Starbucks' goals rely on quality, quantity

By Jake Batsell
Seattle Times business reporter

Bumper crop of coffee labels

E-mail this article Print this article Search archive Most read articles Most e-mailed articles

Those needs seem complementary, but Starbucks is so particular about its beans that it isn't easy for farmers to sell to the specialty-coffee giant.

"For the average coffee farmer, we are in some sense the Holy Grail," Starbucks Chief Executive Orin Smith said. "They would all love to supply us. Oftentimes, they don't know what we want."

Coffee connoisseurs might take issue with Starbucks' claim that it upholds the highest standards of quality: Many have long considered the company's coffee over-roasted. Other critics say it doesn't use enough organic or Fair Trade coffee and spends more money on crafting its image than helping farmers.

Growers say the company is nearly obsessed with details. Its criteria range from soil types to processing methods to how coffee tastes in a cup, and not every farmer's beans make the cut.

SHIFTING FORTUNES Part 5: Boeing and China A look at the growing threat Airbus poses in the Chinese market Day: 1 | 2 | 3 Part 4: U.S. entrepreneurs Instead of profiting, many inventors find the globalized world a difficult place. Day: 1 | 2        Timeline: 1 | 2 Part 3: Coffee and two Americas With every latte, consumers influence livelihoods and government policies abroad. Day: 1 | 2 | 3 | Q&A Narrated slideshow [5:15] Part 2: Microsoft and India As globalization changes the high-tech industry, Microsoft is reaching out to the world, exporting not only jobs and products, but lives and values. Day: 1 | 2 | 3 | 4 | Q&A Part 1: Asparagus and Peru Asparagus farming and how globalization is reshaping the Washington economy. Day 1 | Day 2 | Q&A

"If somebody wants to get business with Starbucks, you have to think, breathe, live and sleep quality," said Alfredo Robert, a Costa Rican coffee-farm owner and the country's former agriculture minister. "You have to pamper coffee because it's not the same to [produce] coffee for all companies like for Starbucks."

Starbucks has opened a farmer-support center in Costa Rica designed to teach more coffee farmers how to grow beans the company would buy. The center, Smith said, aims to boost Starbucks' supply of coffee beans by training prospective suppliers to "elevate their product to a level that we can purchase it from them."

Starbucks topped $4 billion in sales last year and has told Wall Street to expect sales growth of about 25 percent a year. It wants 25,000 stores worldwide — roughly triple its current count. To meet those targets, the company needs a steady supply of coffee that meets its meticulous standards.

Starbucks' coffee-buying executives have voiced concerns about its long-term ability to secure enough high-quality beans, and that prompted the company to establish the Costa Rica support center to address future supply needs.

As Starbucks grows around the world, it also is taking great pains to present itself as respectful of workers and the environment. Three years ago, the company introduced a "preferred-supplier" program in which Starbucks pays premium prices to growers who prove they use environmental safeguards, pay at least local minimum wage and follow local labor laws.

Earlier this year, Starbucks unveiled an updated version of that program, developed in tandem with Washington, D.C.-based Conservation International. The company also invited a host of nonprofit groups, including Starbucks critics, to weigh in with their feedback.
 
While the latest program has converted some critics who once said Starbucks didn't do enough to help workers, others say it is overly bureaucratic and fails to ensure that profits filter down to those who do most of the work.

"It doesn't answer the question, are the small farmers and the laborers going to be better off," said Rodney North, spokesman for coffee company Equal Exchange, a for-profit worker-owned cooperative based in Canton, Mass., that sells only Fair Trade Certified coffee. "As you look through the fine print, the effect diminishes, the closer you look."

Starbucks, however, says it is preserving workers' livelihoods by keeping farms in business. While some Central American coffee farms have shut down during a nearly five-year coffee crisis, Starbucks and other U.S. specialty-coffee roasters have kept a number of farms afloat by paying above-market prices for high-quality arabica beans.

Dub Hay, the company's senior vice president for coffee, says any coffee producer who does business with Starbucks "will readily acknowledge that were it not for Starbucks, there would be a lot more farmers out of coffee and into something else."

Robert — whose farm in suburban San José grows coffee for Starbucks and Peet's Coffee & Tea, among other chains — agrees with that assessment, saying the prices paid by specialty-coffee chains are "the difference between day and night for the producer."

To accommodate Starbucks' support center, the Costa Rican government loosened a customs rule that for years had prohibited bringing unroasted coffee beans into the country.

Peter Torrebiarte, the center's general manager, negotiated with government officials to suspend the restriction, reasoning that coffee professionals flying in from throughout Latin America would need to be able to bring samples to the office. He recalls telling officials that the rule, if not relaxed, "would make it very difficult for us to be regionally relevant."

The government granted Starbucks' request. Torrebiarte insists it was not a "special favor," noting that several other coffee companies have since asked for and received the same permission. Still, Starbucks asked first, and the government's willingness to adjust its rules speaks to the company's increasing clout in coffee-producing regions.

Smith said Starbucks is mindful of its growing influence and is committed to expanding in ethical fashion.

"We can't simply trample over the entire world in our pursuit of the bottom line, for Wall Street or anybody else," Smith said. "We have to be responsible in a much broader sense than we've ever been."

Jake Batsell: jbatsell@hotmail.com