Paper 2

Starbucks and (Un)Fair Trade


Introduction

It is a cold, winter day in the middle of December, and you are looking for a warm, comfortable place to go and get some work done. You decide to head to the local Starbucks on the corner, where you order a tall Peppermint Mocha—with whipped cream and chocolate syrup, of course. You then make your way to a cozy chair in the corner, where you set up your laptop and books. The atmosphere is perfect. The store design is perfect. The employees are perfect. And the coffee is…well, that is up for debate.

As consumers, many of us know Starbucks as being one of the most popular brands in the coffee industry. Many people also know that Starbucks offers Fair Trade certified coffee, which the company often uses in its marketing campaigns to demonstrate how ethically responsible it is. Some consumers are not aware, however, that Fair Trade certified coffee is not as humane and virtuous as it seems. In fact, it is not really fair in any sense of the term. From a deontological ethical standpoint, Starbucks does not live up to ethical ideals in its promotion and sales of Fair Trade certified coffee.

History of Fair Trade Certified Coffee

The trend toward Fair Trade certified coffee stems from the Contra Movement, which occurred in Nicaragua during the 1980s. The Contra Movement resulted from the Nicaraguan government’s unfair treatment of coffee farmers. The United States supported the farmers in their rebellion (Stanley and Argenti 11). “When President Ronald Reagan banned Nicaraguan imports, Thanksgiving Coffee owner Paul Katzeff imported Nicaraguan beans through Canada and donated $.50 a pound to the Sandinistan farmer” (Stanley and Argenti 11). After numerous other countries hopped on the bandwagon and established Fair Trade efforts:

In 1997, an umbrella group called the Fairtrade Labelling Organizations International (FLO) was formed to coordinate monitoring and certification processes. There were 277 cooperatives from 24 countries representing 550,000 farmers that produced coffee on the Fair Trade Registry in 2001 (Stanley and Argenti 11).

After the organization’s creation, it had to establish specific regulations. Two important regulations, which often acted as limitations, were that only farmers with small areas of land were permitted to participate and these farmers were required to be members of a cooperative (Stanley and Argenti 12). Two organizations that helped jumpstart and make popular the Fair Trade movement in the United States were TransFair USA and Global Exchange (Stanley and Argenti 12-14). Global Exchange even used Starbucks as an example of a company that could benefit from Fair Trade (Stanley and Argenti 14).

According to the chart in Appendix A, published in a Stanford Social Innovation Review article written by Colleen Haight, the number of imports of Fair Trade certified coffee the United States received increased every year from 1998 to 2009 (Haight 4). The article explains, “The United States is the world’s single largest consuming country [of Fair Trade certified coffee], buying more than 22 percent of world coffee imports” (Haight 4).

Fair Trade: It is Not What You Think

There are a variety of issues associated with Fair Trade coffee. One very important issue involves consumers. Many consumers consider it worthwhile to purchase Fair Trade certified coffee at local grocery stores and coffee shops; however, the high price tags on these coffee beans do not necessarily translate into higher quality. In fact, Fair Trade certified coffee is frequently lower quality than regular coffee in the marketplace. Since the special coffee is not in high enough demand, not all of these farmers’ coffee beans can be given a special Fair Trade certified label. The beans that are not given the label are sold at regular price, according to their quality. As a result, farmers choose to give their lower quality coffee the Fair Trade label, so they can earn more money off of the higher quality coffee at higher market value (Haight 5). Appendix B depicts an image of the Fair Trade certified label.

Are consumers aware that they are spending more money to receive a lower quality product? The answer is most likely no. Consumers are better off purchasing higher quality coffee, with a lower price tag, and then donating extra change directly to the farmers. Who wants to spend more for a fancy label anyways?

Another principal issue along these lines is that consumers in the marketplace are paying higher prices for coffee with Fair Trade certified labels; however, it is unclear what exactly the premiums are going toward. In her article, Haight explains how money from premiums sometimes goes toward new construction projects and wages at cooperatives (9). Some consumers’ minds may change once they know that the extra money they are putting toward purchasing Fair Trade certified coffee is not going directly to farmers. This seems to be unclear advertising on behalf of the FLO.

The third major problem with Fair Trade is that it limits participants to only “…small growers who do not rely on permanent hired labor and belong to democratically run cooperatives” (Haight 6). This excludes other farmers, of different sizes, from participating in the program (Haight 6). This limits the amount of Fair Trade certified coffee that exists, and if the program is truly that philanthropic, why do rules such as this limit its potential? It is also discriminatory toward farmers that do not fit the established criteria. One of the major purposes of the Fair Trade movement is to assist farmers, and make sure they receive more money (Haight 2). According to Haight, “The poorest segment of the farming community, however, is the migrant laborer who does not have the resources to own land and thus cannot be part of a cooperative” (Haight 8). If the lowest class of farmers is not permitted to participate, there is a flaw in the system. This is unfair and completely goes against one of the principal causes of the movement.

Starbucks and Ethics: A Deontological Perspective

In a description of its coffee products on the company website, Starbucks states, “We have offered Fairtrade coffee since 2000, and are now one of the largest purchasers of Fairtrade certified coffee in the world. In 2012, 44.4 million pounds (8.1%) of our coffee purchases were Fairtrade certified” (Starbucks.com). It is apparent from the website that Starbucks uses its Fairtrade certified coffee as a way to make the brand more appealing to consumers. According to the Organic Consumers Association website, however, Starbucks has marketed itself as giving farmers $1.20 from the Fair Trade premium, but this is not completely true since the company purchases coffee from a separate party, and not directly from farmers (Organicconsumers.org). As a result, the portion of the premium that Starbucks pays that actually reaches the farmers is only $.80 (Organicconsumers.org). Clearly, this is false advertising.

Similarly, in her journal article, Constance M. Ruzich quotes “Starbucks and Fair Trade,” 2002, stating, “Every time you purchase Starbucks Fair Trade Blend, you’re also making a difference, helping to improve the lives of the farmers who grow it” (Ruzich 438). As revealed earlier, evidence exists that this is not necessarily true. Consumers do not always know where the premiums they are paying are actually going. Furthermore, there is nothing in Starbucks’ marketing and advertising stating consumers’ premiums are not going directly to farmers, but they are instead going to separate parties that receive the imported coffee before Starbucks. Ruzich goes on to say that “[Starbucks’ advertising] should be scrutinized and recognized as a high-stakes effort to manipulate, persuade, and sell” (440). This demonstrates that the consumers must take Starbucks’ advertisements for what they are, and individuals should not get caught in the trap of paying inflated prices for Fair Trade certified coffee. By purchasing this coffee, consumers may not be supporting a cause that is as philanthropic as it seems.

In terms of deontological ethics, Starbucks’ commitment to the Fair Trade organization does not live up to ethical ideals. This is especially evident through the company’s marketing and advertising. According to Treviño and Nelson, “…a deontologist focuses on doing what is ‘right’ (based on moral principles or values such as honesty)” (42). In its advertisements, Starbucks is not lying, but it is not being completely honest either. In not revealing all detailed information about the Fair Trade certified coffee and to where consumers’ money is actually going, it is not carrying out the “fairness” aspect of deontological ethics (Treviño and Nelson 42).

Another point that Treviño and Nelson bring up, which also applies to Starbucks’ case is, “A major challenge of deontological approaches is deciding which duty, obligation, right or principle takes precedence because, as we said earlier, ethical dilemmas often pit these against each other” (45). Starbucks has a right to conduct its marketing and advertising how it chooses—to some extent, at least; however does the company not also have an ethical duty to be completely transparent in communicating with consumers? The company has clearly made its decisions in favor of the prior.

In her book, Wrestling with Starbucks: Conscience, Capital, Cappucino, Kim Fellner explains how Starbucks does not act completely just in terms of the prices at which it sells its Fair Trade certified coffee and the amount of money farmers actually receive from the deal. In fact, “…farmers were getting less than 5 percent of the value, an immorally small share.” In contrast to Starbucks CEO Howard Schultz’s compensation, this amount is pathetic (Fellner 233). As such a successful company, Starbucks clearly has the ability to pay farmers more money, but it chooses not to do so.

According to the Stanford Encyclopedia of Philosophy, “…the moral duties typically thought to be deontological in character…are duties to particular people, not duties to bring about states of affairs that no particular person has an individual right to have realized” (Alexander and Moore 16-17). Starbucks’ deontological ethical ideals are the duties it has to consumers and to the farmers who grow the company’s coffee beans. From this ethical standpoint, we should expect Starbucks to be completely honest and transparent in its communications with consumers. For example, consumers may not know until they read through the company’s website that only 8.1% of Starbucks coffee is Fair Trade certified (Starbucks.com). They may never know that the Fair Trade certified coffee they are purchasing is low quality, and that the premiums they are paying are not going directly, or entirely, to the farmers who produce the beans.

The Seven Pillars Institute delves further into deontological ethics by describing three terms associated with the philosophy: moral agent, maxim, and will (Shakil 1). In this case, Starbucks would be the moral agent. The company’s maxims would be to establish honest and open lines of communication with consumers and to support coffee bean farmers to the best of its ability. In terms of Starbucks’ will, evidence shows that it has decided against carrying through with these maxims; instead, the company finds loopholes to avoid them.

“Morality should, in theory, provide people with a framework of rational rules that guide and prevent certain actions and are independent of personal intentions and desires” (Shakil 2). Starbucks has not followed through with this aspect of deontological ethics. Through its marketing and advertising slogans emphasizing Fair Trade certified coffee, the company seems to be providing consumers with what they want to hear. The advertisements make the program sound as if it is supporting farmers more than it actually is. For example, the advertisement that appears in Appendix C implies that Starbucks coffee is worth the higher price (Bitterwallet.com). This suggests that the higher price is worth it because Fair Trade is such a good cause (Bitterwallet.com). It is likely that Starbucks incorporates its Fair Trade participation into its advertising because the company believes it will aid in attracting consumers and increasing sales. Rather than focus on the company’s personal interests, however, Starbucks should instead make the moral decision to either not participate in the program, or clearly convey to consumers the issues and limitations associated with the programs, so the company does not mislead consumers.

Conclusion

Starbucks does not live up to deontological ethical ideals.  The company sells Fair Trade certified coffee and misrepresents the meaning of the Fair Trade certified label in its advertisements and communication with consumers. Starbucks’ participation in the Fair Trade program makes it a poor example of a company that carries out deontological ethics. Next time you wander into you nearest Starbucks and place an order for that almost unaffordable, tall Peppermint Mocha, you may want to look beyond the creamy whipped cream and ooey, gooey chocolate syrup swirled on top. Perhaps you should think more deeply about the ethical standards you expect from such a successful company and the types of behavior that you are reinforcing when you hand over those dollar bills.

Appendix A

Appendix A

Source: Haight 4

Appendix B

Fair Trade Certified Label

Appendix B

Source: Usroasterie.com

Appendix C

Starbucks Advertisement

Appendix C

Source: Bitterwallet.com

Works Cited

“Coffee.” Starbucks.com. N.p., n.d. Web. 12 Nov. 2013.

“Deconstructing Starbucks’ ‘Fair Trade'” Organicconsumers.org. Organic Consumers Association, n.d. Web. 12 Nov. 2013.

Starbucks Advertisement. Digital image. Bitter Wallet. N.p., 1 May 2009. Web. 14 Nov. 2013. <bitterwallet.com>.

Fair Trade Certified Label. Digital image. U.S. Roasterie. U.S. Roasterie, n.d. Web. 15 Nov. 2013.

Fellner, Kim. Wrestling with Starbucks : Conscience, Capital, Cappuccino. New Brunswick, N.J.: Rutgers University Press, 2008.

Haight, Colleen. “Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change.” The Problem with Fair Trade Coffee. Stanford Social Innovation Review, 2011. Web. 12 Nov. 2013.

Larry, Alexander, and Michael Moore. “Deontological Ethics.” Science.uva.nl. Stanford Encyclopedia of Philosophy, 2012. Web. 12 Nov. 2013.

Ruzich C.M. “For the Love of Joe: The Language of Starbucks.” J.Pop.Cult.Journal of Popular Culture 41.3 (2008): 428-42.

Shakil, Ali. “Kantian Duty Based (Deontological) Ethics.” N.p. N.d. Web. 12 Nov 2013.

Stanley, Alison, and Paul A. Argenti. Starbucks Coffee Company. CasePlace.org. Tuck School of Business at Dartmouth, 2002. Web. 12 Nov. 2013.

Treviño, Linda K., and Katherine A. Nelson. “Deciding What’s Right: A Prescriptive Approach.” Managing Business Ethics: Straight Talk about how to do it Right. Fifth ed. 42-45.

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