Chin up, Schultz tells workers, don't let critics get you down

In an earlier report, “Ethiopian coffee trademark dispute may leave Starbucks with nasty taste,” by Madeleine Acey, Douglas Holt. the L’Oréal Professor of Marketing at Oxford, was quoted as saying:

“In their rash attempt to shut down Ethiopia’s applications, Starbucks have placed the Starbucks brand in significant peril. Starbucks customers will be shocked by the disconnect between their current perceptions of Starbucks’ ethics and the company’s actions against Ethiopia.”

Starbucks is accused of working with its industry lobbyists to block Ethiopia’s efforts to control ownership of the country’s most valuable coffee brands. According to Oxfam, the Ethiopian growers selling to Starbucks earned between 75 cents and $1.60 a pound on beans that Starbucks sold at up to $26 a pound. Over 90,000 petitioners responded to Oxfam’s call to ask Starbucks to honor its commitments to the Ethiopian coffee farmers.

According to today’s report on the Seattle Times, Starbucks Chairman Howard Schultz is not too happy with the media attention his company has gotten. Lately, the Starbucks brand has been associated with withholding from poor farmers a fair price for their coffee. Are we seeing the warning from Prof. Holt coming true?
----

Chin up, Schultz tells workers, don't let critics get you down
By Melissa Allison
Seattle Times business reporter
Wednesday, February 14, 2007

Starbucks Chairman Howard Schultz wrote a love letter to employees last week encouraging them not to be disheartened by negative media and online reports in recent weeks.

"Each and every day, you create something special in the world," Schultz assured Starbucks' 135,000 employees.

"Like many of you, I feel it personally when misperceptions about our company or our intent are circulated," he wrote in the Feb. 8 letter.

Employees have responded positively to the message from the man whose name is synonymous with the world's most popular coffee-shop chain, according to Starbucks officials.

But they wouldn't say what negative publicity he was talking about, only that "connecting with our [employees] is a high priority for all of us, and this is just another example of that."

Meanwhile, analysts and investors are scratching their heads about the letter.

"I talked to a large institutional investor who asked me what the bad press was," said Tim Bueneman, senior vice president at McAdams Wright Ragen in Seattle.

"I thought the Consumer Reports story had something to do with it," he said, referring to a recent taste test run by the magazine in which McDonald's coffee beat out Starbucks.
John Owens, an analyst at Morningstar, was similarly perplexed.

"I have no clue. Could it be the issue with the Ethiopian farmers?" he guessed, recalling recent stories about Starbucks wanting Ethiopia to geographically certify rather than trademark its coffee beans.

Whatever irked Schultz, he might have to get used to it.

"As a corporate juggernaut," Owens said, "Starbucks will become a lightning rod for criticism from various groups, much like McDonald's is."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com