Thursday, December 28, 2006

Is Starbucks the Victim of a Coffee Mugging by Oxfam?

I am re-posting this very controversial article originally published on "Seeking Alpha" on December 27, 2006. I think this is one of the better articles on this subject. I particularly like the balanced perspective acheived through the posted comments adjoining the article.

David Phillips (10Q Detective) submits: Oxfam, a development charity that dates back to World War II, alleges that global coffee retailer Starbucks Corp. (SBUX) is depriving Ethiopian coffee farmers of between $88.0 to $132.0 million a year, by opposing the Ethiopian government's efforts to trademark three popular varieties of its specialty coffee—Harar, Sidamo and Yirgacheffe beans.

Oxfam and its broad coalition of supporters say:

More than a year ago, Ethiopia approached Starbucks and asked the company to lead the coffee industry by example and sign an agreement recognizing Ethiopia's legal ownership of its fine coffee names. If companies like Starbucks signed such agreements, Ethiopia would occupy a stronger negotiating position with foreign buyers, capture a larger share of the market associated with its coffee names, and better protect its brands.

Oxfam and its activists allege that there is a huge disparity in the profit distribution to the players in the coffee industry, with Ethiopian coffee farmers often collecting no more than 10 percent of the profits from the sale of their coffees. The rest goes to the coffee industry players that can control the retail price—the international importers, distributors, and roasters like Starbucks.

Starbucks CEO Jim Donald met with Ethiopiaian government officials to discuss trademark issues on November 29, 2006. Given little progress in their talks, Oxfam and its supporters organized “The Starbucks Day of Action” in more than a dozen countries, demonstrating outside many Starbucks stores on December 16, with activists leafleting and carrying the image of an Ethiopian coffee farmer on sandwich board fronts, with the backside reading, "For every cup of Ethiopian coffee Starbucks sells, Ethiopian farmer earn 3 cents. Tell Starbucks: Honor your commitments to coffee farmers." [Ed. note. Watch the video on YouTube now.]

Talks purportedly broke down because Starbucks favored a geographic certification model—much like Jamaican Blue Mountain Coffee, Florida Orange Juice, and French and Napa Valley Wines—which guarantees a point of origin and standard of quality; whereas, Ethiopia refused, opting for brand ownership.

We laud Oxfam’s good intentions, but question their grasp of Ethiopia’s calculus for peculations.

The rhetoric behind economic development today—especially in African countries—is such that where poverty exists, you can be sure that “corruption” won’t be far behind. Aside from widespread allegations of fraud following the May 2005 parliamentary elections, in which results showed the incumbent Ethiopian People's Revolutionary Democratic Front retaining a majority, the business environment—while not thought to be as corrupt as political life—in Ethiopia, still ranked only a 3.70 score (with 1.0 being the best & 5.0 being the worst) on an ”Index of Economic Freedom 2006” census taken by The Heritage Foundation/ Wall Street Journal:

Ethiopia's cumbersome bureaucracy deters investment…. Corruption in Ethiopia poses various problems for [the] business environment, as patronage networks are firmly entrenched and political clout is often used to gain economic prowess.

In our view, irrespective of going the certification process or the intellectual property route, in order for the coffee farmers to share in any incremental value—such as an increase in annual income—necessitates a transparent system that shows how the money is going back to the farmers.

In addition to failing to explain what type of transparent ‘checks and balances’ system need be established, nowhere in its press releases does Oxfam explain how the agency derived the incremental annual benefit to farmers of between $88.0 to $132.0 million.

To the contrary, since 2001, Starbucks has been inserting transparency into standard contracts. Today, the Company has economic transparency requirements for 59 percent of all coffee purchased to provide information on the payments made to farmers. This represents 177 million lbs. (80 million kg.) of coffee.

In December 22, 2006, Starbucks' Letter to the Editor of the Seattle Post Intelligencer (regarding the Ethiopian Trademark), Dub Hay, VP-Global Coffee Procurement said, too:

While our purchases of Ethiopian coffee represent a very small percentage of the country’s total coffee exports, we pay premium prices – in 2005 our price exceeded the New York commodity market price by 23 percent -- for all of the coffee we buy in 27 countries. And, between 2002 and 2006 we increased purchases of Ethiopian coffee by more than 400 percent and are committed to growing those purchases in the years to come.

In our view Oxfam and its supporters have not presented a cogent argument to suggest that Starbucks is acting in an unethical or socially irresponsible manner; nor has Oxfam presented any convincing evidence that Starbucks is willfully trying to maximize its own profit margins—by denying Ethiopian farmers their legitimate coffee profits.

Voir dire [Old French: “To speak the truth”] is a tool used to achieve the constitutional right to an impartial jury. Preliminary examination of Oxfam as an impartial juror would show that the aid agency is in an awkward position to comment on the social responsibility of Starbucks:

1. Language found in a Coffee (Rescue Plan) Policy paper [2002] speaks volumes:

Despite the stagnant consumer market, the coffee companies are laughing all the way to the bank…. Until now, rich consumer countries and the huge companies based in them responded to the crises [slump in coffee prices and economic impact on coffee farmers] with inexcusable complacency. In the face of human misery, there have been many words yet little action.

2. In 2004, Oxfam accepted a £100,000 investment by Starbucks into a rural coffee-growing project in Ethiopia and a range of expertise-sharing programs focusing on improving trading agreements for millions of coffee farmers in developing countries.

Given the weaknesses of Oxfam’s arguments and its lapses in credibility, Starbucks comes across less as a coffee-thirsty exploiter of less-developed countries, and more the victim of a coffee mugging.

Editor David J Phillips does not hold financial interests in any of the companies mentioned in this posting. The 10Q Detective has a Full Disclosure policy.

Seeking alpha December 27, 2006

Eugene Clough wrote on Wed Dec 27th @ 3:17 am


Let's hear it for Starbucks.

abera mola wrote on Wed Dec 27th @ 8:31 am

Jamaican Blue Mountain Coffee holds a trademark, you can check at Second, it is infact Starbucks' argument that makes no sense. It is completely devoid of economic reasoning and the company has chosen to argue its case by citing aid programs it participated in and sometimes even bordering on patronizing comments stating that the Ethiopians wouldn't know how to handle a trademark. 23% over the the New York commodity market for speciality coffees is a joke ... the New York commodity market prices are for bulk auctioned coffee (eg. the folgers blended brands that you find in grocery stores). The selling prices for the speciality coffees is in some cases between 100% - 500% [in some cases more] of what the folgers brands sell for. All Ethiopia is asking is that the prices its farmers get for the speciality coffees [not all its coffees] reflect these differences. The way it hopes to do that is through trademarking.

A most important element you are overlooking is that these coffee brands are the IPs of Ethiopian farmers not that of Sbux and they have a right to do what they will with it [regardless of Sbux sensitivities] ... plus impartiality would have required that you mention Sbux's attemot to trademark the name Sidamo as part of its application in 2004.

Greg Sherwin wrote on Wed Dec 27th @ 3:04 pm

Ahhhh, the answer is "no"?!?

Fair Trade was devised by people who wanted to counter the price squeeze of coffee farmers at the bottom of the chain while retailers profited handsomely with huge margins. Essentially, Starbucks was one of the reasons why Fair Trade coffee came about. Wisely, they saw the opportunity and co-opted it, and now boast their Fair Tradeness as a badge of honor -- in a little smoke and mirrors to deny their prior practices that lead to its creation. So Starbucks is hardly the victim here.

Same goes for the Oxfam case. While I certainly would question the transparency of Ethiopia and the hands over which revenues would flow in that country, it's a bit disingenous to suggest that Ethiopian growers don't deserve protections we afford other food & drink producers around the world because they happen to be unlucky enough to live under problematic government leadership.

I think the most culpable act that Starbucks did surround this was, first of all, denying that they were behind the National Coffee Associations' veto on the measure. And now they've come back front and center publicly stating they were against Ethiopian certification. Talk about speaking out of both corners of your mouth.

I wouldn't go so far as to suggest that Starbucks is some bloodthirsty exploitation machine, the way that Nike has been portrayed. However, like Disney, they profit handsomely from a Potemkin village of ethical propriety when behind the scenes they are no better -- or worse -- than any other profit-making corporation. So calling Starbucks the victim of a mugging is a bit falling for the bait. You should know better.

Tuesday, December 19, 2006

Feel and look fantastic in a coffee body wrap

Ladies, whether before or after Christmas, awaken your senses and treat your skin to a fabulous Bodycoffee anti-cellulite detoxifying body wrap at Mingala. It will tackle that dreaded cellulite and rid the body of the poisonous toxins many of us will be guzzling this party season!

The therapeutic Bodycoffee body wrap gets to work on cellulite and toxins as the clay, green coffee powder, and other healing ingredients provide maximum firming benefits while encouraging skin to eliminate damaging toxins.

How it works

Firstly sea algae activating serum is gently massaged into the person’s cellulitic areas. This serum contains fat-fighting caffeine and sea algae extract, which is an effective natural moisturiser that promotes the silky texture and smooth finish of younger-looking skin.

Next, spa-goers are wrapped in a detoxifying, coffee-infused cocoon. It is full of Bodycoffee green coffee and utane powder, which was first developed using Kaolin clay to stimulate circulation to the skin, gently exfoliate, and cleanse without drying.

Coffee powder from green coffee beans provides more concentrated antioxidant benefits than the roasted variet; it helps eliminate toxins and make skin look more toned. After this luxurious treatment, clients feel invigorated, with firmer skin, sleeker contours, and a healthy-looking glow.

Spa-goers are drawn to this innovative new way to energise their bodies and pamper their skin. After a Bodycoffee treatment, clients emerge radiant, refreshed, and positively glowing.

The coffee plant is acknowledged the world over for its healing properties. It is renowned for its abilities to mend broken skin, soothe irritations, and revitalise cells. The coffee plant is also a free radical scavenge; it neutralises destructive oxidation reactions, which are the culprit of everything from acne to eczema.

Coffee is also a gentle exfoliant, removing dirt and dead skin cells, opening pores so wastes and toxins can be easily released. This plant is also a great cleanser; it neutralises and absorbs strong odours.

Caffeine improves micro-cellular circulation and breaks up the fatty deposits that can cause cellulite. It is an effective astringent; with the same 4.5 pH as the skin, it helps to fend off acne and other blemishes. There is a UVA/UVB protector in the coffee plant, it helps to screen out the sun rays responsible for burning, premature ageing, and skin cancer.

Origins of Bodycoffee

The idea behind Bodycoffee products came from founder Stephanie Profitt and her partner Serge Kogan. Stephanie was inspired while on a traditional Russian bathhouse (known as the "Banya"). People there were using coffee in a way she had never seen before - rubbing it on their bodies as a stimulating exfoliant. It has been a tradition in Russian bathhouses for generations, and coffee also is a natural astringent, antioxidant, and deodorant. It cleanses, moisturises, and protects the skin from the dulling and damaging effects of environmental toxins, revealing a youthful, more radiant appearance.

In 2001, they set up their company Stephka, appointed a team of the best skin care experts, and together set out to combine the therapeutic benefits of coffee with other healing ingredients such as olive and hemp seed oils, shea butter, sea salt, and herbal extracts to create products that can be used every day to diminish the effects of oxidation, sunlight, and pollution. The result was Bodycoffee, a collection of body care products that revitalise tired, dull skin to reveal the soft, new self within.

Bodycoffee treatments are available at Mingala, Pearse Court, Pearse Street, Athlone. You can contact them on (090) 6477770.

Wednesday, December 13, 2006

Arabica coffee project a fantastic hope

VietNamNet Bridge – The project on developing Arabica coffee in Vietnam, which was kicked off eight years ago, is facing failure.

This is an ambitious project that aims to develop the Arabica coffee plantation area in 15 northern mountainous provinces, allowing Vietnam to export Arabica coffee to the world. The investment capital for the first phase of the project was VND800bil ($50mil), a part of which came from French AFD loans.

Wrong investment?

The 2005-2006 crop provided 18,000 tonnes of Arabica, and 11,000 tones were exported, down by 1,000 tonnes in comparison with the previous crop.

Nguyen Nam Hai, Director of Cafecontrol, said that the quality of Vietnam-grown Arabica was alarmingly bad, with the size of coffee beans becoming smaller and smaller.

“There are problems in picking and processing processes,” said Mr Hai.

As a result, a large proportion of product cannot be exported.

“Vietnam-made Arabica is just average quality in comparison with the world’s products. Though Vietnam has exported Arabica for the last eight years, Vietnam is still not a big name in the world,” said Mr Hai.

He thinks that the problem lies in the coffee seed. Catimor is the kind of seed, which is being planted widely in Vietnam; however, Catimor cannot bring good-quality products.

The height of the land for growing Arabica, according to experts, can decide the quality and taste of Arabica. Arabica coffee has been grown on land not high enough above sea level. It is more difficult to grow Arabica than Robusta, which is popular in the Central Highlands and southeastern areas.

The habit of Vietnamese farmers of picking ripe and unripe coffee beans at the same time has also been cited as one of the reasons behind the bad quality of Vietnam-made Arabica.

Hope still cherished

According to the Vietnam Coffee and Cocoa Association (Vicofa), the total area for growing Arabica in the 2005-2006 crop was 2,000 ha higher than the previous crop, about 20,500 ha, mostly in Lam Dong, Quang Tri, Son La and other northern provinces. Of these provinces, Lam Dong can provide 10,000 tones of Arabica every year, 50% of total Arabica output.

Under the development strategy drawn up by the Ministry of Agriculture and Rural Development, the plantation area will be five times greater in the next five years than the current level, which will allow the industry to harvest 150-200,000 tones every year.

The area for growing Robusta will gradually decrease from 500,000 ha to 400,000 ha in the next five years. Doan Trieu Nhan, Vicofa Chairman, stressed that it was an effective solution to get sustainable development, while helping reduce the overproduction of Robusta.

In addition, according to Mr Nhan, Vietnamese producers and exporters will be able to earn more money with Arabica coffee. Arabica prices are always 1.5-2 times higher than Robusta in the international market, and Arabica has never seen overproduction as Robusta has.

However, it is not so easy to develop Arabica plantation area and exports. Nguyen Van An, Director of Thai Hoa Trading Company, the biggest Arabica exporter, said that farmers and processors have to change their habits of farming and processing. They also have to make investment in equipment and technologies suitable to processing Arabica, while they need advice from scientists on the areas for growing and other technical issues.

“Vietnam is a big Robusta exporter, and Vietnamese farmers have been growing Robusta for many years. However, this does not mean that they will be naturally successful in growing Arabica,” Mr. An said.

orginally posted 13 December 06 on

Friday, December 08, 2006

More support for coffee’s anti-diabetes benefits

By staff reporter

08/12/2006- Drinking four or more cups of coffee a day could cut the risk of developing type-2 diabetes by over 23 per cent, say American and Finnish researchers.

Led by Nina Paynter from the Johns Hopkins Bloomberg School of Public Health, the scientists looked at coffee and sweetened beverage consumption and the risk of type-2 diabetes among 12,204 nondiabetic, middle-aged men and women taking enrolled in the Atherosclerosis Risk in Communities (ARIC) Study.

While no significant link between sweetened beverage consumption and type-2 diabetes was observed, the researchers do report a significant protective association amongst coffee drinkers.

The research adds to previous large prospective studies that reported a beneficial link between coffee intake and the risk of type-2 diabetes, but whether these apparent benefits are related to the caffeine content is controversial.

However, the doses reported to offer a protective effect are higher than the average worldwide daily coffee consumption of one and a half cups, while the US average is more than three and a half cups.

The ARICS study, conducted between 1987 and 1999, assessed dietary intakes using a semi-quantitative food frequency questionnaire (FFQ) and classified coffee and sweetened beverage consumption according to the number of cups per day. Diabetes diagnosis was obtained by self-reporting of physician-diagnosed diabetes, diabetes treatment, and/or a fasting or non-fasting blood sugar test

Paynter and her co-workers report in the American Journal of Epidemiology that consumption of at least four cups of coffee was associated with a 23 per cent reduction in the risk of men developing type 2 diabetes mellitus, compared to men who “almost never” drank coffee. Similar intakes in women were associated with an 11 per cent reduction of type-2 diabetes in women, although this was not statistically significant, said Paynter.

Sweetened beverage consumption is reported to have no significant link to the incidence of type 2 diabetes mellitus.

“The lack of association between sweetened beverage consumption and type-2 diabetes risk is surprising,” said the researchers. “Sweetened beverage consumption may be more important risk factor for younger or leaner people and should be studied further in that population.”

“In conclusion, a higher consumption level of coffee was associated with a decreased risk of type 2 diabetes in middle-aged adults,” concluded the researchers.

Being an epidemiological study, no investigation of a potentially protective underlying mechanism was performed. Previous studies have stated that association between diabetes and coffee appears to be complex., with some scientists advocating coffee’s magnesium content for improve insulin sensitivity. Additionally, the range of polyphenols, particularly chlorogenic acid, may explain some of the inverse association between coffee intake and risk of type-2 diabetes mellitus.

Some reports have stated that caffeine could also increase insulin sensitivity, but this relationship is controversial. A study published in June in the journal Archives of Internal Medicine(Vol. 166, pp. 1311-1316) reported that drinking six or more cups of coffee every day could reduce the risk of developing type-2 diabetes by more than 20 per cent, but if the coffee is decaffeinated, the reduction in risk rises to over 30 per cent – a result that suggested the benefits of coffee for this population group are not due to caffeine.

There are several limitations with this study, most notably that the data was obtained by observational self-reporting, which is dependent on the recall and accuracy of the individual participants.

“Although several observational prospective studies have yielded consistent findings and although biological explanations for decreased diabetes risk with increased coffee consumption have been postulated, further research, particularly experimental studies that can examine the long-term effect of coffee consumption on glucose metabolism, insulin sensitivity, and diabetes risk, is needed before recommendations can be made about coffee drinking with respect to the prevention of type-2 diabetes,” said Paynter.

Source: American Journal of Epidemiology

Volume 164, Issue 11, Pages 1075-1084; doi:10.1093/aje/kwj323

“Coffee and Sweetened Beverage Consumption and the Risk of Type 2 Diabetes Mellitus - The Atherosclerosis Risk in Communities Study”

Authors: N.P. Paynter, H-C. Yeh, S. Voutilainen, M.I. Schmidt, G. Heiss, A.R. Folsom, F.L. Brancati and W.H.L. Kao

Tuesday, December 05, 2006

More cafes, varieties boost U.S. coffee roastings

Dec 5, 2006

By Susan Buchanan

Of Dow Jones NewsWire

NEW YORK (MarketWatch) -- U.S. coffee companies are roasting beans at the strongest pace in over 30 years, reversing an earlier downtrend, as consumers lap up gourmet java and try new products and origins, according to industry members.

American adults now drink almost as much coffee as soft drinks, for the first time since 1990, the National Coffee Association says.

Roastings nationally reached 19.535 million, 60-kilogram bags in 2005, according to Coffee Publications Inc. in New York, and should exceed that level in 2006 - possibly by 5%. Those widely watched numbers cover most, but not all American roastings.

Hernando de la Roche, managing director of Hencorp Coffee in Miami, says a buoyant U.S. cafe culture - with shops owned by Starbucks and other chains popping up on nearly every city corner - has spurred young adults to drink java, while new offerings on supermarket shelves have also lifted demand.

"The coffee-shop phenomenon has exposed a broader base of consumers" to the brew, said Lars Atorf, spokesman for Procter & Gamble (PG), maker of Folgers. "Coffee's become more popular among younger adults - a group that in the last 10 to 20 years was trending towards sodas and other beverages."

Research supporting java's health benefits has altered consumers' views from "I love coffee, but it might be bad for my health (to a) belief it's good for my health," he said.

P&G, Kraft (KFT), Starbucks Coffee (SBUX) and other U.S. roasters and retailers raised their prices in September and early October as the cost of robusta coffee, a hardy bean grown mostly in Asia and used in U.S. blends, swelled. Since then, prices of arabicas - the milder variety cultivated in Brazil and Central America - sped to a 10-month high of $1.2835 a pound on the New York Board of Trade this week, as inventories dwindled and Brazil's harvest next September could be 25% to 30% smaller.

Most American consumers don't mind paying up for the brew they love, however, coffee analysts said.

Meanwhile, roasters have developed new products as consumer tastes become more sophisticated, Atorf said. New items at P&G include various flavors of Folgers and Millstone coffees, stomach-friendly Folgers Simply Smooth, Folgers Gourmet Selections and a single-cup brewing system called Home Cafe. Folgers recently introduced AromaSeal plastic canisters, he noted.

Ted Lingle, senior adviser to the Specialty Coffee Association of America, said growing enthusiasm for specialty or gourmet beans, which account for 15% of U.S. java demand, explains part of the recent growth in roastings. But, he said, the Coffee Publications numbers that the industry uses may only cover 80% of all roastings, missing some of the specialty companies. Coverage is nonetheless improving, especially as bigger firms buy smaller roasters.

"Coffee is on the minds and lips of American consumers like never before -56% drink it every day, and market penetration is back on par with soft drinks after 16 years," said Robert F. Nelson, president of the National Coffee Association. "With more varieties than ever, consumers are not only drinking more coffee, but mixing and matching options to satisfy expanding tastes." Mixing and matching, he explained, means drinking traditional and gourmet beverages and trying new products.

According to the National Coffee Association's drinking survey, released in March, recent growth in demand was driven by the 25-39 year-age group, with daily use in that crowd reaching 47% in 2006 from 38% in 2004. Demand among those 18-24 years of age rose to 31% in 2006 from 22% in 2004.

Some 73% of U.S. seniors, traditionally big coffee drinkers, imbibed in 2006 versus 67% in 2004.

The U.S. is the top consumer, drinking nearly 21 million bags of coffee annually. The European Union swills almost 39 million bags a year, with per-capita consumption particularly high in northern Europe.