DATAMONITOR360

Starbucks: a shot in the arm for Fairtrade

Overview
Extracted on: 21 Oct 2011 Reference Code: 6F0FAF0F-F619-42B7-A95B-14F1735F10D7 Publication Date: 27 Nov 2008 Publisher: Datamonitor

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DATAMONITOR360

Starbucks: a shot in the arm for Fairtrade

Overview

As part of its strategic overhaul, US coffee chain Starbucks has announced that all of its espresso-based beverages in the UK and Ireland will be fair trade by the end of 2009, ostensibly helping 100,000 farmers globally. However, the commercial value of the move is questionable as it may lead to increased prices when consumers can least afford them. The US coffee giant's latest commercial endeavor involves the conversion of all of its espresso-based coffee drinks (including cappuccino, mocha and latte) to fair trade coffee by the end of 2009. The announcement encompasses the retailer's 700 UK and Ireland stores, although the move is planned to be rolled out globally at a later date. Starbucks's latest strategy follows UK chain Costa Coffee's October announcement that it would source part of its overall coffee bean supply from farms approved by the Rainforest Alliance. Starbucks's move is part of an ongoing attempt by the firm to revitalize its sales. Indeed, the retailer needs to improve as it faces great competition from both direct competitors and McDonald's and JD Wetherspoon, which have targeted coffee sales to make a greater contribution to their respective bottom lines. Currently, 6% of Starbucks coffee is certified as fair trade. Its new commitment would see the company double this value, resulting in the Seattle-based chain becoming the world's largest buyer of fair trade coffee. In addition, the Fairtrade foundation has stated that the move will benefit 100,000 farmers in Latin America, Asia and Africa. Starbucks might feel it needs to address its public image, as many consumers may find the size of its organization and its global cultural reach overwhelming, possibly to its own detriment. This 'choice editing' move by Starbucks should help refocus and soften the company's image. Many economic and financial commentators believe the global economic downturn could become a prolonged or deep recession. If this proves to be the case, sales of societal and ethical food and drink products may suffer. The Starbucks move is an interesting counterpoint, as it is primarily a commercial move that may help bring about societal change. However, if it leads to price rises when consumers feel they can least afford the extra expense, the commercial value of the move may be limited, or may even prove detrimental to sales.

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