Figure 1 depicts the overall context of non-fair trade and fair trade coffee purchases among the top ten firms internationally in 2008. It shows that only four of the ten purchased any fair trade certified coffee. These data suggest an inverse relationship between firm size and commitment to fair trade for those who choose to participate. Fifth-ranked Starbucks (U.S.) was the world’s largest purchaser of fair trade certified coffee at this time (nearly 20 million pounds, or 5 percent of its total supply). Sixth-ranked Tchibo (Japan) had a slightly lower commitment to fair trade both by volume and percentage (approximately 12 million pounds; 3 percent of total volume), but this was significantly more than the two largest firms. For no. 1 Nestlé (Switzerland) and no. 4 J.M. Smucker (U.S.), fair trade purchases were relatively similar by volume (approximately 4 and 3 million pounds, respectively), but Nestle had by far the lowest percentage of fair trade purchases (0.0025 percent).

Figure 2 depicts the context in the United States for selected firms that purchased and sold fair trade certified coffee, as of 2010, on three dimensions: year of entry into fair trade certification, volume of fair trade purchases, and the percentage of total volume those fair trade purchases represent. Earlier entrants are on the left side of the graphic and later entrants are on the right side. Firms that purchase 100% fair trade coffee are at the top and firms with the lowest percentage of fair trade relative to total purchases are at the bottom. The later entrants with lower percentages of fair trade purchases are all large, publicly traded corporations (Green Mountain Coffee Roasters, Starbucks and J.M. Smucker), and the early entrants are smaller firms with much higher percentages of fair trade purchases. Thanksgiving Coffee is somewhat of an anomaly because although an earlier entrant, it does not purchase exclusively fair trade coffee. The remaining smaller firms shown are also all at the 100% level, despite entering the fair trade system in later years.

The firms of greatest interest with respect to our research objectives, however, are those that are making disproportionate contributions to sustainability goals through greater volumes of fair trade purchases (represented by the largest circles in the graphic). In this case Equal Exchange is purchasing more fair trade coffee than other highly committed firms, approximately twice as much as the next largest 100% fair trade firm, Cooperative Coffees (which is a cooperative composed of 23 smaller firms that purchase collectively). At the other end of the spectrum, Green Mountain Coffee Roasters (GMCR) and Starbucks are the two largest buyers of fair trade coffee beans in the U.S. (together accounting for more than 40% of the total volume certified by Fair Trade USA), despite their lower percentages of fair trade relative to total volume [34]. GMCR’s fair trade certified purchases in 2010 totaled 23.5 million pounds, which was more than three times as large as Equal Exchange’s fair trade purchases, and slightly more than Starbucks’ 21 million pounds. GMCR’s percentage of fair trade purchases was 27.8%, while Starbucks’ percentage was 7.9%. Starbucks’ much greater marketing emphasis on its first party (i.e., self-certified) Coffee and Farmer Equity (C.A.F.E.) Practices program, and its low percentage of fair trade purchases, have been characterized by some critics as “dabbling”[7]. Nevertheless, Starbucks was the world’s largest buyer of fair trade coffee until 2010, and its size gave the firm a strong voice in the policy direction of fair trade in the U.S., as we discuss further below.

Equal Exchange was the first fair trade coffee company in the U.S., established in 1986. It is organized as a worker-owned cooperative, and purchases coffee from small farmer cooperatives. Its legal structure is unique: if the company is sold, the proceeds must go to another fair trade organization, not to the worker-owners. It is located in West Bridgewater, Massachusetts. Equal Exchange focused exclusively on coffee in its early years, but has since expanded to chocolate, tea, bananas and other products. The firm reported $46.8 million in annual revenue in 2011. Like other 100% fair trade firms, Equal Exchange’s marketing efforts are focused primarily on the social responsibility dimension, while the two firms discussed below place far greater emphasis on the dimension of taste [53].

Green Mountain Coffee Roasters originated as a café, but became a publicly traded corporation in 1993. It is headquartered in Waterbury, Vermont. Like the other two firms, GMCR is a specialty coffee roaster, meaning that it focuses on higher quality Arabica coffee varieties that are differentiated from lower-cost, mass-market coffee. The firm began selling fair trade coffee in 2000 after being approached by Transfair USA (now FTUSA), and expanded these sales through a licensing agreement with Newman’s Own Organics, a 100% fair trade brand, in 2003 [54]. GMCR also uses other ecolabels, including organic and Rainforest Alliance certifications. The firm reported $2.6 billion in annual revenue in 2011, and has grown very rapidly in recent years due to the popularity of the Keurig single-cup brewing machine (GMCR fully acquired Keurig in 2006) and its patented coffee pods that are inserted in the machine.

Starbucks is the largest coffeehouse chain in the world, and the largest specialty coffee firm. Like GMCR, it is a publicly traded corporation. It is based in Seattle, Washington. The firm began selling fair trade coffee in 2000 as a result of pressure from activist organizations, including Global Exchange, but has received frequent criticism since then for its relatively low percentage of fair trade purchases relative to total volume [19]. The firm reported $11.7 billion in annual revenue in 2011.

Figure 3 depicts the other brands that have connections to these three firms. Starbucks owns Seattle’s Best Coffee, and also roasts for the warehouse club Costco’s private label brand, Kirkland Signature. Green Mountain Coffee Roasters owns the brands Tully’s, Timothy’s and Diedrich. In addition the company roasts for McDonald’s, Bruegger’s Bagels and Caribou Coffee, as well as the 100% fair trade brand Newman’s Own. Equal Exchange does not have any subsidiary brands or roasting/licensing arrangements in the U.S., but does have joint branding alliances in other countries [55].

Figure 4 depicts the commitment of each of the three firms to fair trade purchases during the period 2004 to 2011. It shows both total green coffee purchases and fair trade purchases for each firm, thereby illustrating the percentage of fair trade volume relative to total volume in recent years. Figure 4a shows that Starbucks has fluctuated in its commitment to fair trade: after a gradual initial increase, its fair trade purchases leveled off from 2006 to 2008, then approximately doubled in 2009 to reach 10.6% of sales, but have fallen to approximately 8% in the last two years. Green Mountain Coffee Roasters, in contrast, has steadily increased its volume of Fair trade purchases, as seen in Figure 4b, although in the last two years the percentage of fair trade purchases has declined as its total coffee purchases grew dramatically. Since 2010, GMCR has been the world’s largest purchaser of fair trade certified coffee, despite purchasing less than half as much total coffee as Starbucks. Figure 4b indicates Equal Exchange’s fair trade purchases were larger than GMCR in 2004 and 2005, although currently its total fair trade purchases are much less than the other two firms. Equal Exchange has maintained its commitment to 100% fair trade over this period, and its coffee purchases increased steadily from 2004 to 2009, although they have leveled off since then.

Each firm had a different response to Fair Trade USA’s exit from the international fair trade system, and to its move to allow coffee from plantations to be certified as fair trade. These changes alter the social and economic aspects of sustainability that are captured by the fair trade label, which are given more prominence in both the standards and discourse of fair trade than its environmental aspects. FTUSA’s actions required firms in the U.S. coffee industry to decide how to respond, and also generated a very public dialogue on the normative issues embedded in the firms’ strategies.

Equal Exchange had the most dramatic reaction, announcing that it was abandoning FTUSA certification completely (the firm had already moved to alternative certifications such as IMO’s Fair for Life for some of its products). Equal Exchange is currently purchasing coffee beans certified by Fair for Life, Fair Trade International (which is moving into the U.S. to compete with its former licensee FTUSA), and the Mexican nonprofit FUNDEPPO (which recently developed a Small Producers’ Symbol).

Green Mountain Coffee Roasters has remained with FTUSA, and is currently sourcing coffee from one of their plantation pilot projects. Notably, the company has said it will not brand plantation coffee as fair trade “until we have evaluated the impact of these pilots at origin” [57]. Company representatives have emphasized that their measures of success include the potential impacts on sustainability, such as continuing to support small farmers. However, Larry Blanford, GMCR’s president and CEO, signed a statement supporting the changes at Fair Trade USA.

Starbucks has also remained with FTUSA, but has not stated whether it will label plantation coffee as “fair trade”. Ben Packard, the company’s vice president for Global Responsibility, emphasized the market impacts, not sustainability goals, as a key driver of future decisions when he said, “We are waiting to see what the implications of these different schemes on the marketplace are going to mean” [11]. By “different schemes” he was also referring to Starbucks’ first party C.A.F.E. Practices program, which, as mentioned above, is prioritized over fair trade in its marketing.

Equal Exchange eventually went even further than its initial response by encouraging GMCR and Starbucks to leave FTUSA certification and move to Fair Trade International’s more rigorous seal. After meeting privately with GMCR executives in March, 2012 and failing to convince them of the strategy, Equal Exchange took the unusual move of placing a full-page color advertisement in Vermont’s largest daily newspaper to repeat this request publicly [13]. The advertisement claimed that FTUSA’s actions “threaten to reverse decades of hard-won gains while potentially putting at risk the very survival of the farmer cooperatives” [59]. Equal Exchange’s Rodney North underscored the importance of this point, noting that “small farmer co-operatives were the co-creators of fair trade; to now take it and change it in a way that threatens their viability is unacceptable” [60]. Equal Exchange representatives described FTUSA’s actions with respect to fair trade standards with words including “weaken,” “loosen” “lower,” “dilute,” “undermine,” and even “betrayal.” While most of the firm’s discourse focused on the impact the changes would have on small farmer cooperatives, it also mentioned the threat to consumer confidence in the FTUSA label. These points included that the change would make it impossible to distinguish between plantation and producer cooperative coffee, which ultimately may cause consumers to feel misled.

GMCR and Starbucks have been much less visible in the media coverage surrounding Fair Trade USA’s recent moves, but it is difficult to disentangle the perspectives of the certifier and these two corporations. In explaining the standards changes, Fair Trade USA’s president and CEO, Paul Rice, has frequently referred to the needs of these and other large firms, such as Dunkin’ Donuts and Whole Foods (owner of the Allegro coffee brand). He responded to suggestions that roasters at these corporations replace plantation coffee with smallholder-grown coffee in their blends as “the height of arrogance” because “no one tells them how to put together the perfect French roast [10].” Dean Cycon, owner of the small, mission-driven coffee firm Dean’s Beans, said that Starbucks and Green Mountain would be able to become 100% fair trade certified under the new standards without changing “their business practices one iota [14]”. Even Fair Trade USA’s farmer cooperative assistance program (which was announced along with its decision to certify plantation coffee) is designed to help those cooperatives that are already some of the largest, and which supply GMCR and Starbucks [10].

Two arguments frequently used by both Fair Trade USA and GMCR representatives in support of the standards changes are: (1) they will increase the positive impacts of fair trade through higher volumes, and (2) expanding or extending the scheme to hired laborers who were previously “excluded” from fair trade will help the “poorest of the poor.” GMCR coffee buyer Ed Canty, for example, asked, “Why can’t these workers, who are some of the poorest of the poor, in some of these [coffee] estates be involved as well [12]?” Phyllis Robinson, Equal Exchange’s education and campaign manager, responded to the first point, saying that, “To the extent that more volume equals more income (and more premiums), this is good for farmers. To the extent that more volume increases the visibility of fair trade for consumers, this is also a good thing…This issue however, isn’t one of volume alone…we’re talking about long-term structural change [61].” Equal Exchange’s blog included a statement from Marike de Pena, vice president of the Latin American and Caribbean Network of Small Producer Organizations, who challenged the second point by claiming that “farmers’ incomes are far below workers’ income [62].”

GMCR has increased the visibility of fair trade, however, through a “Better Quality for All” marketing campaign, as well as a more recent, celebrity-driven campaign called “Great Coffee, Good Vibes, Pass It On.” These campaigns emphasize how easy it is for consumers to participate in fair trade through a “simple purchasing decision” or a “simple choice.” Equal Exchange representatives, in contrast, emphasize that consumer engagement in fair trade is far from simple, suggesting it is “time consuming” and “resource heavy,” but that consumers need to “go further and learn more” and “get smarter and smarter.”

Equal Exchange acknowledges not only the challenges for consumers, but the difficulty that increasing scale presents for their firm and for the industry. Marike de Pena, for example, who has experience competing with plantations in fair trade as a small-scale banana farmer, wrote on the Equal Exchange blog that “it is a lot easier, cheaper, faster and safer to buy from the big estates” [62]. Robinson echoes this point in several other Equal Exchange blog posts, stating that “working with small farmer organizations can be challenging and time consuming” and that “it may be a slower and less glamorous path to work with small farmer co-ops and consumers,” but this approach is likely have a greater long-term impact on sustainability [61,63].