The Ethical Espresso: Fairtrade Firm to Take on Starbucks

Cafédirect to go head to head with US cappuccino giant
The Independent
By Danny Fortson and Lauren Veevers
Published: 11 March 2007

Selecting a coffee can be a complicated affair: American-owned outlets have introduced a generation of Britons to all sorts of often baffling sizes, types and milk-fat combinations.

Now, though, all this is about to boil down to one key choice: would you like your coffee with ethical feelgood factor to go?

Cafédirect, the UK's largest Fairtrade hot drinks company, is planning to roll out a network of city-centre bars, sparking coffee wars on British high streets.

With the UK Fairtrade market soaring to the £200m mark, the company is seeking to challenge the omnipresent Starbucks, criticised last year for its alleged unfair bargaining with Ethiopian coffee farmers.

Penny Newman, chief executive of Cafédirect, said: "We want to get our message across, and a coffee bar is a good way to do that."

Part of the profits from the stores will be sent back to the communities of 250,000 coffee-bean growers in Latin America and Africa.

Ms Newman said: "It's not just about giving a fair price. It's about championing a different way of trading coffee. It is also about being a business, not about being a charity. You've got to be a business to be able to change the rules."

Starbucks has grown into a business with an annual turnover of $7.8bn (£4bn) - not far behind Ethiopia's entire gross domestic product.

Starbucks was recently caught in a public relations disaster after it was revealed that while Ethiopian farmers get about $1.10 (57p) per pound of coffee, retailers can make about 52 espressos from a pound of coffee, worth up to $160 (£83).

Cafédirect's formation was prompted by the end of the International Coffee Agreement in 1989, which led to a collapse in global coffee prices, driving many small farmers into poverty.

The Fairtrade coffee market around the world was valued at £13.7m nine years ago, but by 2005 it had grown to £65.8m.

In October 2006, more than 1.5 million disadvantaged producers were directly benefiting from Fairtrade, while another five million benefited from Fairtrade-funded projects.

The UK has the biggest Fairtrade market of 20 countries across Europe, Japan, North America, Australia, New Zealand and Mexico.

The first Cafédirect outlet has opened in Regent's Street in London, and its success has prompted the plan to roll out stores across the country.

Ms Newman used her prior experience at the Body Shop, the original ethical business pioneer, to shape Cafédirect's business.

She spent a great deal of time talking to local growers to ensure that the end product was much better.

Ms Newman says she wants to make sure that Cafédirect doesn't meet the same fate as the Body Shop, which was bought last year by cosmetics giant L'Oréal.

She said: "I'd love it to end up like the Body Shop in terms of turnover and being a global brand, but I would hate for it to be taken over by somebody who is not ethically centred. I want to go on championing the idea of a truly global, ethical brand."