
Tazo Tea
tea
Ethos plastic bottles with some water in them
Hear Music CDs
Torrefazione Italia coffee shops, closed by Starbucks in 2005

NESTLE
Hills Bros coffee
Nescafe instant coffee
Taster’s Choice
coffee
Coffee-mate flavored sugar

KRAFT FOODS formerly owned by Altria a.k.a. Philip Morris
Gevalia
coffee, tea and loads of related accessories
Maxwell House
coffee, instant coffee, related accessories
Sanka
decaffeinated coffee

PROCTOR & GAMBLE
Folgers instant, decaf, flavored, and regular coffee
Millstone bulk, decaf, flavored, regular, organic, and fair trade coffees

SARA LEE
Douwe Egberts coffee
Senseo coffee machines and coffee
Insecticides strangely Sara Lee also markets a diverse line of insecticides under various brand names suchs Pyrel and Ridsect
A long list of other coffee brands such as Bravo, Maison du Cafe, Natrena, and many more

MASSIMO ZANETTI
Hills Bros
instant cappuccino, canned coffee, and loads of gear
Chase & Sanborn (strangely, I couldn’t find a website for this classic brand – has it been killed?)
Chock full ‘o Nuts decaf, flavored, “bricks”, and more coffee related stuff