News Analysis: Starbucks fights 'arrogant' jibes

As Starbucks reviews its UK PR account, Sarah Robertson investigates what the coffee chain is doing to address accusations,led by the anti-globalisation movement, that it is destroying communities and livelihoods.

Starbucks is the epitome of the ubiquitous corporation that people love to hate. For this reason its UK PR account, in the process of being reviewed as the firm attempts to improve its ethical credentials (PRWeek, 14 January), is one of the most challenging briefs around.

Named after the first mate in Herman Melville's Moby Dick, Starbucks the coffee chain was born in liberal Seattle in 1971. It has since mushroomed to operate 8,000 shops in 34 countries, each week serving 28 million customers. Three new Starbucks branches open every day - its target is 30,000 stores, with sights set firmly on growth markets such as China.

The business has flourished in the UK over the past decade, but success has attracted fierce criticism on issues such as fair-trade coffee, GM milk, chairman Howard Schultz's alleged financial links to the Israeli government, and accusations that the relentless growth is forcing locally run coffee shops out of business.

CSR investment

A survey carried out last month by Global Marketing Insite found that even Starbucks customers perceive the company as 'arrogant, intrusive and self-centred'. No surprise then that Starbucks has invested significantly in CSR activity. In the UK it has offered grants to charities, such as the Royal Society of Arts, educational foundations and training courses; it also produces an annual CSR report.

Last October Starbucks joined forces with Oxfam, giving £100,000 to a rural region in Ethiopia where farmers suffer from poverty and drought.

The money is being invested in seed, improved irrigation systems and local education programmes. And the company is offering advice on improving coffee yields. Starbucks also has a diverse-supplier policy, which it claims increases the amount of business it does with companies that are majority-owned by women, minorities or socially disadvantaged individuals.

Moreover, Starbucks was one of the first major coffee house brands to introduce 'ethical' coffee in 2002 when it offered a 'fair-trade coffee of the week', and shortly afterwards added it to its main menu. But the chain now lags behind competitors such as railway kiosk firm AMT and Marks & Spencer, which has switched to 100 per cent fair-trade coffee in its in-store cafes.

Starbucks needs to move quickly to catch up, according to Fairtrade Organisation head of comms Barbara Crowther, who says that introducing 100 per cent fair-trade coffee would boost its image.

But criticism of Starbucks extends beyond fair-trade policies. The company's notoriety was cemented in Naomi Klein's seminal anti-globalisation book No Logo. She said Starbucks operates by 'clustering' - saturating areas with branches, forcing local businesses to close down.

Ethical Consumer magazine researcher Ruth Rosselson says: 'Starbucks has a number of useful policies in how it sources coffee, and its dialogue with Oxfam is progress. However, we would recommend consumers choose non-chain shops that offer fair-trade coffee. Starbucks operates like the supermarkets: it puts local companies out of businesses and with this policy can never be 100 per cent ethical.'

Corporate Watch researcher Chris Grimshaw dismisses Starbucks' CSR programmes as 'a smokescreen to create the illusion of ethics'. He adds that the company is committed only to making money for its shareholders.

Indeed, its critics do not appear to be having much impact on global sales, which grew 30 per cent to £2.9bn in the 12 months to September 2004.

Many believe that Starbucks will remain a prime target of criticism by virtue of being a visible American multinational.

Dr Stuart Thomson, director at political consultancy Upstream and author of New Activism and the Corporate Response, thinks the best way to address the anti-globalisation movement and other pressure groups is to use their figureheads as advisers.

'It is not enough to have CSR policies if the company is unable to understand the activist group it is facing,' Thomson says. 'Starbucks should liaise with the activist groups that campaign against it so it can anticipate where they will attack. Consultancies are known to take on people with activist backgrounds to help them.'

He adds that protesters are often intelligent, articulate middle-class people who know how to lobby effectively, and have already made Starbucks back down in certain areas. For instance, in 2001 a local community group stopped Starbucks opening a branch in London's Primrose Hill by petitioning the local council. Names on the list included Alan Bennett, Neneh Cherry and Jude Law.

Starbucks provided details on CSR activity that it undertakes with organisations such as the National Literacy Trust. 'We do a great deal of community work; we're proud of the grassroots passion of our people,' says Starbucks head of CSR and comms Scott Keiller.

MAKING ENEMIES

- 1999 Activists trash Starbucks shops in its home town of Seattle, protesting against the negative impact of globalisation at the World Trade Organisation meeting there

- 2001 Starbucks allegedly charges firemen working at Ground Zero after 9/11 for bottled water

- 2001/02 Local resident groups stop Starbucks branches opening in the North London districts of Primrose Hill and Camden

- 2004 Boycott Israel Campaign criticises Oxfam's deal with Starbucks for the latter's alleged Zionist links and calls on the public to boycott the chain.

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