John Steel, Chief Executive of Fairtrade coffee brand Cafedirect, talks us through the coffee buying process, and how they’re keeping it fair for farmers.
Firstly, can you give us a brief history of Cafédirect, and what makes you different from other coffee brands?
Cafédirect was born in 1991. What is amazing about the business is it started as a genuine intervention – direct action to fight injustice and enable farmers to get a fair price for their coffee. Four charities came together with three coffee cooperatives to start Direct Trade and pay a fair price. This was a response to the collapse in the International Coffee Agreement in 1989. In 1992, the brand moved on to the high street and started trading with the Co-op, Sainsbury’s and other grocery stores swiftly followed.
In 1994, Cafédirect was one of the three brands to start Fairtrade and be a key part of a movement for fairness for farmers and to improve their livelihoods. Cafédirect is the only company that has remained totally committed to Fair trade over the last 25 years.
Ten years later, in 2004, Cafédirect was one of the first organizations in the world to engage its customers in the ownership of the Company, offering shares to the public. In what now is called crowdfunding and completed online, Cafédirect printed the details and a phone number on packs of coffee, tea and cocoa and over 4,500 people bought shares in the company.
Cafédirect Producers Foundation (now called Producers Direct) was established as a standalone farmer-owned charity to maximise impact with Cafédirect farmers by 2009. Ten years on, the charity is raising additional funds on the back of Cafédirect’s donation at a ratio of 5 to 1; has raised over £10m; positively impacted on over 600,000 farmers lives and spun off an award-winning tech startup, WeFarm, which connects farmers across the world providing life changes knowledge and insight.
In 2011, Dutch agricultural investor, Oikocredit, invested in the business and three of the original charities divested themselves, leaving Oxfam as the sole charitable investor. In 2014, Cafédirect innovated in two key markets becoming the first company in the world to offer Fair trade capsules to take on Nestlé’s global dominance with Nespresso and starting its own online coffee subscription business, with the acquisition of Kopi coffee. A year later, Cafédirect started roasting its own coffee in London Fields, increasing employment in Hackney and launching another first; a new 100% Organic, 100% Fair trade range.
The Business became the UK’s first coffee company to become B Corp certified in 2018; leading the way and joining a new movement to improve business practices, and was recognised at the highest level as UK Social Enterprise of the Year 2018.
Describe to us how you go about purchasing coffee from farmers, and how involved Cafédirect is in the growing process.
The vast majority of our coffee is purchased directly from co-operatives who we have worked closely with for over 20 years and who own a share in Cafédirect. We agree upfront how much we are going to buy in a season and agree on a price that includes the Fair trade minimum, Fair trade premium, organic premium and money for quality too. We use a 3rd party logistics company to bring the coffee to processing facilities in the UK and EU, where coffee is then roasted, ground and packaged for our customers.
Our involvement in the growing process comes from three main sources – Fair trade and Organic investment, our donation and support of our producer led charity, Producers’ Direct and our relationship with the growers, including all aspects of governance and the Directorships held by farmers on the Cafedirect board.
All these initiatives mean that the growing process is financially supported, direct and considers carefully the needs of the producers.
Can you talk us through the production and packaging process, and how you ensure that it remains sustainable?
Production is mostly outsourced to like-minded partners. The biggest example of this is the roasting and packing of our coffees in partnership with Bewley’s. They have been working with Cafédirect for over ten years and have also supported sustainability initiatives too.
A big issue is packaging. This is most noticeable in roast and ground coffee, which is packaged in laminated bags with a value to ensure the product does not become oxygenated and stays fresh.
Cafédirect has spent considerable resource looking at this issue and in April 2019 launched home compostable packaging in a trial with Waitrose & Partners.
Cafédirect has been Fairtrade certified since 1994; with the fluctuating prices of coffee in stock markets, how challenging has it been to maintain the policy of Fair trade?
This is an incredible commitment and challenge. 25 years ago three food and drink brands became the first to commit to Fair trade – Clipper Teas, Green & Black’s chocolate and Cafédirect coffee.
Cafédirect is the only one to remain totally committed. The coffee price remains ridiculously low – below $1 per pound of coffee. The Fair trade minimum is $1.40 per pound with an additional 30c premium paid too. The cost of producing a pound of coffee varies by origin but is estimated to be $1.28-$1.36.
Cafédirect’s commitment to Fair trade is unmatched and is totally appreciated by coffee producers, who would not be able to survive without buyers paying above the price of production.
Cafédirect set up its own charity in 2009, talk us through the work and goals of the organisation.
The charity was set up to be aligned with Cafédirect’s mission, to improve the livelihoods of tea, coffee and cocoa farmers and their families. Prior to 2009, Cafédirect had invested its own money directly into projects with each producer organisation.
This new model was achieving three key objectives:
- Firstly, to empower producers – the charity is run by producers for the benefit of producers. This has the benefit of really understanding issues on the ground and addressing them in an owned and actionable way.
- Secondly, the charity is standalone and independent of Cafédirect. Many corporates have foundations which are owned and run by the corporation. Although they have position impact, it is always as part of a commercial enterprise looking to maximise the benefit of this work for itself.
- Finally, the charity is able to raise donations from other funders which amplify Cafédirect’s investment. So for every £1 Cafédirect donates, the charity raises over £5 more – a very impressive result.
In your personal opinion, what are the major problems with the food and drink industry in general, in terms of sustainability and environmental impacts?
There are many, so to help focus, let’s start with value, balance and ownership. In food and drink supply chains, too many businesses extract the value far away from the origin at which the product is created and ensure farmers are kept as poor, impoverished beneficiaries at the end of a supply chain.
Also, the vast majority of food & drink businesses have ownership structures designed on profit maximisation and returning value to the wealthy few.
If you combine these two factors it exacerbates the inability of farmer communities to improve their communities and the landscapes in which they operate. Ultimately this is not sustainable. Without the transfer of value to the origin and the fairer sharing of ownership the landscapes and communities upon which we depend will not be able to provide for us.
This imbalance is further worsened by businesses using plastic, convenient packaging in the name of “adding value”. To change this, and change this fast, there needs to be a seismic shift in the role of business and its relationship with value chains.
Do you predict any major changes or new trends in the food and drink industry as consumers are increasingly demanding sustainable and eco-friendly produce?
There is a definite and accelerated shift towards consumers supporting businesses with purpose. This is clearly visible in the growing interest in B Corporation and Social Enterprise. In addition, the consumer focus is putting increasing pressure on the industry with regard to packaging and hopefully, this will extend into all areas of business. The strength of feeling demonstrated by Extinction Rebellion and its supporters show the increasing dissatisfaction with maintaining the status quo.
At a more fundamental level we are seeing significant shifts in consumption, be it in veganism, dairy alternatives, and moves to local supply or insects being a more readily available source of protein.
What are your aims for the future of Cafédirect?
In the future, it is important to scale up the business further, have a stronger voice on the way business should be done and demonstrate the importance of smallholder farmers in food & drink.
Cafédirect has an incredible business model built on excellent products provided in the best way. We need to express ourselves more confidently to show the way. These are exciting and important times, and Cafédirect is energised to play its role in challenging and changing for a better future.