October 22, 2006

Fair Trade Coffee - a Review of Where it's Been and Where it's Going

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There's a good article in today's Boston Globe that talks about Fair Trade Coffee, where it is going and where it came from. With its origins in Europe some 30 years ago, the idea of paying a little bit more to farmers, and leveling the bargaining table instead of pitting huge corporations versus small farmer co-ops fighting for daily sustenance. Transfair USA has been the proprietor of the Fair Trade label and certification program, and says that over 100 million pounds of coffee has been roasted under the certification program since 1999. This means that over $75 million in extra payments has gone to help 800,000 people in 25 countries.

One owner of a 100% Fair Trade coffee shop complains that while they use 100% Fair Trade certified coffee, other companies barely scratch the surface and use it as a marketing tool. Starbucks only has one blend of Fair Trade coffee out of its dozens of blends. For me, this brings up the idea that Transfair should start to consider a "Gold Level" of FT certification to make a distinction for these entities that use FT coffee almost exclusively. What I don't disagree with though is the idea that you must be all in or nothing. So, by some people's wishes, Starbucks needs to be all in on FT coffee, or none at all. Starbucks for example roasts 11.5 million pounds of FT coffee a year. Why walk away from that goodwill? If it had to be an all or nothing idea, very few people would wade into these waters and bring the benefits of Fair Trade to the market.

There are certainly some big signposts of success along the road. Fair Trade is going mainstream, as Dunkin Doughnuts in 2003 started using Fair Trade coffee exclusively for their espresso drinks, and apparently now WalMart is testing Fair Trade coffee in Texas. McDonalds is selling Newman's Own coffee from Vermont based Green Mountain Coffee Roasters in several hundred outlets here in the Northeast. When will you see it reach critical mass? I don't know, but it will do so only when the market demands it and the marketers believe that it helps sell their coffee to their consumers. That's how capitalism works, and so far, I'll take the gains that Fair Trade has had, and look forward to the one's that they hope to gain in the future.


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ReadMore at Transfair USA

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Posted by Scott Martin at October 22, 2006 9:52 AM
Recent Comments

While I like the concept of Fair Trade, I think that it does not have what it takes for broad market appeal. In particular, there are three types of coffee purchasers, to whom it will not appeal and one of those groups is essential for broad market support. The biggest coffee purchasers are companies who provide coffee for employee break rooms. While a few companies are willing to spend a little extra on coffee to keep their employees happy, most will use something like Folgers or contract with the lowest cost coffee service. The next group is the largest group of individual consumers, who think that coffee like Folgers or Maxwell House is pretty good. Most of them have never heard of Fair Trade and probably wouldn't pay the price, if they had. The last group is the small group of individual consumers, to which I belong. I already pay more than $10/lb for premium green Celebes, which I roast at home and use for regular coffee and I go through a lot of it. I also have a Nespresso, for espresso which costs $0.49 a shot and I go through a lot of that, as well. While I like to help others, when I can, I already spend a fortune on coffee. For that reason, it's just not worth it to me to pay even more, just to feel like I helped someone in Indonesia. Fair Trade is an admirable idea that will certainly continue and continue to grow for a while. But basic market forces will keep its appeal limited. After all, capitalism works, because people just like to save money.


Posted by: John Gaver at January 15, 2007 2:46 PM
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