Coffee: Hotter is Better, Right?

Over two billion cups of coffee are consumed each day1, and a large proportion of those cups are purchased at Starbucks. As the world’s largest consumer of coffee beans, Starbucks will be directly impacted by the effects of climate change on its primary input: coffee beans.

How will climate change affect Starbucks?

Coffee plants, from which beans are harvested, thrive in moderate and stable environments with a precise combination of temperature and precipitation, a very particular climate only found in a few locations around the globe.2 These areas are commonly found in tropical highlands near the equator known as the Bean Belt. These areas, however, are extremely vulnerable to climate change which is raising global temperatures, making weather patterns unstable leading to periods of long droughts punctuated by intense rainfall, and the proliferation of pests and plant diseases that feed on coffee beans.

Unfortunately, these conditions have already affected global coffee production. For example, coffee harvests in Central America dropped 20% in 2013 after an onset of Coffee Leaf Rust, a fungus that blocks sunlight to leaves and kills coffee plants.3 Similarly, the Coffee Bean Borer is a major pest that causes crop damage totaling USD $500 million annually and further reduces bean supply.4 The Borer also reproduces faster in the warmer and higher altitude climates where Arabica coffee is produced. Changing weather patterns have also contributed to overall declines in global coffee production. For example, droughts in Brazil destroyed one third of coffee crops in 2014.5 In Tanzania, coffee production has declined 50% since the 1960’s and is projected to reach critically low levels in 2060.6

The continuation of climate change and these resulting trends will inevitably reduce the supply of coffee beans which is causing concern for coffee bean consumers. Jim Hanna, Starbucks’ Sustainability Director, has acknowledged: “What we are really seeing as a company as we look 10, 20, 30 years down the road – if conditions continue as they are – is a potentially significant risk to our supply chain, which is the Arabica coffee bean.”7

How is Starbucks dealing with climate change?

Starbucks has been responding to climate change since 2004 with one primary initiative aimed at climate adaption and mitigation efforts. The company has opened seven farmer support centers staffed with agronomists and sustainability experts who work with coffee farming communities to improve coffee quality and yields.8 In 2013, Starbucks purchased a coffee farm in Costa Rica which it turned into a laboratory for testing coffee-growing practices and developing plants that can thrive in warmer temperatures.9 To combat pests and plant disease, the company distributed coffee plants bred to be rust-resistant to farmers in Mexico. It even openly shares its formula for breeding the plants.10

Externally, Starbucks has generated awareness about and engaged in addressing the effects of climate change. The company has partnered with other businesses and organizations to promote climate-smart agricultural practices and was a founding member of Business for Innovative Climate and Energy Policy, a social project advocating stronger climate change and clean energy policies in the United States.11

What else can be done?

While Starbucks has been addressing climate change for over a decade with commendable success, the company itself continues to be part of the problem. Starbucks greenhouse gas emissions have risen each of the last three years. While the company has made changes to improve its energy efficiency, a recent business decision to offer heated food has led to more energy consumption by refrigerator and oven appliances, offsetting a portion of the gains realized from its sustainability efforts. While it may prove difficult to reduce energy consumption of necessary appliances and equipment, Starbucks could revisit its store design to shift toward more energy efficient lighting and design, modify store entrances and drive-through windows to reduce heat entrance/escape, and utilize recycled paper products. As part of its “My Starbucks Idea” initiative, the company could create a contest soliciting ideas for the most effective ways to reduce carbon emissions. Together with consumers, the company may be able to reduce coffee cup consumption by encouraging recycling or incentivizing customers to bring their own reusable coffee containers.

As global temperatures rise and climates continue to change, Starbucks will likely have to change as well. Whether it is a supply chain shift, innovation of new products, or reframing customer’s product expectations, something will likely have to change. And Starbucks will likely lead the way. I guess when it comes to coffee, perhaps hotter isn’t necessarily better.

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[1] The Climate Institute Report: A Brewing Storm: The Climate Change Risks to Coffee,  http://fairtrade.com.au/~/media/fairtrade%20australasia/files/resources%20for%20pages%20-%20reports%20standards%20and%20policies/tci_a_brewing_storm_final_24082016_web.pdf

[2] New York Times, “Climate Change Threatens World’s Coffee Supply, Report Says”, http://www.nytimes.com/2016/09/23/science/climate-change-threatens-worlds-coffee-supply-report-says.html?_r=0

[3] BBC News, “Coffee in Crisis: The Bitter End of Our Favorite Drink?, http://www.bbc.com/future/story/20150728-coffee-the-bitter-end-of-our-favourite-drink

[4] The Climate Institute Report: A Brewing Storm: The Climate Change Risks to Coffee,  http://fairtrade.com.au/~/media/fairtrade%20australasia/files/resources%20for%20pages%20-%20reports%20standards%20and%20policies/tci_a_brewing_storm_final_24082016_web.pdf

[5] The Climate Institute Report: A Brewing Storm: The Climate Change Risks to Coffee,  http://fairtrade.com.au/~/media/fairtrade%20australasia/files/resources%20for%20pages%20-%20reports%20standards%20and%20policies/tci_a_brewing_storm_final_24082016_web.pdf

[6] Coffea Arabica: Yields Decline in Tanzania Due to Climate Change: Global implications,

http://www.sciencedirect.com/science/article/pii/S0168192315000830

[7] The Guardian, “Starbucks Concerned World Coffee Supply is Threatened by Climate Change”, https://www.theguardian.com/business/2011/oct/13/starbucks-coffee-climate-change-threat

[8] Starbucks Website, http://www.starbucks.com/responsibility/environment/climate-change

[9] MIT’s Technology Review, “Starbucks Responds to Climate Change, with Mixed Results”, https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/

[10] MIT’s Technology Review, “Starbucks Responds to Climate Change, with Mixed Results”, https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/

[11] Starbucks Website, http://www.starbucks.com/responsibility/environment/climate-change

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8 thoughts on “Coffee: Hotter is Better, Right?

  1. I find it very impressive that Starbucks has been so proactive in its sustainability initiatives (since 2004!). While I understand the downside of introducing heated food, I would also be curious to know the relative impacts to both the business and the environment of being exposed to/ reliant on coffee production vs. introduction of heated foods vs. energy efficiencies in-store. Thank you for the post!

  2. Thank you for this post about Starbucks– I think we’d be hard pressed to find anyone who hadn’t enjoyed one of their beverages at some point in time. All while reading your work, I was wondering what role corporations like Indigo can have in preventing or at least lessening the negative impacts that climate-change poses for coffee growers. Did you, in any of your research, come across programs looking to leverage biofilm coverings for producing a more sustainable coffee bean?

  3. I do have noticed Starbucks partnership with sustainable coffee farms to improve their energy efficiency in supply chain. This is a very interesting and effective method that could be used widely in food and beverage industries around the world. Also, I really like your proposal of adjusting their store design, including modifying store entrances and drive-through windows to reduce heat entrance/escape, and utilizing recycled paper products etc. To build on that idea, I also think they could decrease their heating/cooling temperature 2 degree centigrades lower/higher in winter (since Starbucks stores are always overly hot/cold during winter/summer), and remind their customers to use as fewer stir sticks / napkins / coffee cup sleeves.

  4. Interesting post – thank you! I completely agree that Starbucks as a company is part of the problem itself – it is such a behemoth in the industry and it will take considerable effort to lower their greenhouse gas emissions. One measure that Starbucks has taken to become more eco-conscious is the introduction of ‘Leadership in Energy and Environmental Design (LEED®)’ Certified Stores [1]. These stores use recycled coffee grounds in table tops, low emitting materials for adhesives, sealants, paints, coatings and flooring, 10%+ of materials extracted locally and save over 45% in lighting power through efficient LED fixtures. Starbucks now has more than 750 LEED®-certified stores in 19 countries [2]. This is more than any other retailer [2]. Hopefully, as Starbucks continues to expand it will focus on reducing greenhouse gas emissions partially through ensuring new stores are LEED®-certified.

    References:
    [1] http://www.starbucks.com/responsibility/environment/leed-certified-stores
    [2] http://www.gbes.com/blog/starbucks-the-worlds-greenest-retailer/

  5. Thanks for the interesting post! I did some work with coffee farmers in South America about a year ago and a main topic of conversation among the farmers was how they were able to grow coffee at higher and higher altitudes thanks to rising temperatures. Unfortunately this meant that lower altitude plants were not a productive, and coffee plants typically take about 3-5 years to start producing so it’s not easy for farmers to adapt. On top of this, it’s not very easy for some of these farmers to buy and sell land because of inconsistent land rights documentation. Given this, I think that it’s great that Starbucks is working to develop coffee plants that can thrive in higher temperatures.

    However, I would like to see Starbucks take action a little closer to home. I just tried to do some research on paper cup production, and it definitely seems like a complicated chemical process. I would be interested to know if Starbucks is taking advantage of all options to go green in this space. For example, currently Starbucks cups are neither compostable nor recyclable, and that seems like low-hanging fruit for them. I have used plenty of compostable coffee cups from the HBS dining hall that don’t sacrifice on functionality, I wonder why they aren’t doing this?

  6. Thanks for the post! You bring up an interesting point that the recent shift towards offering heated foods has led to more energy consumption by refrigerator and oven appliances. I wonder, however, whether this was an intentional shift by Starbucks to diversify their product offerings to concentrate less on coffee due to the exposure to climate change risk of the Arabica coffee bean that you outline in your article. This calls into question for me the core intentions of Starbucks when it makes sustainability claims, while increasing energy consumptions in other aspects of business.

    Another aspect that was interesting in reading your article was the fact that Starbucks purchased a coffee bean farm in Costa Rica as part of its sustainability efforts. This reminded me of the IKEA case, where the company was considering purchasing/leasing land in order to have more control over the sustainability of its supply chain. I wonder whether this would be a viable option for Starbucks, to go one step past partnerships, and actually acquire or lease land for coffee bean farming. This would allow Starbucks to have even more control over making sure sustainable practices were being used for coffee bean growing, but also might be a distraction from its other business initiatives and would require a large upfront cost.

  7. Thank you for this insightful post! You note that the effects of climate change could have a real impact on Starbuck’s coffee yield, but has climate change had any effect on their financial results? It would be interesting to know if investors have factored climate change into the valuation of Starbucks? My initial reaction is the actual risk posed to the coffee industry seems pretty minor and Starbucks has little monetary incentive to address climate change in a major way other than from a PR perspective. Do you believe their efforts have had a real impact or is this a corporation looking to appear environmentally conscious to maintain a certain brand image?

  8. Thanks for an interesting read! Your article mentioned some additional efforts that can be taken to create more energy efficient design at Starbucks locations worldwide. It appears that Starbucks has made considerable efforts since 2008 in building for LEED certification at all new company-operated stores. In fact, the company now has over 1,000 LEED certified stores in 20 countries, including features such as recycled coffee grounds, low emitting materials, local materials, and LED fixtures (resulting in 45% power savings).

    Starbucks’ commitment has been inspiring. That said, Starbucks has approximately 24,000 stores, which means less than 1% of its stores are LEED certified. How should Starbucks approach converting the existing stores to a sustainability standard that will enable the company to achieve its sustainability goals with respect to energy and water conservation, renewable energy, and recycling / reducing waste? Will shareholders be on board?

    References:
    http://www.starbucks.com/responsibility/environment/leed-certified-stores
    http://www.starbucks.com/responsibility/environment/water-and-energy
    http://www.starbucks.com/responsibility/environment/water-and-energy
    http://www.starbucks.com/responsibility/environment/recycling

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