Caffeine Headache: Starbucks Responds to a Growing Threat

The coffee king takes action in the face of serious long-term threats to its global supply chain.

Caffeine Headache: Starbucks Responds to a Growing Threat

According to the United States Department of Agriculture, the global economy consumed approximately 150 million bags of coffee in 2015[i]. As the world continues to realize the impacts of climate change, scientists have sounded the alarm on the future of coffee growing worldwide. Sensing the threat to its supply chain, it’s no surprise that Starbucks, the world’s coffee giant, is taking steps to mitigate the risk.

Coffee and the Climate

Much of the scientific literature on the impact of climate change on coffee was compiled in a 2016 report by the Climate Institute. The findings point to three primary ways that climate change has threatened coffee production:

  • Coffee has a harder time growing at higher temperatures: coffee has adapted to very specific growing zones and even half a degree of temperature change can significantly damage plant health.[ii]
  • Higher temperatures are more hospitable to pests that destroy coffee plants: warmer, wetter environments help coffee predators like the coffee berry borer thrive and wreak havoc on coffee crops.[iii]
  • Changes in rain cycles have made it more difficult for coffee plants to succeed: the area suitable for coffee growing has shrunk as rain patterns have changed.[iv]

The King of Coffee

Starbucks, the world’s largest purveyor of coffee products, realized the long-term industry threat posed by climate change. According to the company website, “We believe now is the time to increase our investments in solutions and strategies – both in our stores and at the farm level – that help tackle this crisis.”[v]

Since 2004 the company has pursued an aggressive strategy based on 2 primary approaches:

  • Supply Chain Support:
    1. Recognizing the impact that climate change currently has on the agricultural communities that supply its product, Starbucks has committed to working with farmers to implement ‘climate-smart’ best practices for growing coffee. They’ve ensured that their Coffee and Farmer Equity (C.A.F.E.) sourcing requirements include these standards.[vi]
    2. In 2013 Starbucks opened a new Global Agronomy Research and Development Center to study the necessary changes in farming practices and assist farmers based on their findings.[vii] Starbucks works with its coffee growers around the world to implement findings and build a more climate-resilient supply chain.
  • Energy Consumption Reduction:
    1. Starbucks tracks its total greenhouse gas emissions from stores, offices, and manufacturing plants. It has committed to reducing its total emissions by 25% through energy efficiency measures (like LEAD certification) and investing in renewable energy generation.[viii]
    2. The company has also taken an active role in public discourse on the topic of climate change by joining BICEP (Business for Innovative Climate and Energy Policy) as a founding member and signing on to RE100, an agreement to drive towards 100% renewable power.[ix]

What’s Next?

  • In recent years, Starbucks’ commitment to reduce energy consumption has hit a snag as the company introduced hot food to its stores. The introduction of refrigerators and ovens has caused overall energy consumption to increase year over year.[x] Starbucks should be more intentional about how its business decisions impact its overall environmental goals. Though introducing food has been helpful for the bottom line, the effect of this change should have been anticipated. Starbucks must work to mitigate the impact of food introduction and take seriously its commitments to reduce overall emissions. It is difficult to take seriously the pledges that Starbucks makes if it fails to live up to those obligations. Otherwise, this failure becomes a liability amongst climate-conscious consumers who would perceive Starbucks’ previous efforts as corporate ‘greenwashing,’ not values-driven business management.
  • Starbucks should leverage the special relationship that it has with its farmers to train other companies in how to manage agricultural supply chains. Many industries are similarly affected by the effects of climate change and since Starbucks is such a leader in the field, they should dedicate resources to the research of other significant crops and supply chain management guidelines that can be disseminated across organizations and industries.

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[i] World Production, Markets, and Trade Reports, “Coffee: World Markets and Trade,” United States Department of Agriculture, June 17, 2016, http://www.fas.usda.gov/data/coffee-world-markets-and-trade, accessed November 04, 2016.

[ii] Elisabeth Rosenthal, “Heat Damages Colombia Coffee, Raising Prices,” The New York Times, March 9, 2011, http://www.nytimes.com/2011/03/10/science/earth/10coffee.html, accessed November 4, 2016.

[iii] Juliana Jaramillo et al., “Some Like It Hot: The Influence and Implications of Climate Change on Coffee Berry Borer (Hypothenemus Hampei) and Coffee Production in East Africa,” PLoS ONE 6, no. 9 (September 14, 2011):, http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0024528, accessed November 4, 2016.

[iv] María Baca et al., “An Integrated Framework for Assessing Vulnerability to Climate Change and Developing Adaptation Strategies for Coffee Growing Families in Mesoamerica,” PLoS ONE 9, no. 2 (February 26, 2014): http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0088463, accessed November 4, 2016.

[v] “Tackling Climate Change,” Starbucks Coffee Company, http://www.starbucks.com/responsibility/environment/climate-change, accessed November 04, 2016.

[vi] Ibid.

[vii] “Farmer Support Centers,” Starbucks Coffee Company, http://www.starbucks.com/responsibility/community/farmer-support/farmer-support-centers, accessed November 04, 2016.

[viii] Nanette Byrnes, “Starbucks Responds to Climate Change, with Mixed Results,” MIT Technology Review, 2016, https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/, accessed November 04, 2016.

[ix] “Tackling Climate Change,” Starbucks Coffee Company, http://www.starbucks.com/responsibility/environment/climate-change, accessed November 04, 2016.

[x] Nanette Byrnes, “Starbucks Responds to Climate Change, with Mixed Results,” MIT Technology Review, 2016, https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/, accessed November 04, 2016.

[xi] @Wallpapersdsc, “Coffee Beans HD Wallpapers,” Wallpapers HD Free, 2016, http://wallpapersdsc.net/other/coffee-beans-27397.html, accessed November 04.

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3 thoughts on “Caffeine Headache: Starbucks Responds to a Growing Threat

  1. Zach, I really appreciated your insightful assessment of Starbucks moving forward. It struck me that despite being quite progressive in their overall strategy, staying true to it is something that needs to be a priority integrated into every part of the business. While I like to think I would, I’m really not sure I would’ve considered the energy impact of hot and cold products. I wonder if this was similarly an oversight, or a conscious tradeoff by the company.

    My impression is that Starbucks invests in relationships with its supply chain, but it will be interesting to see how effective they are at encouraging them to implement the findings coming out of the research center. In my experience, that change requires a significant amount of education, behavior change, and/or financial incentives. Do they have the relationships and infrastructure to make that happen on the ground? Will they use a carrot or stick approach? It will be exciting to keep an eye on the progress they make and how.

  2. Zach,

    Great post. You did a great job identifying the climate-change-related issues brewing for Starbucks and other coffee companies. As an avid coffee consumer, this issue strikes close to home. Thanks for highlighting it.

    A couple questions the post left me contemplating:

    1) Do you think Starbucks should not have introduced hot food at all, for the reasons above? Or do you think they should have just done it more thoughtfully? If the latter, do you think management failed to recognize how the introduction of hot food would impede their progress on energy consumption reduction? Or do you think they made a decision to postpone some of the goals in this area in order to introduce hot food into stores? The reason I ask is that it seems many things Starbucks does increase their energy consumption, and yet the do them anyway. For an extreme example, the most energy-reducing action they could take would be to close their entire operation, yet they continue to stay open. So at what point should a business decision that increases energy consumption be permitted for the sake of a better product or service, and at what point should companies prioritize the environmental impact?

    2) Are there examples of other crop-related industries where you think Starbucks could help industry participants manage their agricultural supply chains? Do you think that Starbucks’ ability in this area is due to special know-how at Starbucks, or just a willingness to prioritize this part of their business (often) at the expense of short-term profitability?

    Overall, nicely done, and thanks for bringing this issue to everyone’s attention!

  3. Zach – thank you for your article. As a long-time Starbucks consumer I was aware that they are very focused on the environment and creating a more sustainable model. However, I did not realize that their introduction of hot food products was at odds with the goal of reduced emissions. I really find it interesting because it underlines the questions we’ve been debating in class: can you have a for-profit and save-the-world model in the same business. With their hot food offering, it is clear that Starbucks has higher emissions and does run the risk of losing brand equity in the mind of the climate-conscious consumer. However, I wonder how big of a risk it it is. Said differently, why do you think Starbucks felt that their consumer “allowed” them to offer hot food in direct competition to the goal of lowering emissions? To me, this implies that the value of the hot food outweighs the potential risk of losing the climate-conscious customer. How long do you think we have to wait until that equation shifts and the threat of losing the consumer outweighs the profit generated from hot food sales?

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