April 23, 2008

11 Min Read
Living La Vida Mocha

Organic, bird-friendly and fair-trade certified coffees are the buzz of the specialty coffee market. But can a Cuppa Joe really change the world? Some people think so.

Although clean beans make up only a fraction of the $55 billion global coffee market, roasters and retailers say they see a growing market among consumers willing to pay a premium for java that jibes with their conscience.

"As an industry, [fair-trade coffee] is growing at 100 percent," says Rebecca Wagner, fair trade and organic project manager for Green Mountain Coffee Roasters in Waterbury, Vt. "Our organic was growing at 50 percent, but that's backed off a little bit because people are aware of organic now."

How Can You Be Sure?
For consumers, certification is a guarantee that they are making socially and environmentally responsible purchase decisions, says Kenya Lewis, public relations manager for TransFair USA in Oakland, Calif., the only fair-trade certifier in the United States.

Coffee can receive three different certifications—organic, shade-grown and fair-trade.

  • Organic certification guarantees that coffee is grown without the use of agrochemicals and in accordance with U.S. Department of Agriculture standards. Coffee is certified organic by an independent third-party organization, such as the Organic Crop Improvement Association in Lincoln, Neb., or Quality Assurance International in San Diego.

  • Shade-grown certification means the coffee is grown in the shade of a natural forest canopy that preserves soils and habitat for animals, including migratory birds. The Smithsonian Institute Migratory Bird Center works with independent certifiers to offer "bird friendly" coffee that bears both shade-grown and organic seals. Companies that sell coffee with the bird-friendly seal contribute 25 cents a pound to support research and conservation programs at the Bird Center.

  • Fair-trade certification from TransFair guarantees that coffee growers are paid a fair price for their crops—at least $1.26 a pound for nonorganic coffee and $1.41 a pound for organic coffee, Lewis says. Fairtrade Labelling Organizations International in Bonn, Germany, sets the price. TransFair typically works with farmers who are part of democratic cooperatives that avoid the use of chemical pesticides. Often, portions of the co-op's revenues are used for community projects, such as building schools or health-care centers. TransFair-licensed roasters pay a 10-cents-a-pound quarterly fee that covers the certifier's monitoring, administrative and marketing costs.

In the conventional java supply chain, the "C," or commodity, price per pound for coffee on the New York Coffee, Sugar and Cocoa Exchange hovers around 50 cents, but coffee production costs in Latin America average about 80 cents a pound. Lewis says farmers now receive as little as 20 cents a pound for their beans.

The retail price of coffee hasn't followed the downward spiral of the price paid to growers. So although some large coffee companies have logged record profits in the past three years, many communities where beans are cultivated are struggling with unemployment, malnutrition, lack of medical care and scanty opportunities for even basic education. Tens of thousands of farmers, from Mexico to Tanzania, have abandoned their farms, Equal Exchange reports.

Industry experts agree that Americans care about these issues, but opinions differ on how to help and whether consumers are willing to pay to help solve these problems.

American consumers can make a difference. About 80 percent of American adults down 20 percent of the world's coffee, making the United States the world's largest coffee-drinking nation, according to the National Coffee Association's 2001 "National Coffee Drinking Trends" report. Coffee is the second largest commodity in the world, after oil, says David Griswold, president of Portland, Ore., coffee importer Sustainable Harvest. "Coffee is one of the few products most people drink every day, and coffee consumers can make an impact on the market," he says.

U.S. specialty coffee sales topped $4.3 billion in 2000, but organic coffee sales represented only $75 million to $125 million in sales, according to "The U.S. Gourmet/Specialty Foods Market" report published by Packaged Facts and released by MarketResearch.com in 2001. Shade-grown coffee was a mere drop in the pot at between $3 million and $6 million, and fair trade coffee sales were $3 million to $5 million, according to a specialty coffee industry report in the November 2000 issue of Gourmet Retailer.

In the third quarter of 2002, organic and fair-trade beans accounted for about 7.2 percent of Green Mountain's sales.

Social Responsibility
Avalon Organic Coffees eventually may offer one or two fair-trade coffees. But Vice President of Sales Liz Kollar says her company takes a more traditional approach to do good: corporate philanthropy. In 2001, the company donated nearly $13,000 to Coffee Kids, a Santa Fe, N.M., aid organization that works to improve quality of life for children and families in Central American coffee-growing communities.

"We like to work with Coffee Kids because we feel that the money works to build community-based projects as opposed to farmer-specific benefits," Kollar says. "In the last couple of years, they've built a water system in Chiapas, Mexico, [and] a women's health clinic in Guatemala—I think that's made a significant difference."

Avalon is a division of privately held New Mexico Coffee Co., based in Albuquerque. The company sells shade-grown coffees certified organic by OCIA and certified kosher by a rabbi.

In yet another approach, Allegro Coffee Co., a subsidiary of Austin, Texas-based Whole Foods Market Inc., hired the accounting firm Ernst & Young LLP to confirm it pays farmers at or above current fair-trade prices. In 2001 Ernst & Young reported that Allegro purchased 2.1 million pounds of specialty green coffee at an average price of about $1.59 a pound, including transportation, import fees and taxes. Thornton, Colo.-based Allegro paid its farming partners a weighted average of $1.38 a pound.

Allegro Marketing Director Tara Cross said though TransFair does a good job of raising awareness about fair trade, Allegro doesn't participate in the licensing program. Instead, it buys about 85 percent of the 2.5 million pounds of coffee it roasts each year directly from family-owned farms. Though Allegro pays as much as $2.30 a pound for green beans, most are grown on farms that are not part of a co-op and thus do not qualify for fair-trade certification, Cross says.

Allegro's consumer research suggests that demand for fair-trade coffee is low for various reasons: consumers are not convinced farmers are being paid fair prices; there are fair-trade coffee quality issues; and consumers perceive that specialty coffees are a luxury item for which they already pay extra. Thirty percent of Allegro's coffee is certified organic, and 70 percent is what the company calls sustainably grown.

But some retailers say the skepticism Allegro has experienced has more to do with awareness than validity of the mission. In Minneapolis, consumers understand and are willing to throw their purchasing power behind fair-trade certified products, says Patricia Cumbie, marketing associate for Twin Cities Natural Food Co-ops.

"Fair trade is not a marketing pitch; it's a belief about the way business should be done," she says. "[And] we are bringing the message to the consumer in a way that a wholesaler or roaster wouldn't be able to."

Joyanna Laughlin is a freelance writer in Estes Park, Colo. She may be reached at [email protected].

Natural Foods Merchandiser volume XXIII/number 11/p. 12, 14, 16


Natural Foods Merchandiser volume XXIII/number 11/p. 14


Natural Foods Merchandiser volume XXIII/number 11/p. 16

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