Page 175 - The Starbucks Experience

PRINCIPLE 5

C.A.F.E. Practices
As was noted previously, Starbucks has developed an evolv-
ing set of guidelines for buying coffee. If coffee suppliers meet
certain criteria, they can negotiate a long-term, premium price
for the coffee they sell to Starbucks. However, if a supplier
wants to be a stable provider for Starbucks, it must commit
to being independently measured on these criteria, which
include

• Opening up its books so that Starbucks can see how
it pays its providers, all the way down to the coffee
picker

• Working with Starbucks to develop environmentally
friendly practices, such as decreased pesticide use
and lower water consumption
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• Constantly improving the living conditions for its
laborers

• And, of course, maintaining a high level of product
quality

Starbucks generally pays a higher price for its coffee than
its rivals pay (approximately $1.26 more per pound), and a
Starbucks supplier contract, under C.A.F.E. Practices guide-
lines, guarantees a premium price that will protect the farmer
from the volatility of the coffee market. This helps providers
plan their coffee businesses more strategically—buying land,
investing in equipment, increasing salaries to workers, and
securing loans.
Does Starbucks have to pay a premium fixed rate instead
of paying the lowest price possible for acceptable-quality cof-
fee? Does it have to give incentives so that its suppliers focus