Starbucks Corporation (NASDAQ:SBUX) paid way, way more per pound for its coffee in 2006, the company will announce this morning -- more than any other major coffee company (according to Starbucks' own claims, anyway). In 2005 and 2006, the average commodity market price paid for coffee was $1.04 per pound; and, it's certain, far less for The Procter & Gamble Company (NYSE:PG)'s Folgers brand or Kraft Foods Inc. (NYSE:KFT)'s Maxwell House tinned coffee.
Starbucks (the company reports with obvious pleasure) paid a premium price of $1.42 per pound in 2006, up from $1.28 per pound in 2005. In doing so, the company believes it allows coffee farmers to make a profit, and gives them a "sustainable livelihood." The company also reported it had increased its percentage of coffee purchased under purchasing guidelines developed with Conservation International -- C.A.F.E. Practices -- to 53% of its total, or 155 million pounds.This, while certainly grand, is not an indication that Starbucks is perfect. I'm certainly a fan of sustainability, even if it's trumpeted loud and proud by the corporation which practices it. In late 2006, Starbucks was roundly decried for objecting to Ethiopia's attempt to secure trademark protection for its Sidamo and Harar beans.
It's great that Starbucks is moving in the direction of better trade practices and more fair treatment of hundreds of thousands of farmers in third-world countries around the globe. However, the company needs to go all the way. I'll be chatting later today with Dub Hay, senior vice president coffee, Starbucks Coffee & Global Procurement -- and hopefully, finding out what the company will do to reduce the double-standard impression.











Reader Comments (Page 1 of 2)
1-18-2007 @ 10:14AM
Keith Johnson said...
CHARBUX is full of.....beans and so is this story!
Comparing the "average commodity price" for coffee of what starbucks paid versus what Folgers paid is laughable and giving starhbucks credit for paying more is a JOKE.
1. The LIFFE price for Robusta is where Folgers buys MOST of their coffee and it is about .40 per lb UNDER the "average" market price for Arabica, which IS the "market" on the NYBOT. Then, ROASTERS (not just your beloved Charrrrbux) pays a DIFFERENTIAL that is assigned at different rates and by country of origin...Example: Colombia adds on about .09 per lb and Mexico adds about .04 per lb)..so if Charrrrbux paid an average of $1.42 when the market was at an average of $1.27 for the year, they did not buy NEARLY THE AMOUNT OF FAIR TRADE OR SHADE COFFEE OR BIRD FRIENDLY coffee that you people give them such great media coverage for doing!!! AND...there are SO MANY small roasters that focus on quality so much more that charrrrbux that buy in smaller amounts and pay WAAAAY higher than charrrrrrrbux did....so QUIT LETTING THEM GET AWAY WITH MANIPULATING YOU TO GIVE THEM AN IMAGE THAT IS A FRIGGIN LIE...LIES!! By the way, they SELL THEIR MILK (in the same cup as their trashy coffee) for MORE $$ than ANYONE ELSE, TOO!!
1-18-2007 @ 11:02AM
michelle said...
Thank you Keith Johnson!!! I really don't see why Starbucks is patting itself on the back either.
1-18-2007 @ 11:10AM
Fiona Mackenzie said...
Attempts to provide "natural" or "organic" food, or economically viable products that are "fair traded," are sporadic and inconsistent.
IT HAS TO START SOMEWHERE!
The people who are at least trying, and incidentally raising our awareness, deserve a great deal of credit. Dissing them because their product or delivery is less than perfect, while giving the old-style bottom-line-only bandits a free ride is ridiculous.
1-18-2007 @ 11:18AM
Steven said...
The public is dupted by Starbucks. Paying $1.75 for a plan cup of coffee & up to $5.00 for fancy coffee is not to smart. I see people on food stamps going to coffee shops on a regular basis. We complain about gas prices at $2.00 per gal. and pay what for coffee? Something is messed up
1-18-2007 @ 11:19AM
Dusty Rainwalk said...
IF and I do mean IF Starbucks were paying more for the coffee beans it does not help the poor field workers. Third world countries are comprized of the have's and the have not's. The growers are the have's. By paying more for coffee beans is helping the have's and doing nothing for the have not's. The growers will keep the profit and face it, it won't reach the one's that need it most. So this is nothing more than Starbucks patting themselves on their back. BOO on Starbucks overpriced coffee.
1-18-2007 @ 11:33AM
jeanna said...
Starbucks may be touting helping the underpriveleged growers but I've discovered Capulin coffee through a friend. They actually seem to be on a true mission to benefit the growers and not exploit them. Midday Magic is amazing coffee.
1-18-2007 @ 11:36AM
Tobias Schreiber said...
Well for all you critics out there....Starbucks is under a microscope for all the moves and choices it makes. It is a still a business that is trying to make a profit that is providing security for over 120,000 employees not including the many families that work in producing the coffee. They have done many things that may or may not be seen as perfect. But I do know for a fact that they pros definitely out weigh the cons...so all of you complaining about coffee prices, Starbucks takes care of a lot of people so suck it up...
1-18-2007 @ 11:37AM
Felicia said...
Alright everyone...
not only DOES starbucks pay premium prices for their beans, they also build hospitals and schools and churches and do TONS of stuff for the communities where they buy their coffee from. And everyone complains about what the prices are, and funny, because i have never heard the people who are there all of the time complain about it. And if you take into conideration what the company pays their employees (currently nearly $1 above min. wage, and higher for shift supervisors) along with the fact that EVERY starbucks employee who works over 20 hours a week (this includes the FARMERS that everyone is talking about) are eligible for HEALTH CARE (really good too if i might say), a 401K, stock options, tuition reimbursment and alot more...than you add on the cost off the ingredients in the drinks and all of that stuff...you'd realize that you are paying a very FAIR price for you cup of joe. Its really sad when everyone has to pick on a company that is providing people with alot of things, and doing alot for communities...just because they think they have the facts. maybe some of you need to go INTO a starbucks and ask for last years social responsibility fiscal report, and its probably on the internet as well...sure a bottle of water will cost you an insane $1.80, but .10 of that is going to help get clean water for children in third world countries...so why not pay it? that means that you are helping too...
the problem is we live in a society where nobody gives a hoot about anyone but themselves...here we have a company that is worried about MORE than the profit they make, and they are just getting harrassed for it...how terrible.
1-18-2007 @ 11:38AM
you can compare starbucks to wallmart that all it is,they just found a market said...
i dont know if the majority of people even like starbuck coffee or just it is accesable for them.
1-18-2007 @ 11:40AM
tomas said...
What a tangled web when it comes to wholesale "procurement" of coffee beans. Us laymen have no idea whether any real money really trickles down to the ones who deserve it most, the farm laborers, "campesinos" etc. If I knew, and thats a big if, that Staburcks and Folgers etc were giving up a slight percentage of their coveted market share in order to put more money back into those rural communites, then I would gladly pay twice as much for a pound of coffee. In the meantime I try to only buy Fair Trade coffee, it costs a little more sometimes but I sleep a better at night.
1-18-2007 @ 11:47AM
tammy said...
who cares what they pay for it, it is just damned good coffee, wish they were on EVERY corner!
1-18-2007 @ 11:52AM
ray said...
Your coffee is way to expensive and doesnt taste anywhere as good as Donkin Donut coffee. Your coffee has a burnt taste to it. DD coffee is smooth and rich tasting.
1-18-2007 @ 11:56AM
Don said...
Overpriced? From the gas pump to the local dairy case to your local car dealership. If we're gonna get on this train, we need to point that finger toward many other entities far more significant than a coffee shop.
1-18-2007 @ 12:02PM
Jim said...
America runs on Dunkin
1-18-2007 @ 12:06PM
GAVIN said...
COME ON ALL YOU NEGITIVE,UNINFORMED,WISH I WAS FORECASTERS OF THE SECOND LARGEST COMMIDITY IN THE WORLD..........GIVE ME A BREAK. YOU DO NOT DO YOUR RESEARCH.STARBUCKS DOES CARE ABOUT THE FARMERS IT DOES BUSINESS WITH AND THEY ALSO CARE ABOUT EVERY EMPLOYEE WHO WORKS FOR STARBUCKS.YOU ARE BRAINLESS TO SAY OTHERWISE.
1-18-2007 @ 12:11PM
l harman said...
Not certain why some folks are so critical of Starbucks. Great product, packaging, and clean, friendly stores. Starbucks also pays decently and gives even part-timers benefits! Who else does that? I support Starbucks all the way. If anyone is agitated at the world go pick in radical muslims.
Did you know Obama went to muslim school?
1-18-2007 @ 12:23PM
Mike B. said...
Hard to believe the passion STARBUCKS brings out in people,on both sides. They are the good guys, but I'd rather have a cup of the new McDonalds coffee for sixty nine cents anytime!
1-18-2007 @ 12:33PM
Harold Berman said...
I don't drink much coffee but when I do, I could care less how much the merchant pays for it. I just want it to taste good and not empty my wallet. My favorite coffee comes from those huge gas stations on the highway. And when I drive long distances, I really need some good coffee. At those stations, they charge about $1.25 for a huge cup and you have all kinds of milk or cream to add. They provide a real service to the drivers and the public. Starbucks charges almost twice as much and their coffee (aka rocket fuel) is bitter. When I have no other choice, I will buy the Star but I don't like it. And if they overpay for the beans, that is their problem.
1-18-2007 @ 12:46PM
Cliff Zimmerman said...
This is a true story. My name is Cliff Zimmerman. In the summer of 1969, I
> > was trying-out for the Canarsie High School (in Brooklyn, NY), football
> > team. At the time, I was almost 16 years old, about to enter the 11th
> grade.
> > I had recently transferred from Stuyvesant HS in Manhattan, where I was
> the
> > starting quarterback on the JV (junior varsity), football team. I had an
> > extremely strong arm for my age, and was able to throw a football almost
> 70
> > yards. I was not well received by the players on the Canarsie team, as
> they
> > were a tight group of friends that had been playing together for years. I
> > was good enough to challenge for the starting quarterback position, but my
> > efforts to join the team met with much resistance. The other quarterback,
> > already on the team, was extremely jealous of my talents. Since it was
> > acknowledged by the coach that I was the better player, and consequently
> had
> > the inside track for the starting position, the other quarterback went
> out
> > of his way to physically hurt and humiliate me. There are two specific
> > incidents which I can recall. To this day, they are still ingrained in my
> > mind, as if they had just happened. One time, I was standing in front of a
> > bunch of thorny bushes. The quarterback's best friend, Michael "Meatball"
> > Hirschorn, sneakily knelt down behind me, as the quarterback violently
> > shoved me into the sharp bushes. They all laughed and taunted me, as I lay
> > there bleeding and dazed. Another time I returned to my locker just in
> time
> > to witness the quarterback urinating into my locker, pissing all over my
> > personal belongings. He turned to me and laughed, "What are you going to
> do
> > about it, huh?" I stood there completely stunned, as he walked away,
> > hysterically laughing... This past summer I was at my high school reunion,
> > where I struck-up a conversation with an old acquaintance. I was informed
> > that this same person, the quarterback who tormented and humiliated me, is
> > now the owner of Starbucks - Howard Schultz. I remember him as being a
> > ruthless and despicable human being, who would stop at nothing to crush
> > those who got in his way. It is common knowledge that untold numbers of
> "mom
> > and pop" stores have been put out of business by the corporate monster
> known
> > as Starbucks. Too, they employ over-sea / underaged child labor to keep
> > their operating costs at a minimum, all the while claiming to know
> > absolutely nothing about unfair and illegal business practices. I do not
> > patronize Starbucks, and anyone with a social conscience should not
> either.
> > Both Howard Schultz and his company epitomize GREED.
>
>
>
1-18-2007 @ 12:52PM
Carl said...
Anyone who has frequented a Starbucks should know that everything they sell is grossly overpriced and
if they choose to pay it then let them, I personally will not.