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CN EXCLUSIVE: Starbucks CEO Orin Smith addresses activists' accusations

Mar 18, 2001 12:20 EST

CoffeeNetwork

NEW YORK, Mar 18 � Starbucks President and Chief Executive Officer Orin Smith defended the specialty coffee roaster and retailer's record on social, and environmental and food safety issues and said activists � who are slated to stage a nationwide protest this week � have made unfair accusations and demands.

Six activist organizations -- Organic Consumers Association, Friends of the Earth, Center for Food Safety, Pesticide Action Network, Sustain, and Rights Action -- launched a letter-writing campaign to Smith last month insisting Starbucks meet three demands: remove all genetically engineered food ingredients from its products, start brewing and promoting Fair Trade coffee, and provide clear evidence of efforts to improve the wages, working conditions and lives of farmers.

The letter said that if Starbucks did not implement these demands according to the group's time line, "you leave us no choice but to launch a national and global campaign highlighting Starbucks' unwillingness to address consumer demands for safe foods sustainably produced." The activist coalition now plans to kick off the campaign on Tuesday, March 20 � the day of Starbucks' annual shareholders meeting in Seattle -- by protesting and handing out leaflets in front of the company's retail locations in some 100 U.S. cities.

In an exclusive interview with CoffeeNetwork, Smith said he found the letter "offensive and probably meant to be so." Nevertheless, Starbucks' Senior Vice President for Corporate Social Responsibility Dennis Stefanacci extended an invitation to the activists to meet face-to-face to discuss their concerns � an invitation they refused.

"We tried to have a conversation with them but they were unwilling to speak with us unless we unequivocally agreed to meet all their demands, which makes it difficult because they are very complex issues with no real easy solutions," said Smith, who spoke with CoffeeNetwork from Starbucks' headquarters in Seattle.

Starbucks' Smith

"Protesting Starbucks is a great forum for getting publicity and the only thing I can do is, first, make sure our people and customers are not interfered with and, second, try to tell our story the best I can," he said. "I don't know that those allegations won't influence some people and it's disappointing to me because it's unfair."

STARBUCKS CHECKS PRODUCTS FOR GMO CONTENT, GOAL OF GMO-FREE SUPPLY

Smith said the company appreciated the activists' concerns about the effect of GMOs (genetically modified organisms) on human health and the environment, and that providing safe, high-quality products is a priority at Starbucks.

"We review all the literature on this and comply with all FDA and government regulations. On that basis we determined that these foods are safe and don't threaten public health," Smith said. "Having said that, we evaluated all the products in our stores and we believe that they are mostly GMO free. Our tea and coffee is certainly GMO free, our soy products are certified GMO free and other products are GMO free. Other areas we do have GMO content, but we are still sensitive to concerns and we're trying to move toward GMO free supply."

Smith noted that although public awareness about GMOs is growing, there has been little debate on the subject in the U.S. and much of the food supply already contains GMOs. He estimated 70 percent of the products sold in supermarkets and more than 95 percent of the milk supply in the U.S. may contain GMOs.

Regarding recombinant bovine somatotropin (rBST) -- a synthetic growth hormone the activists' voiced particular concern about -- Smith estimated 25 percent of Starbuck's milk is currently free of rBST and the company hopes ultimately all its milk supply will be rBST-free.

However, he noted that obtaining rBST-free milk is a challenge because although only 30 percent of cows in the country are injected with rBST, the U.S. Department of Agriculture has reported that less than 5 percent of the country's milk supply can be certified rBST-free because of bulking processes used by the U.S. dairy industry.

Meanwhile, since Starbucks sources a large quantity of milk, Smith said efforts were underway to arrange for a supply of rBST-free milk to serve on an as-requested basis. "We're making inquiries to all our supplies asking what required," said Smith.

In a letter replying to the activists, which was distributed to the media, Smith said Starbucks hopes to have rBST-free milk available by request in U.S. company-owned stores by the end of the summer.

STARBUCKS SEEKS ENOUGH FAIR TRADE COFFEE TO SERVE BREWED

In April 2000, Starbucks formed an alliance with TransFair USA to source, roast and sell Fair Trade Certified coffee to meet consumer demand. And on October 4, Starbucks began offering packaged Fair Trade Certified coffee by the pound at more than 2,300 company-owned retail stores in the U.S.

"We entered into an agreement with TransFair, which is the only organization in the U.S. that certifies Fair Trade coffee and we have since offered Fair Trade in our stores," Smith said. "We've given it our brand and our most valuable asset � a presence in our stores."

As far as meeting activists' demands to sell brewed Fair Trade coffee, Smith said the company will continue to work with TransFair and other organizations to find enough high-quality Fair Trade coffee to sell brewed in stores.

"We talked with TransFair about it and can't outsource the amount of Fair Trade coffee available in a sufficiently large supply to offer as a 'coffee of the day' on a rotating basis," said Smith. "We want to help our Fair Trade coffee partners upgrade coffee and our hope is once they upgrade coffee we will be able to offer it on a rotational basis."

He also noted that Starbucks, staff will currently make a plunger pot of Fair Trade coffee for customers on request.

STARBUCKS DEVELOPS GUIDELINES TO IMPROVE LIVES OF COFFEE FARMERS

Addressing activists' claims that Starbucks allows low wages and unjust labor practices on the coffee plantations of their suppliers, Smith told CoffeeNetwork that "one of the things we've done in the coffee industry is pay suppliers much more for coffee than they ever got before."

However, because coffee used by Starbucks -- and other roasters -- is bought through brokers, he noted there were challenges in ensuring a fair percentage of the purchasing price found its way to farmers.

In the March 16 letter to the activists, Smith noted that the coalition asked for proof it had implemented a code of conduct for its suppliers. Smith said the company had not developed a supplier code of conduct, but rather a "Framework for Action," specifying "guidelines for activities to improve the lives of people who grow, harvest and process coffee that Starbucks buys."

"We believe we are the only coffee company in the world to agree to such a Framework," said Smith's letter. "We continue to comply with that Framework through a variety of activities such as the partnership with TransFair USA and Conservation International, as well as many other projects around the world that encourage more sustainable coffee growth methods and directly improve the lives of coffee farmers and their families."

Smith said the company was concerned about the impact current low international coffee prices � below the cost of production in many coffee-producing countries � will have on growers. He also said current pricing was so low "farmers are not picking product and we're afraid we'll not have the supplies we need."

Starbucks has had mixed results in putting together long-term contracts to guarantee prices both beneficial to farmers and to secure Starbucks' supply, he said. "We tried to sit down and figure out what a fair price for coffee would be and enter in longer term contracts," he said. "There was enthusiasm from larger growers, but smaller growers would take the guaranteed floor price but not the ceiling."

STARBUCKS KEEPS INVITATION TO ACTIVISTS OPEN

Although Starbucks may have been unfairly singled out by activists �- who admit the company's high visibility made it target over much larger U.S. coffee roasters �- officials at� the specialty coffee company are still willing to meet with its critics.

"If you are serious about having a major impact on these issues, rather than simply using protests against Starbucks to publicize your cause, we urge you to meet with us to discuss these issues in detail and to work cooperatively with us on solutions upon which we can both agree. We reaffirm our willingness and desire to meet with you as soon as is mutually agreeable," Smith's letter concluded.




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