Dispute brings a rare opportunity for Starbucks

By Wondwossen Mezlekia

The recent Starbucks Day of Action escalated the public dispute to another level, described by an activist as color orange or “severe” – red being “imminent” - in a scale of likelihood of public actions. Starbucks has not commented on this to date but there are indications suggesting that the company did feel the heat. Whether the giant would move from its stance remains an interesting story to follow.

On December 16, many Starbucks customers including Ethiopian Americans, Fair Trade activists, and University students made it out to the busy streets in the US, Canada, New Zealand, United Kingdom, Germany, and other countries. In addition, in what is seen as proof of Oxfam’s sophistication in campaign strategies and the organization’s intimacy with grassroots supporters, a video of the public action was released through YouTube on December 19th - another surprise. The three minutes video is both alarming and full of striking contrasts.

It is amazing to see people from different corners of the world talk the same language. Starbucks customers across the globe are shocked by what they’ve come to learn. Some customers are even compelled to make a sudden decision of boycotting Starbucks despite no mention of the “B” word throughout the campaign.

The company’s actions against Ethiopia symmetrically oppose the touted ethical practices. The gap between the public’s perception of Starbucks and what is revealed in the video is too wide to connect. But one of the customers interviewed on the video thinks that Starbucks can turn this around by taking a better course of action. He advises Starbucks to use this opportunity and “show that they are what they say they are.”

I agree. Public disputes have this horrible nature of harming businesses in the hospitality industry more than others. If not for fear of damages to its reputation, I think the timing is indeed an opportunity for Starbucks to advertise their determination to play fair. This is paramount especially in light of the company’s ambitious expansion plans - both vertical and horizontal.

At home, Starbucks has a challenge to win in order to continue dominating the market through diversification. The growing urge by customers for global justice and ethical business practices is an untapped potential. This is an opportunity for all brands founded on ethical premises of supporting sustainable development in poor countries.

The demand for environmentally friendly and fairly traded commodities is already ahead of the supplying capacity of the mushrooming businesses (not necessarily producers). In Seattle and other major cities in North America and Europe, Starbucks senses its weaknesses as compared to its competitors who are fast filling in the niche market by serving 100% Fair Trade Certified™ coffees in Universities and other central locations.

It is unlikely that future customers settle for anything less than fairly traded goods and services. If coffee businesses and the American football game have commonalities, it is that their regulars are the ones that are captivated during their early ages. These Starbucks would-be customers are already coming of age.

Starbucks’ horizontal growth also faces similar challenges. The company’s focus on market penetration to reach out to newer markets highly depends on the company’s perceived image in those markets.

In other parts of the world, particularly in the Middle East and Africa, the only safe route to their markets is a positive image. It is farfetched for any company to aim at spreading its tentacles, faster than Globalization itself, to the world markets with conceit mounting to blocking the poor from benefiting.

Starbucks has just introduced its Black Apron Exclusives™ in Kuwait as “a rare and exotic coffee from Gemadro Ethiopia.” It is also opening its first store in Cairo, Egypt, a neighboring country for Ethiopia. These new emerging markets have their eyes at this public dispute and how the company handles the standoff with Ethiopia over the country’s own names will undoubtedly be detrimental to its success in the regions. Arabs are not strange to the origin of coffee Arabica.

This public attention is an opportunity for Starbucks to promote the company’s stance not only because the alternative does not look good but also it is less expensive to do it at this time.

It may look a difficult decision for a corporation as big as Starbucks to change its position in the middle of public attentions. But others, such as Nike™ and Nestlé™ have done it before. What it takes is courage. After all, the basis for a sound decision lays in weighing opportunities and threats – not just in analyzing strengths and weaknesses.

If handled well, the dispute over Ethiopia’s coffee names will benefit everyone in the supply chain including the farmers, businesses, and consumers. But a decision has to be made somewhere and it has to be made today.

As the idiom goes, a stitch in time saves nine!