Starbucks Group9 SAJVA

8/10/2019 Starbucks Group9 SAJVA

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Starbucks andConservation Internation

Team 9 -members

Dipankar Biswas

Abhishek Nandan

SUBHRAJIT SARKAR

Subhash S N

Alexandre ZIACK

NICOLAS LANGLOIS D ESTAINTOT


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Background of Starbucks

Founded in 1971, when its first store, Starbucks Coffee, Tea and Spice

Seattle

In 1982,Howard Schultz, joined Starbucks

Went public in 1992, as part of global expansion strate

Revenues of $2.7Bn in 2001 with nearly 70% of them coming from co

based beverages

Mission statement: to establish Starbucks as the premier purveyo

coffee in the world while maintaining our uncompromising principl


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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 issuesgiving, Starbucks Foundation


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Starbucks Procurement System

Purchased about

1% of theworlds coffee

Starbucks

procured onlyArabica coffeedue to its finetaste

Sourced typically

from small andmedium farmers

From 1999

focus was gon procurinshade-growcoffee

Stress was given on thequality of the beans so much

so that it paid $1.20 perpound instead of the industryaverage of $0.48, almost one

and half times premium


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Conservation InternationalFounded 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 collaboFord Motors


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Finding common groundPartnership between CI & Starbucks was keen to be created

The ideas of both the organizations was considered for the mutual cooperatio& 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), environmental group

First MOU was signed between CI & Starbucks in Feb 1998 for pilot sourcing prChiapas

CI worked directly with the farmers to commit them produce quality coffee wi

standards specified by Starbucks


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Key elements of partnership

A second MOU was signed between CI & Starbucks on Auguwith focus on 4 key elements

Expanding both the companys work with farmers to promote conservation & improve livelihoods in a w

global biodiversity hot spots

Supporting the introduction of a year-round product line that reflected Starbucks commitment to aenvironmental agriculture and socioeconomic improvement in certain coffee-growing regions

Developing coffee-sourcing guidelines that incorporated sound environmental management practicfair livelihoods to farmers

Seeking to engage other leaders in the coffee business in a collaborative effort to articulate industry-wenvironmental and social quality


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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 dStarbucks

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

leaders


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Project Operations

With quality being a major challenge, many producers lack information of a best-q

bean

CIs staff sampled each farmers bag of beans & published the reports about the s

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 geograisolated with each other

The pooling of resources is necessary to avoid the risks involved


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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 certi

Project resulted in 40% average increase in coffee farmers earnings, 100% growth in cooperatives & al100% repayment record

Project ChallengesThere were considerable debate about CI shifting its traditional focus awaybased projects and moving more towards scientific research

On the other hand, Starbucks faced procurement challenges brought on bysourcing guidelines & by Fair trade movement

St b k N C ff P h i


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Starbucks New Coffee-PurchasingGuidelines

Suppliers should meet the environmental (50 points), social (30 points), economic (20 points), astandards`

Guidelines largely based on conservation principles for coffee production

Suppliers meeting these guidelines were given priority

Fair Trade MovementConcerned with the small farmers

Starbucks entered into an agreement with TransFair USA

Global Exchange & TransFair pressured Starbucks to purchase larger quantities with the quality a second priority


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Business lessons

Showcase yourstrength

Adapt to thechangingmarket

Dontcompromise

yourstandards

Success replConcentrate on the success fa

Focus on the needs of the ma

Give priority for the supplier

Find mutual benefits

Make commitments for impro

Make common interests for lrelations


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Thank you

Documents

Starbucks Group9 SAJVA