August 22, 2014

Coffee Company CEOs Should Watch What They Say About Fair Trade

fair trade

What happens when a business owner dismisses a common standard for quality and fairness in their industry?

Andrea Illy, CEO of Illycaffe, makers of the well-known Illy brand, recently told Quartz that his company would never sell fair trade coffee. Fair trade is a popular standard for coffee that ensures growers receive a higher price for their product. But Illy said it’s unsustainable:

“People buy fair trade products as a way of showing ‘solidarity’ with coffee bean farmers, to pay more for a product than it is worth on the market for the sake of fighting against poverty. They drink fair trade products occasionally for the sake of feeling right, not necessarily regularly.”

He went on to explain that his company employs its own set of sustainability efforts, which he said go beyond fair trade standards. But by effectively dissing a popular standard for the coffee industry, he may have already done some irreversible damage to his company’s reputation.

People who buy fair trade coffee do so for a number of reasons. According to the Fairtrade America’s website:

“The international FAIRTRADE Mark is your assurance that products bearing it have met the internationally-agreed social, economic and environmental Fairtrade Standards.”

Social and environmentally conscious customers like having that assurance every time they make a purchase. But Illy claims that fair trade buyers are less likely to become loyal customers because they just buy these products on occasion to feel good about their purchases. Even if there’s any truth to his statements, customers who care about this standard and buy accordingly might not like seeing their buying habits classified as such.

In fact Lloyd Alter, managing editor of Treehugger says because Illy’s Fair Trade policies he and many he knows won’t be buying the coffee again.

The company’s own environmental and social policies might be enough to satisfy some customers. But not everyone will do the research to learn about such policies. That’s one of the reasons that certifications like fair trade exist in the first place.

So even if it doesn’t make sense for his company to identify with this standard right now, dismissing it altogether may not be a good move either.

Fair Trade Photo via Shutterstock

8 Comments ▼

Annie Pilon - Staff Writer


Annie Pilon Annie Pilon is a staff writer for Small Business Trends, covering entrepreneur profiles and feature stories. She is a freelance writer specializing in marketing, social media, and creative topics. When she’s not writing for her various freelance projects or her personal blog Wattlebird, she can be found exploring all that her home state of Michigan has to offer.

8 Reactions

  1. So you are suggesting that companies should support any standard with public recognition, even if they don’t agree with it and even if they think that it wholly backfires on the very cause it is trying to support?

    That’s nonsense. CEO’s need to lay it out there. They are in a better position than anyone for highlighting deficiencies in programs such as Fair Trade. Because unfortunately anything that purports itself to be “green” these days is considered beyond reproach — which essentially opens the door to a lot of consumer misinformation and fraud when the green banner is waved without scrutiny.

    Thus I applaud Andrea Illy. More CEO’s need to take a stand and not be sheep following the herd … or following the easiest money by avoiding uncomfortable but necessary conversations. If it weren’t for those like himself and Intelligentsia’s Geoff Watts, consumers would never know about Direct Trade – for example – which does far more for both farmer and consumer.

    • That’s true. I agree. Sometimes, it takes courage to leave the pack and take a stand. But if you keep up the fight, your followers will eventually see what you’re trying to stand for and they’ll appreciate you for it.

  2. Hi Annie,

    In a way … I can see that CEO’s point. Sometimes green programs and socially conscious programs come across more like “pat yourself on the back” marketing gimmicks than about treating your suppliers right.

    It’s reminiscent of Hollywood movie stars pontificating about energy conservation yet flying around the world in private jets contributing far far more to pollution and a bad environment than the average person. One star said he was going to fly around the world preaching the message of energy conservation — and others rightly called him out for pure hypocrisy.

    I’m not saying that fair trade is hypocrisy — not at all. I’m just making the point that some companies show their stripes privately, rather than by making a big deal out of it.

    And this CEO did say he believed in trading directly with suppliers so that they could make a profit.

    - Anita

  3. The FairTrade movement, and particularly FairTrade USA, have come under increasing scrutiny and criticism for being run more as a business than a movement for economic justice. FairTrade certification (and organic certification) is a pricey proposition that many small coffee farmers can’t afford. In addition, the requirement that farmers be part of coops excludes many individual farmers from the protections afforded by FairTrade. I can’t speak directly to Illy’s standards, as I haven’t read them in detail, but many coffee importers and roasters have turned to some form of direct trade or relationship trade, where they establish relationships with coffee growers and set their own standards for payment, bean quality and other elements of production. These relationships often take the form of partnerships where the parties collaborate to produce the highest quality coffee possible, with higher payments made for better quality coffee. Many of these importers are also committed to transparency, publishing the prices paid for the coffee they buy and revealing the entire production chain of the coffee from bean to cup. The end result is excellent coffee grown using sustainable methods and sourced responsibly and ethically. These days, I’m far less likely to seek out FairTrade coffee and instead, buy from roasters who can tell me where their coffee comes from and how it was grown.

  4. There’s a difference between transparency and stupidity. A company can (and generally should) do what makes sense for that business. The issue I take with this CEO is that his blanket statements about the Fair Trade standard are generalities. There’s no nuance, so he ends up sounding (whether accurate or not) like a moron insulting customers for wanting to make the world a better place.

  5. There is a lot of “greenwashing” with so-called “Fair Trade”-type of certification and lack of transparency….i i believe that Fair Trade under the “feel good factor” appeal might be a clever marketing trick…..i can understand illy’s CEO comments as long as they are also transparent about their sustainable policies.

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