Starbucks And Fair Trade Marketing Essay

Starbucks is well known US coffee shop company and has an impressive number of branches all over the industrialized nations. As a coffee provider, Starbucks have purchased and sold Fair Trade Certified coffee for more than 10 years. Fair Trade certification aims to make sure collaborated small-scale coffee farmers to receive fair amount of wage which potentially contribute to their business skill development. Starbucks started this purchase of Fair Trade certified coffee in 2000 and it has been helping the Fair Trade market in the US for certified coffee grow and developing awareness and users of the consumers. Starbucks initiated coffee-buying programs to make sure benefits for small-scaled famers since 2009 by integrating the inspection and auditing process for Fair Trade certification and by providing farmer training program to pursue sustainable coffee production and buying more coffee from suppliers participating in both programs.

Starbucks has its partnerships with TransFair USA and Fairtrade Labelling Organizations International (FLO) for sustainable and ethical coffee procurement. TransFair USA is one of the 23 member organizations that comprise Fairtrade Labelling Organizations International. Currently, approximately 5% of Starbucks total coffee purchases are Fair Trade certified coffee.

Although Starbucks’ Fair Trade programs can contribute to improvement of agricultural and environmental practices and the prices farmers can receive for their coffee products, expanding programs with small-scaled farmers faces several obstacles such as geographical reasons (i.e. extremely remote area) and local infrastructure issues and supply chain complexities.

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At farmer’s level, difficulties for them are still cost of audits and complexities of inspection process for Fair Trade inspection and verifications. Starbucks is crucial to make sure that the farmers who implement responsible farming practices and socially responsible working conditions can qualify for the certification labeling in the market place by providing interventions for improving understanding of farmers and respect each other. Moreover, efficient and easy systems for licensing and labeling Fair Trade Certified coffee is crucial not for the farmers but also for Starbucks as they can offer the certified products globally to bring more consumers to the market place.

Improvement of product quality and business viability are also crucial so Starbucks launched an initiative to help small-scale farmers through technical supports at Starbucks Farmer Support Centers. Starbucks aims to purchase Fair Trade Certified product up to 100 % responsibly grown and ethically traded coffee by 2015. As a progress, Starbucks already doubled their purchases of Fair Trade Certified coffee by 2010.

Roles of Starbucks towards Sustainable Development and Its impacts

The fundamental role of Starbucks in Fair Trade implementation is to help small-scale farmers for product sales, quality and their wages to sustain their quality of life. Other important role is to pursue such sustainable business model to address how ethics in the business development of agricultural activities in developing countries by establishing fruitful relationships between them and developed nations is crucial role model for the future business sustainability. Moreover, successful large companies like Starbucks are required to take responsibilities in helping developing nations in return of using their ability to grow agricultural products in the past decades.

In today’s society, fair-trade, green and organic products like Fair Trade Certified coffee, encourage us to make more ethical choices. They appear in most aspects of our lives such as vehicles, clothes and food. Although these social movements are still controversial, these products can educate consumers to be aware of sustainable environmental and ecological issues. For example, the fair-trade, green, and organic organisations appeal their ethical and environmentally-friendly products because some other existing businesses are either; ignoring the impact of the environment and human health, or making use of producers and farmers in developing countries to produce their products at unfair/cheaper prices. I believe that more businesses should take into account such ethical issues as a part of sustainability practices to maintain a good relationship with society.

Table 1 shows the conventional coffee route from small-scale farmers to the coffee consumers. In the past, small farmers had to go through local middleman, exporters, brokers and then sold to importers in other countries. Because of the supply chain, their wages had been very little.

Table 1: conventional coffee route

Table 2 shows the conventional coffee route with Starbucks. This mechanism started in 2000 as mentioned above. In this route, the role of Starbucks was to fill the roles of exporters and brokers and instead they directly negotiate with local middleman to sell the products to distributors and retailers including coffee shops. Therefore, Starbucks successfully help the small-scale farmers to receive certain amount of wages to fill their basic needs by skipping exporters and brokers. However, this mechanism does not directly address the essence of poverty issues as Starbucks was the one that get the most benefits from the reduction of time spent and transaction costs rather than focusing on the farmers’ cost benefit.

Table 2: Conventional coffee route with Starbucks

Table 3 shows the Fair Trade route with Starbucks. The introduction of this mechanism through Fair Trade programs significantly contribute to the cost benefit for small-scale farmers. As shown in Table 3, small-scale farmers directly contact with Starbucks for the business negotiations through cooperatives. As mentioned above, Starbucks also support for the farmers’ business skill development to create “win-win” situation between the small-scale farmers and Starbucks.

Table 3: Fair Trade route with Starbucks

Problems

Problems in Starbucks Fair Trade programs are the local preconceptions about American multinational companies as it is fair for many farmers in developing countries to percept America as mass culture, infecting traditional values, large scale service with poor quality, and most importantly, fear notion of being invaded by such industrialized nation needs to be mitigated in order to pursue sustainable Fair Trade programs.

Farmers

Preconception about American multinational companies

Resistance to mass culture mind

Fear of notion of being invaded

Starbucks

Lack of understandings of traditional values

Large scale service with poor quality

Suggestions and implications

One suggestion to overcome the preconception towards multinational companies is to consider the role of NPO/NGO in the developing countries which can function as a social middleman between multinational companies and local small-scale farmers. They could provide several educational courses on sustainability to learn more about what the multinational companies are trying to achieve. At this stage, Starbucks is utilizing their own Fair Trade Practices programs which recruit only suppliers that comply with certain economic, social and environmental standards. And this program now accounts for approximately 25% of all coffee purchased by StarBucks. As their aim is to become a role model to encourage other multinational companies in the coffee industry, collaboration with NPO/NGO can spot another positive light on the improvement of the community engagement.

Another suggestion is to come up with new mechanism for advanced Fair Trade route with Startbucks not only making sure the wage paid to the small-scale farmers but also making sure the actual consumers understand why Fair Trade programs exist.

Finally, there should be a linking platform between small-scale farmers and coffee consumers.