Starbucks and

Conservation International
Team 9 members

Dipankar Biswas
Abhishek Nandan
SUBHRAJIT SARKAR
Subhash S N
Alexandre ZIACK
NICOLAS LANGLOIS D ESTAINTOT

Background of Starbucks
Founded in 1971, when its first store, Starbucks Coffee, Tea and Spice was founded in
Seattle
In 1982,Howard Schultz, joined Starbucks
Went public in 1992, as part of global expansion strategy

Revenues of $2.7Bn in 2001 with nearly 70% of them coming from coffee and coffee
based beverages
Mission statement: to establish Starbucks as the premier purveyor of the finest
coffee in the world while maintaining our uncompromising principles as we grow

CSR at Starbucks
Since 1991, Starbucks contributed $1.8mn to social welfare
Every decision was taken collectively

In 1999, a dedicated CSR department was formed

It oversaw Starbucks involvement in literacy programs, community volunteering,
environmental affairs, shade grown coffee and international relief efforts
It had five divisions: Business practices, environmental affairs, community issues, corporate
giving, Starbucks Foundation

Starbucks Procurement System

Purchased about
1% of the
worlds coffee

Starbucks
procured only
Arabica coffee
due to its fine
taste

Sourced typically
from small and
medium farmers

Stress was given on the

quality of the beans so much
so that it paid $1.20 per
pound instead of the industry
average of $0.48, almost one
and half times premium

From 1999,
focus was given
on procuring
shade-grown
coffee

Conservation International
Founded in 1987 in Washington D.C.
Its mission is to conserve worlds living natural heritage
It has identified 25 areas of the world as bio-diversity hotspots
It has a staff of 776 overseeing projects in 30 countries
It has an annual revenue of $56 million
Established the Center for Environmental Leadership in Business in collaboration with
Ford Motors

Finding common ground

Partnership between CI & Starbucks was keen to be created
The ideas of both the organizations was considered for the mutual cooperation between CI
& Starbucks
Starbucks mainly concentrated for high-quality coffee
CI was concerned about conservation & shade-grown coffee
Similarity of Starbucks initial alliance with Environmental Defence Fund(EDF), a non-profit
environmental group
First MOU was signed between CI & Starbucks in Feb 1998 for pilot sourcing program in
Chiapas
CI worked directly with the farmers to commit them produce quality coffee with the
standards specified by Starbucks

Key elements of partnership

A second MOU was signed between CI & Starbucks on August 2000
with focus on 4 key elements
Expanding both the companys work with farmers to promote conservation & improve livelihoods in a wider range of
global biodiversity hot spots
Supporting the introduction of a year-round product line that reflected Starbucks commitment to alternative
environmental agriculture and socioeconomic improvement in certain coffee-growing regions
Developing coffee-sourcing guidelines that incorporated sound environmental management practices and provided
fair livelihoods to farmers
Seeking to engage other leaders in the coffee business in a collaborative effort to articulate industry-wide guidelines for
environmental and social quality

Project Operations
Agreements were signed between CI & each producers with its respective cooperative

Improvements were suggested for the producers to meet the quality standards of Starbucks
Two basic practices to remain in program:
No trees could be felled on producers farms of in the Biosphere reserve
No coffee pulp could be thrown into the rivers

Precise standards were tailored to each farm

Producers committed to deliver an authorised quantity of beans to their cooperatives which in-turn delivered to
Starbucks
CI had a team of extentionists who monitored the progress
CI also provided training courses in the villages to the farmers, co-op managers, technicians & also to the cooperative
leaders

Project Operations
With quality being a major challenge, many producers lack information of a best-quality coffee
bean
CIs staff sampled each farmers bag of beans & published the reports about the standards of
their produce
They also provided corrective measures to improve the quality

CI found a major huddle for the small farmers in the terms of funding
They set up a low-interest Conservation Enterprise Fund to tackle

The cooperatives lacked business & commercialization skills and also were geographically
isolated with each other
The pooling of resources is necessary to avoid the risks involved

Project Progress
Significant results were achieved for the efforts
Purchased of shade-grown coffee increased to 1.5 million pounds
Starbucks would buy from the producers who are in the transition provided they achieve organic certification
Project resulted in 40% average increase in coffee farmers earnings, 100% growth in cooperatives & all loans had
100% repayment record

Project Challenges
There were considerable debate about CI shifting its traditional focus away from fieldbased projects and moving more towards scientific research
On the other hand, Starbucks faced procurement challenges brought on by the
sourcing guidelines & by Fair trade movement

Starbucks New Coffee-Purchasing

Guidelines
Suppliers should meet the environmental (50 points), social (30 points), economic (20 points), and quality
standards`
Guidelines largely based on conservation principles for coffee production
Suppliers meeting these guidelines were given priority

Fair Trade Movement

Concerned with the small farmers
Starbucks entered into an agreement with TransFair USA
Global Exchange & TransFair pressured Starbucks to purchase larger quantities with the quality concerns being
a second priority

Success replication
Business lessons

Concentrate on the success factors

Focus on the needs of the market

Showcase your
strength

Give priority for the suppliers performance

Find mutual benefits

Dont
compromise
your
standards

Adapt to the
changing
market

Make commitments for improvements

Make common interests for long term
relations

Thank you