MPs Stumble On The Hot Spot: How Fair Is Starbucks?

Part III of the transcript taken during the UK Members of Parliament questioning of Starbucks and others.

Preceding posts:

Part I, "Parliament Grilled Starbucks over Ethiopia's Trademark Issue"
Part II, "MPs Explore Starbucks' Fair Trade® Credentials"
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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 356-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INTERNATIONAL DEVELOPMENT COMMITTEE

FAIR TRADE AND DEVELOPMENT

Tuesday 27 February 2007


MS SANDRA TAYLOR, MR CLIFF BURROWS and MR MIKE BARRY

Evidence heard in Public Questions 1 - 82

Oral Evidence Taken before the International Development Committee on Tuesday 27 February 2007

Members present
Malcolm Bruce, in the Chair
John Barrett
John Battle
John Bercow
Richard Burden
James Duddridge
Ann McKechin
Joan Ruddock
Mr Marsha Singh

Examination of Witnesses

Witnesses: Ms Sandra Taylor, Senior Vice President, Corporate Social Responsibility, Starbucks Coffee Company, Mr Cliff Burrows, Senior Vice President and President of Starbucks Coffee Company, Europe, Middle East and Africa, and Mr Mike Barry, Head of Corporate Social Responsibility, Marks & Spencer, gave evidence.

(Continued from Part II)

Q66 Ann McKechin: In light of the success of Fairtrade here and in Europe, can you say why you decided to go along with your own scheme at the end of the day three years ago, as opposed perhaps to a scheme which had wider recognition among producers and retailers?

Mr Burrows: Again, this is not either/or for us; it is complementary. Today, fair trade accounts for about two per cent of world coffee production. We are responsible for purchasing about two per cent of global coffee. Those two numbers are coincidentally the same. We are a global business where fair trade recognition and the brand are different in different countries. We referred to TransFair USA; it is Max Havelaar in France, Belgium and some other countries in Europe. It is the fair trade labelling organisation which is the association. Equally, we had a big commitment to the sustainability of farmers' crop and that was why for us CAFÉ practices support our future growth, our commitment to quality and the payment of a premium price. We paid $1.42 on average per pound last year which is a premium on the prevailing commodity price.

Q67 Joan Ruddock: What percentage of the coffee that you purchase for the US market is done through TransFair USA as opposed to your own scheme?

Mr Burrows: Six per cent of our total purchases are made through TransFair.

Q68 Joan Ruddock: For the US market?

Mr Burrows: In total, it is 14 per cent of fair trade coffee and the vast majority is through TransFair.

Q69 Joan Ruddock: So, it is six per cent in the US?

Mr Burrows: Yes.

Q70 Joan Ruddock: What percentage of the coffee that you buy for use in the UK market goes through Fairtrade?

Mr Burrows: We buy coffee and use roasting plants in the US and also Amsterdam. We tend to measure at one level which is the total purchase, that is, 14 per cent of the global market. That is bought at a premium price of $1.42. In terms of the retailing element - we will not buy specifically for the UK market - we have seen a consumer increase in ethical including fair trade products over the past few years. We offer Fairtrade as a fresh-brewed coffee daily in the UK stores, and we offer whole bean. One of the range is a fair trade Café Estima blend which includes fair trade coffees from Latin America and East Africa. It is always available in our stores and today probably six per cent of our whole bean coffee is under the Fairtrade mark.

Q71 Joan Ruddock: Six per cent of the coffee consumed in your outlets comes under Fairtrade?

Mr Burrows: Yes, indeed.

Q72 Joan Ruddock: I confess that I have not been in one recently. My hours are such that I do not get out enough, but I understand - I have checked with those who know - that if one goes to a counter to buy a cup of coffee in a Starbucks outlet one must specify that one wants the Fairtrade coffee. Obviously, it is a minority product within the café, so when one goes to the counter one needs to ask for the Fairtrade coffee.

Mr Burrows: Most stores will offer two coffees every day: one will originate from a product or blend somewhere round the world; the second one will consistently be a fair trade coffee, and that is a Café Estima Fairtrade-certified blend. It is always on offer in our stores, as are the whole beans. If one orders a latte that will not be a Fairtrade product; it will be one purchased predominantly under the CAFÉ practices mark because we have the same mix, recipe and standard in all our stores round the globe. Indeed, that has been a blend which is proprietary to our product since 1986.

Q73 Joan Ruddock: Given that practice, what is the scope for increasing - would you wish to do so - the amount of Fairtrade coffee that you sell here?

Mr Burrows: If one looks at the Fairtrade purchase, over the past several years it has gone from 1.2 million, to 2.4 million and then 4.8 million. We then broke through 10 million and last year it was 18 million. We have a commitment to grow that and to offer our customers a range of coffees in terms of both origin and quality. There is a continuing interest in Fairtrade, so I see it growing. In my time with the UK business we introduced whole bean first, ironically, through Sainsbury. Then we introduced whole bean in all our stores and moved it forward to work with the Fairtrade Foundation to develop the Café Estima blend which gave us consistency that we can offer round the globe. In a sense, I think that has been one of the major achievements. We now have a recognised Fairtrade product that we are proud to share with our consumers round the globe.

Q74 Joan Ruddock: It is now six per cent. Where might it be in five years' time?

Mr Burrows: I really do not know, because equally we are committed to paying a premium for all our coffee and to ethically sourcing all our coffees. Part of that range will include Fairtrade. Mr Singh asked whether if it did not bear the Fairtrade label it was unfair trade. We have the commitment that in time all our coffees will meet all the criteria of transparency, price and quality and also social and economic criteria. That was how we started as a company. If we are to achieve our ambitions we have to ensure an ever-growing supply of sustainable quality coffee.

Q75 James Duddridge: We heard earlier that DFID had funded work in schools and a number of projects through Fairtrade to increase awareness. One of our jobs on this Committee is to hold the Government to account and make sure that that money is being spent well. Whilst not condemning that expenditure, it strikes me that perhaps some of that money should have come from supermarkets and retailers. Do you agree that that may happen longer term, and what more can supermarkets and retailers do to promote fair trade generally?

Mr Burrows: That is a valid question. I believe that Fairtrade has done an amazing job especially in this country in raising awareness of the foundation and the fair trade issue generally. We contribute to that through the promotion advertising and the payment of a licence for using the Fairtrade logo. In a sense there is funding. The other matter - I am sure that I also speak for Marks & Spencer - is that we need to talk to our consumers. They are incredibly inquisitive; they want to know what you are doing these days and they along with the workforce hold you to account. We spend a tremendous amount of time talking to and training our own employees in stores - we call them our partners - so they can share that information and conversation with consumers. I have here a fairly standard leaflet that we provide both for consumers and for educating our partners in the stores. It is about how we source our coffee. Mr Singh asked whether if it was not labelled Fairtrade it was fairly traded. Those are the types of questions being asked, whether by those in schools, by our own people who work in the stores in the UK or the more than one million customers who visit our stores every week.

Mr Barry: I think that this is the best money this Government has ever spent in addressing social and environmental issues. The change that has taken place in terms of consumer awareness of social issues and the awareness of retailers that they have to progress and make changes to their supply chain and mobilise change among producers has made a huge difference. Do retailers have to contribute? Yes, and we do so via the licence fee and Fairtrade price that goes back to the producers and all the marketing that we put into it. Interestingly, just after Christmas we had a team of 50 people in the room preparing for Fairtrade Fortnight: merchant buyers who make sure that we have the right products in the right store at the right time, technologists who manage the supply chain and marketers. Those 50 people across the business were involved in Fairtrade. That is a valuable commitment by the business to make a change. It is right that Fairtrade should be something to which retailers contribute, but I believe that those are the primary vehicles by which they should do it.

Q76 Chairman: That raises a question which perhaps is slightly unfair given that Ms Lamb has left the witness table, although she is sitting behind it. One of the matters that you have said is that there is Fairtrade which is a registered trade mark and there is also the concept of fair trade. I just wonder whether there is a danger of confusion. We go back to Mr Singh's question. People are asked whether they want Fairtrade coffee or Starbucks coffee. That is not a good mix. Looking at it the other way round, if the Fairtrade Foundation says that it is the only fair trade organisation there is a danger of compromising other good practices. How do you reconcile Fairtrade as a registered trade mark and the development of fair trade practices and ensure that they do not collide but operate in a synergistic way and add value to the concept?

Mr Burrows: That is an excellent point to make. Obviously, there are other marks alongside Fairtrade. You mentioned the Rainforest Alliance. There are other marks such as the Organic Soil Association. We must as a country with the support of government, Select Committees and DFID work - I do not say "educate" - to achieve standard criteria for trading. The more we can get synergy across marks or what they stand for not only in this country but elsewhere - TransFair and Fairtrade are two different logos but they are committed to the same end - publicise them and share them with the public the better the public will be informed.

Mr Barry: All our market research tells us that consumers want a minimum number of trusted labels in the line. There is a high degree of trust in Marks & Spencer and many other retailers in the UK, but what they are saying is that they still want us to use an independent mark where possible. We believe that the ground-breaking work of the Fairtrade Foundation particularly with commodities - cocoa, cotton, sugar, coffee and tea - gives huge reassurance to the consumer about how to do that. One must remember that the British consumer has been on a journey. Back in 1990 the British consumer was probably the most trusting in the world. There was a succession of food scares in the 1990s: GM food, mad cow disease, foot and mouth et cetera. That left the consumer in the UK pretty bruised. Consumers became concerned about what they were being told by scientists and government. As a result of that uncertainty consumers are saying to us that they want to make sure there is an independent voice just to check it and keep an eye on it in order to understand what is going on. Would we be better off if every British retailer had a different approach to social development? I do not think we would. By all of us backing the Fairtrade mark we support each other and become a much stronger set of retailers in terms of what we are doing and how we deliver it.
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To be continued in Part IV