Green Mountain is Buzzing About Fair Trade Coffee

By Sarah Fister Gale


Finding a way to produce products that are good to the earth, safe and delicious for consumers, and profitable to your business is the Holy Grail of the organic industry. If a company’s passion for organics overwhelms its business plan, the business can easily fail, while the drive for dollars alone defeats the whole idealism of organics.

It’s a difficult balancing act but the companies that do it right gain success and accolades from consumers and industry members alike, becoming models for other growing organic businesses to emulate.

Green Mountain Coffee Roasters is one of those companies. What began in 1981 as a tiny local coffee roaster nestled in the mountain town of Sugarbush Valley, VT, Green Mountain has grown into a specialty organic coffee products powerhouse. The company roasts high-quality Arabica coffees and offers more than 100 coffee selections, including certified organic, Fair Trade Certified, single-origin, estate, signature blends and flavored coffees that it sells under the Green Mountain Coffee Roasters and Newman’s Own Organics brands. Publicly traded since 1993 it currently has sales in excess of $161 million, the majority of which are generated by the company’s wholesale business, which serves 8,000 supermarkets, convenience stores, offices and other locations and its direct mail catalog and e-commerce website. The company also recently signed a deal to source, roast and package a blend of Newman’s Own Organics coffee exclusively for more than 650 McDonald’s restaurants—that’s right, McDonald’s—in Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Maine and Albany, NY.

What makes Green Mountain so special is its “organic” approach to business. From the employee perks and its relationships with farmers, to the five core principles that guide all decision making. Everything the company does is based on the idea that “we can change the world by the way we do business,” says Patty Vincent, coffee products and certification manager. “We are motivated to achieve success because the more profitable we are, the more good we can do in the world.”

The company’s mission states that “Green Mountain is a values-driven company that views profit as a means to achieve a higher purpose. The company allocates five percent of its pre-tax earnings to social and environmental causes, including investing in the farms and surrounding communities that grow its premium coffee beans.

The five core principles—a passion for coffee; financial performance; a destination workplace; ethics; and commitment to social responsibility—drive all decision making, Vincent says. While many organic companies tout similar belief systems, it’s the combination of social responsibility and financial performance that drives its success.

“When we want to do something, we have to convince the leadership team it will be profitable, and that’s not always easy,” she says.

The leadership teams calls it “conscientious profitability.” Through its business practices, it strives to promote positive change in the global effort to create long-term solutions and sustainability for people and ecosystems worldwide. But it also realizes that none of the social change can be accomplished if the company doesn’t pay as much attention to good business practices as it does to sound environmental choices. This is why every move the business makes, from its decision to develop organic lines, to its desire to pay more for coffee beans through Fair Trade certification, is first carefully evaluated to make sure good deeds and good business go hand-in-hand.

The Road to Wellness is Paved in Coffee Beans
The company’s early history took a dramatic and auspicious turn with a single great cup of coffee. In 1981, Green Mountain’s current owner, Bob Stiller, was skiing in the Vermont mountains when he stopped at a lodge to warm up. They gave him a cup of coffee and he was so taken by the rich taste and heady aroma that he went to the local roaster who produced the beans, and within days purchased the company. It was the beginning of the specialty coffee boom when consumers were just starting to develop a palette for fresh coffee beans brewed in a variety of bold flavors and regional blends.

Back then customers came directly to the local roastery for their coffee, where they could scoop still-hot beans into paper bags while perusing Italian pottery and top-of-the-line coffee machines. The company quickly grew, expanding from the local store to sales of beans in restaurants, inns and national grocery chains across the country, and through its robust catalog business.

During this time of rapid expansion, Stiller fostered a business model based on sustainability and success for everyone involved, from employees and farmers to vendors and customers. In the spirit of all-inclusive success, Stiller began hosting “summits” where employees, vendors and customers gathered to brainstorm ideas for growth. Vincent recalls attending the first summit, where 125 people met at a local hotel to listen to motivational speakers and generate ideas for the business. From those sessions and others in the years to follow, dozens of ideas and initiatives were generated.

Vincent’s current pet project—an idea generated at the last company summit—is the company’s renewable energy program, which strives to reduce the use and waste of fossil fuels. The company just invested in a biodiesel fuel tank for its local delivery trucks to reduce the use of gasoline for shipping; and it has instituted a “no-idle” policy, requiring trucks to shut off their engines when they load and unload shipments to further reduce fuel waste.

“It’s very exciting for us to do this,” Vincent says of the biodiesel tank and other renewable energy efforts. “It’s all part of our company’s commitment to sustainability.”

The company also invests heavily in the development of its employees and farmers. For in-house employees that means access to a remarkable wellness program, which includes yoga courses, meditation, smoking cessation, weekly Spanish classes and a 50-percent tuition reimbursement program for local college courses. The company also periodically hosts vendor fairs inviting educators to the facility to offer programs that might appeal to employees.

“Wellness is just common sense,” Vincent points out. “If people are healthy and feel good, they perform better and that’s good for business.”

The Push for Fair Trade
The healthy worker principle translates outside the company walls to the farmers who benefit most significantly from the company’s investment in social and environmental causes and to its commitment to Fair Trade wages for labor. “When it comes to coffee, organic and Fair Trade go hand in hand,” says Ed Canty, Fair Trade and organic buyer for Green Mountain. Both Fair Trade and organic reinforce the company’s desire to be good to the earth and to the people who farm it, guaranteeing that neither will be abused, mistreated, or stripped of the ability to sustain life.

Fair Trade promises a living wage and healthy work conditions for coffee bean farmers, and a large part of that is offering opportunities to farmers to grow organic beans that deliver a profit without exposing themselves to toxic chemicals and pesticides. Fair Trade wages ensure they can feed their families, educate their children, and invest in their farming operations to deliver the best quality coffee beans for a premium price, today and in the future.

“It just makes sense,” Vincent says of Green Mountain’s commitment to Fair Trade. “You can’t ask people to produce coffee below the cost of living. We aspire to behave in a way in which everyone we interact with is better off for having known us.”

This is why Green Mountain embraces and invests in Fair Trade certification.
It is one of 300 U.S. companies to support fair trade for growers and is one of the largest providers of double certified coffee—organic and Fair Trade—in the nation. Green Mountain’s Fair Trade certified and organic coffee sales have grown 60% in the third quarter of fiscal 2005 compared to the previous year, and the company expects to see that number continue to soar.

But transitioning to Fair Trade wasn’t easy, Canty says. It was a big decision for the company that required a lot of research and number crunching. “The Fair Trade movement was a ground swell through the company that began with a lot of people in different departments saying it was something we should be doing.”

The Green Mountain leadership team started seriously looking into Fair Trade in the late 1990s when one of the many coffee crises was brewing in the coffee market. “Because coffee is a commodity and because the plants take five years to grow to maturity, the supply and demand of coffee beans swings like a pendulum,” Canty says. When market prices go up, farmers see the potential for profit and plant a lot of new plants. Then, when the plants mature five years later, the market is flooded and the prices plummet causing them to abandon coffee growing for other crops, causing the beans to become scarce again, Canty says. “This kind of fluctuation in the market ruins families, lives and communities.”

In the late 1990s, farmers were getting as little as 40 cents per pound for coffee that cost them 80 cents per pound to grow. “At that time we were losing relationships, we were losing farmers and the quality of the beans was dropping,” Canty says. “We knew that we had to find a way to get the farmers more money, but we needed to do it the right way.”

The company had a policy of paying living wages to all of its farmers, but Canty knew that if they just offered more money for the beans without controlling distribution there would be no way to ensure that the farmers would see the profit.

Like all the conscientiously profitable decisions that Green Mountain makes, the desire to pay higher prices for beans wasn’t only for the sake of the farmer. Canty knew the quality of the beans was tied directly to the success of the farmers. When they don’t have money they can’t invest in the farming infrastructure and they are driven to cut corners. “They develop a ‘who cares’ mentality that has a ripple effect on future harvests,” he says. “We had already noticed quality was sinking and we wanted to find a way to give them better wages and hold them accountable for the quality of the beans.”

The Fair Trade movement offered a solution. Fair Trade certification guarantees fair prices to farmers and promotes long-term business relationships between buyers and sellers, and greater transparency throughout the supply chain.

Through Fair Trade certification programs, higher wages are distributed through farming co-ops where members vote on what to do with additional income. The money can be spent on education, community infrastructure, farming implements and individual wages. Along with supporting families, Fair Trade co-ops reinvest profits in credit unions, crop diversification, insurance programs, and other opportunities that build the communities around the farms.

“Fair Trade allowed us to give money to support and strengthen the organizational leadership skills and the infrastructure of these communities,” Canty says. “By supporting it we knew we wouldn’t just be supporting the coffee produced that year, we were supporting it into the future.”

Reinforcing the decision to support Fair Trade coffee was growing consumer demand, Canty adds. For a product to carry the International Fairtrade Certification Mark, it must come from the Fairtrade Labelling Organizations International (FLO) inspected and certified producer organizations. The crops must be grown and harvested in accordance with the International Fairtrade standards and the supply chain is monitored by FLO-Cert to ensure the integrity of labeled products.

All certified Fair Trade products can carry the Fairtrade label to allow consumers to identify goods that meet these standards. “Our customers are looking for this label so it continues to be a sales driven motivation,” Canty says.

Back to Organic
At about the same time Green Mountain was investing in Fair Trade certification for farmers, it began exploring organic coffee products. “We know that organic and Fair Trade are sisters,” Canty says. “We saw that organic was a growing market and it was a natural fit for our value system. Plus, the coffee just tastes better.”

But transitioning a coffee farm to organic takes even longer than other kinds of farms because the coffee plants take five years to grow to maturity. Adding to the challenge of convincing farmers to make the organic move—that would cost them yields and profits during the long transition—was a long-held distrust of Western buyers who went to coffee farms in the 1940s and 1950s and convinced them to replace traditional methods of farming with fertilizers and pesticides.

“If we go in and say we have a brand new way for you to farm and it costs $15,000 and five years to get certified, there would be a lot of animosity,” Canty says. “They were using organic farming methods before they were told to do it differently.”

So Canty is careful in the way he asks farmers to consider transitioning. “We always encourage them to go organic and we offer a lot of support,” he says.

Through Green Mountain’s social responsibility program—which is separate from the money spent to buy coffee—the company invites proposals from farms, including those that ask for money to help them make and support the organic transition. The program invests in building roads, buying vehicles, technical assistance and support, as well as sending people from the company to the farms to guide them during the transition.

Canty also tries to forecast coffee bean needs well into the future and signs contracts for future harvests whenever possible. “It’s about setting expectations for relationships and letting them know what quality and quantity we will want.”

The farms that have made the transition love the organic model, he says. “It’s a healthier work environment, and they are more interested in the taste of the beans. They take a lot of pride in growing such a quality product.”

McDonald’s Becomes a Fair Trade Champion
Currently, roughly 25 percent of Green Mountain’s coffee products are organic and 28 percent is Fair Trade with that number increasing annually. Canty continues to be cautious, however, in encouraging farmers to make the transition. “We have a reputation that once you are a farmer in our supply chain you stay with us,” he says. “I don’t want to tell them to convert to organic if I can’t promise them a home for their coffee. I don’t want to see our people go bankrupt because the market gets flooded.”

He maintains a database of organic coffee bean farmers who he can reach out to as demand increases, which he was able to do recently when Green Mountain signed a deal with McDonalds to produce an exclusive line of organic Fair Trade Newman’s Own coffee for 650 of its New England restaurants. The McDonald’s contract was a great boon to Green Mountain and to the many farmers in its network, who Canty had waiting in the wings while the deal was finalized, letting them know that he might have a need for a lot of beans in the very near future. “I couldn’t tell them until the deal was signed,” he says.

But now that it is, Canty has been able to bring several new farming co-ops into his fold to meet the dramatic increase in demand for organic Fair Trade coffee beans. Green Mountain went from working with 28 farming co-ops in fiscal year 2005, to 64 co-ops in fiscal year 2006, and the amount of organic Fair Trade coffee the company sourced grew from 4.3 million pounds to 9.7 million pounds in the same year. This growth is thanks in large part to the McDonald’s deal.

“You have to give kudos to McDonald’s,” Canty says. “They deserve a lot of support for their decision to go with organic Fair Trade coffee.”

That decision is having an impact that is felt around the world. Canty estimates that conservatively, each of the 30 new farming co-op that he has recently begun relationships with has an average of 400 families. “That’s 12,000 families whose lives are changed because of McDonald’s’ decision.”

Through the Fair Trade certification, every farmer is guaranteed $1.41 per pound of coffee or the current going rate for conventional coffee plus 20 cents (referred as the C+ 20 rate), whichever is higher. Conventional coffee prices are currently around $.99 per pound.

Canty points out that while many corporate conglomerates can push down the price of a commodity when they sign a deal for such large quantities of a product, the fact that McDonald’s chose Fair Trade shows they have no intention or desire to try to push for lower prices. “The farmers know that through this deal they are guaranteed to get at least $1.41 a pound for their coffee, and that the demand will be there in the future. That’s how Fair Trade protects farmers.”

Canty has also noticed that since the McDonald’s deal went public a lot of importers who previously hadn’t paid much attention to organics or Fair Trade have started asking about it and picking up the lingo. “This was a big wake-up call for the whole industry that they need to get involved in Fair Trade and organic,” Canty says. “It shows that it is not a fad, it’s a trend that will only continue to grow.”

Sarah Fister Gale is a contributing editor to Organic Processing Magazine. She can be reached at sarah@organicprocessing.com.