You’re morning alarm goes off and there is only one thing on your mind, a hot fresh cup of joe cascading down the slippery smooth lining of your throat. After two satisfying gulps and a slight moan of appreciation you are awake and coffee has once again saved the start of your day. Coffee has become a daily necessity for some. It’s no surprise then that coffee is the second greatest trade commodity in the world, trailing only the Crude Oil industry. Thanks this popularity, Starbucks has been able to become ‘King of the Beans’ as the largest coffee company in the world. The demand for coffee is so great that it outpaces water consumption. So it might make sense then why as I write this paper, I have a cup of Starbucks coffee next to me.
As I sip on my ice-cold Dark Verona coffee, I have to wonder where exactly the coffee in my cup came from. Starbucks has 17,651 stores in over 60 countries servicing millions of customers everyday. Most of their coffee comes from Latin America, Africa and Asia; nations that have had a history of unfavorable working conditions for coffee farmers and workers (Starbucks 2012). During the year 2000, the company announced that is was moving towards using Fair Trade coffee in its products through it’s own Coffee and Farming Equity. The aim of this paper is to look at whether Starbucks’ move to Fair Trade coffee was the best approach to being a more sustainable company and if the continued shift to a mainstream industry will water down the purpose of fair trade coffee.
Before digging deeper in the practices of Starbucks, first and understanding of the fair trade movement is needed. The idea is not a new one. Fair Trade was a first introduced in the early 1940’s and1950’s. Fair trade is defined as:
“A trading relationship, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering trading conditions to, and securing the rights of, marginalized producers and workers especially In the South Americas.” (Low & Davenport, 2005)
Introduced in 1997, the Fairtrade Labeling Organization helped to spur the initial growth of interest in certified fair trade products (Elliott, 2012). The Fairtrde Labelling organization is the world’s largest independent certification body of fair trade products. Fair trade commodities are traded under the principles that only fair and just methods were used to produce the products. With regards to fair trade coffee, the global sales have seen the greatest growth amongst all fair trade commodities with 2011 sales growing to be six times larger than sales in 2004 (Elliott, 2012). This shift has seen fair trade coffee become a more mainstream commodity. As of 2004, the 5 largest coffee exporting countries, Brazil, Colombia, Vietnam, Indonesia and Cote d’Ivoire 45% of the world’s coffee supply. The largest importers of the commodity, United States, Germany, Japan, Italy and France, consume 57% of the worlds coffee supply (Friddell, 2007). Within the last several decades, high consumption the United States has propelled it into the single largest importer of coffee in the world. It is not surprise then that the majority of fair trade coffee purchases occur in the United States.
Starbucks prides itself on not selling coffee, rather, an experience. According to founder Howard Schultz, “We are not in the coffee business serving people, we’re in the people business serving people” (Schultz and Yang, 1997). This strategy coupled with a strong belief in customer service has allowed them to charge premium price for its products, long before its push to use more sustainable products. When looking at the success of the company it is hard not to ask if the Fair Trade movement was a way for Starbucks to act as a wolf in sheep’s clothing. By disguising their actions as ‘ sustainable and ethical’ are they attempting to trick the flock of socially motivated consumers in believing they support their cause? The move would make would be enough justification to charge more for their already premium priced products. The company was one of the first large corporations to introduce free trade coffee on their menus. However, this was after a long and lengthy battle with the human rights organization Global Exchange (Driesen et al 2005). The organization was finally able to twist Starbucks’ arm. Starbucks was exposed to cases of what happens to corporations who refuse to change despite growing organization and consumer pressure, i.e., Nike. Nike was initially very hesitant to address the pleas and allegations of poor wages and sweatshop working conditions. As a result, they went through a period where they saw their revenue, customer base and market share decrease. With these mounting pressures, they were forced to deal with problems at hand and give into the demands of the protestors (Spar, 2002). Starbucks essentially dogged a bullet by addressing the protestors’ demands in a relatively timely manner.
The Coffee and Farming Equity initiative was the birth child of Starbucks Fairtrade coffee sourcing efforts. In Hau Lee’s “Embedding Sustainability: lessons from the front line” he examines how Starbucks gamble to be more sustainable represents an unwilling commitment to create change. Lee explains that “walking the talk of social responsibility is a far greater challenge than may seem at first” (Lee, 2008). In his review, he cites that they are many unforeseen challenges that occur in try to implement this change. In order to attack the problem, accommodations must be made to deal with other underlying factors. Starbucks realized this when the trying to implement this CAFE initiative. It required them to address several connecting factors. Factors such as “soil erosion, pesticide pollution of water sources and unethical labor practices” (Lee, 2008) needed to be accounted for in the sustainability plans and required Starbucks to engage with the farmers who were several steps removed from them. The approach proves to be very successful because it doesn’t just address the individual fairness issue of how the coffee is bought and sold. Rather, it looks at the need to improve conditions that directly make unsustainable and unethical actions the only possible course of action.
This effort to be more sustainable thus proves to be beneficial for more than one entity, providing value to Starbucks, farmers and the nations the coffee is sourced from.
As it would seem, the move for fair trade has been sustainable for Starbucks. To date 93% of their coffee is sourced from ethical sources with 90% of that being fair trade (Starbucks 2012). Their efforts have not been limited to fair trade coffee but also to their tea and cocoa purchases. The company finds itself in a similar position as Whole Foods where they must figure out the best balance as growing as a global company while still committed to their plans for sustainability.
The fair trade industry has seen a light-speed growth within the last decade. However, this movement brings with it the problem of fair trade being labeled as a type of brand. This can stand to weaken the purpose of fair trade and be seen as sign of social status. With an emphasis on labeling, companies and corporations could be motivated to do the bare minimum to meet these standards. The topic of labeling is in itself rather muddled because of the various labeling agencies in the market. To date, they are seven fair trade certification organizations in existence (Gridell 2007).
Essentially, what stands to be a the greatest contributors to the fair trade movement, increased sales, also stands to be the biggest cause of its downfall. Isabelle Szmigin, in her article “Undestanding the Consumer”, explains that “the watering down of the fair trade message to one suggest that every consumer can ‘shop’ for a (socially and environmentally) better world through their individual consumer choices” (Szmigin, 2003). Low and Davenport explain that the growing fair trade coffee market has become a type of battle for market share by mainstream retailers (Low &Davenport, 2005).
It is unfair to place all off the blame on the retailers this watering down of the fair trade industry. As an attempt to reach a gain larger support, the mainstream industries were invited to help increase awareness by increasing sales (Low & Davenport, 2005). What this ultimately led to was consumer belief that by buying and consuming the product was enough to create the change needed and creates a surface message that all will be better because of their purchase. Fair trade coffee offers attractive benefits for retailers from a profit stand point. The push for mainstream influence has both been a positive and negative for the movement. This growing push for products to be labeled sparks and issue for unlabelled products (Elliot, 2012). Retailers are faced with the challenge of convey the message that conventional products are not necessarily “unfair”.
Starbuck has done a good job so fair in taking the steps to become a more sustainable company. However it is important that they are aware that they will be under constant watch from the public. Companies that show environmental leadership will always attract greater scrutiny than others. The company knows that it cannot make the change on their own as their sale of coffee only accounts for 5% of the world coffee supply (Starbucks, 2012). With the free trade coffee becoming more of a mainstream product, it presents the opportunity for more global companies to assist in the change. However, they cannot let their pursuit of a profit water down the true purpose of the industry.
Lee, H. L. (2008). Embedding sustainability: Lessons from the front line. International Commerce Review : ECR Journal, 8(1), 10-20.
Elliot, Kimberly A. “Is My Fair Trade Coffee Really Fair? Trends and Challenges in Fair Trade Certification.” CGDev.org. N.p., Dec. 2012. Web. 15 Nov. 2013.
Szmigin, Isabelle. Understanding the Consumer. London: Sage Publications, 2003. Print.
Low, W., & Davenport, E. (2005). Postcards from the edge: Maintaining the ‘alternative’ character of fair trade. Sustainable Development, 13(3), 143-153.
Fridell, Gavin. Fair Trade Coffee: The Prospects and Pitfalls of Market-driven Social Justice. Toronto: University of Toronto, 2007. Print.
Schultz, Howard, and Dori Jones. Yang. Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time. New York, NY: Hyperion, 1997. Print.
Spar, Debora L. “Hitting the Wall: Nike and International Labor Practices.” Harvard Business School (2002): 1-17. Print.