business consumerism corporate responsibility fair trade

Starbucks: “coffee served cold”

Image Preview This is not about someone trying to sue Starbucks for purchasing a cold coffee they expected to be hot. No. This is about Starbucks’ cold disapproval of trademarking Ethiopian coffee.

Those who drink coffee on a regular basis should understand Ethiopian coffee to be a beverage a cut above it’s tropical brothers. I understand that something about mountain soil, altitude and temperature makes varieties such as Yirgacheffe, Sidamo, and Harrar particularly high quality coffees.
It comes as no surprise then that the Ethiopians would like their brands trademarked so as to prevent any other coffee makers using their names to label coffee, not grown or produced by the original Ethiopian farmers. Considering Ethiopia is one of the poorest countries in the world, a boost to their income insured by trademark security seems fair. Starbucks beg to differ.

Starbucks have a mixed reputation. Many people go about their daily lives, purchasing and consuming their coffee without a moments thought. Similarly, a percentage of people are very hostile towards the coffee giant, publicly proclaiming its injustice. Until recently, I was on the fence. I knew Starbucks had questionable morals and I avoided them just to be sure. Until the other day however, I never knew enough to make an informed decision.

Starbucks never really feels like a multinational giant. It’s too homely. Their cafes are usually small, cosy and warm with comfortable chairs and almost every form of coffee imaginable. Its hard to compare them to a supermarket, which is large, cold, bleak and jam packed with goods and bargains yet the two are very similar. Starbucks has led its customers to believe that it is not the run of the mill multinational company, and that they sell “coffee that cares”. To some extent they do. They do look after their farmers. Until recently however, Starbucks paid little attention to its producers (Howard Shultz, founder of Starbucks’, in his memoir “Pour your heart into it” has very little mention of farmers) It was only once the consumer started questioning “Fair trade” and “Fair to Farmers” that Starbucks realised they would be losing out if they did not appear to be playing along. They therefore initiated C.A.F.E (Coffee and Farmer Equality) which you can read about here. Funnily enough, the former name of C.A.F.E was “Starbucks Preferred Supplier Program” which I’m guessing was renamed to sound more “fair to farmers”. I have a quote from Douglas B. Holt (author of the essay “Is Starbucks “Coffee that Cares?”) that says:

“The perception that Starbucks works hard to benefit its poor coffee farmers has become a valuable part of the Starbucks brand for the company’s educated middle-class customers. And Starbucks ethical positioning is meaningful not only to customers, but to its other key stakeholders as well, especially investors and employees”

If Starbucks truly was looking out for its farmers, why is it bluntly protesting the trademarking of Ethiopia’s highest income product? The trademarking of coffee brands Sidamo and Harrar (which are up for debate) would significantly increase the income of the estimated 6 million Ethiopians involved. Surely this is increasing the welfare of the farmer? Where then is Starbuck’s support? More to the point, why the hostility?

The coalition of Ethiopian coffee producers lobbied to have their three best and main coffee varieties (mentioned previously) trademarked. Starbucks caught wind of the idea, and voiced their protests through the National Coffee Association (NCA) and tried to block efforts to trademark the products, insisting certification was a better alternative. This move has come under a lot of scrutiny with people accusing the company of going to the NCA with direct complaints to Ethiopia’s demands. It must be made clear that this is not the case. To clarrify the matter, Starbucks’ senior vice president of coffee procurement denied approaching the NCA saying:

“We did not get the NCA involved – in fact it was the other way around, they contacted us.” (BBC)

It just so happens that Starbucks’ Senior vice president of Coffee Procurement is also the Chairman of the Government Affairs committee of the NCA. It would appear there was no need for Starbucks to approach the NCA about blocking Ethiopia’s bid considering they already had a key man handling trademark concerns on the inside. It must also be taken into account that Starbucks are also one of the largest, and most influential players in the NCA when it comes to superior coffees and it is hard to believe that a multinational company had no involvement in the NCA’s decision making.

It is completely beneficial financially to prevent Ethiopia from trademarking its highest quality produce because as long as it is “certifified”, Starbucks can continue to buy it at a cheap price, and sell it to consumers at an extortionate one. In fact, any coffee company could buy certified Ethiopian Coffee at negotiated low prices and then market it to coffee consumers as higher quality coffee. By certifying the products rather than trademarking them, Starbucks can insure they dictate the price of purchase and sale. They therefore rallied the NCA to protest to the US Patent and Trademark Office (USPTO) in order to prevent the trademarks going through, claiming Certification was better. According to Douglas Holt, in the 24 months since making this claim, Starbucks still failed to produce sufficient evidence that certification marks would provide benefit to farmers. As i am aware, they continue to protest and make up excuses to this day. For “coffee that cares”, this is hypocritical.

Surely a company that claims to be fair to farmers wouldn’t be opposing a bid to make farmers lives better? Like all multinationals, it boils down to profit and public relations. If they appear to be doing the right thing, more people will like them. They will only help people as long as they get a good deal out of it. As soon as their profits are threatened, the hammer falls and the company will show its true colours (this can also be said for other companies such as Tesco and Walmart which we are also in the process of researching). It is a two faced approach, but one the business community is happy to endorse. Starbucks has “The Economist” on its side, for example. In it’s November 30th 2006 edition “Storm in a Coffee Cup”, the magazine questions Ethiopia’s competence in running its own businesses, taking stabs at corruptions in the government saying that supporting the Ethiopian farmers in this matter (trademarking) would be fruitless under such a corrupt regime which failed to build a stronger economy. (Holt argues that this is a poor and un-researched argument with regards to Ethiopia’s efforts). It should also be recognised that trademarks would be governed by the coalition of Ethiopian Coffee producers, exporters and producers which is a commercial enterprise and has little to do with governmental affairs. Even if it did involve the government, how does this give a US company grounds to interfere with foreign private industries and deprive one of the poorest countries in the world with a means to increase it’s GDP? How is this a fair to farmers, fair trade approach?

I end this entry with another quote from Douglas Holt whose research referenced above has been extremely helpful in clarifying the murky water and whose excellent referencing has been the foundation of the information I have used.

“Starbucks is carefully guarding its economic interests and doing its best to muddy the issue so that the media and its stakeholders won’t pay attention. Starbucks opposes Ethiopia’s efforts in order to shore up its market position, not out of paternal concern for the plight of the African people”.

For the benefit of those wanting to read Holt’s essay and his detailed analyses of all Starbuck’s approaches and excuses, click here.

12 comments

  1. Good post. I used to like Starbucks until I heard about the Ethiopia thing, and this kind of fills in the gaps in my knowledge of the whole situation. When you think about the starvation and the suffering going on in Ethiopia at the moment it’s astounding how heartless they are in their attempts to grow even more rich and powerful.

  2. Good article, well researched and clearly argued; but take care over typos… they don’t do you credit

  3. I’m glad we helped you turn Wall Street into a personal ATM, Mr Spam Comment. I’m leaving you in because you make me laugh.

    And thanks for the link Ben, that’s a cool site. I may well consult that myself in london from time to time.

  4. Thanks for the info. Whilst living in Seattle, I’ve never been a fan of Starbucks. Howard Shultz is about $$$ and not a lot else – he even sold off the local NBA team to Oklahoma of all places!
    Thank you for shedding a light on Starbucks!

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