Wednesday, May 14, 2008

Starbucks – Pretty Good After All…


Whether you love them, or love to hate them, the caffeinated equivalent of the fictional Fox Books (You’ve Got Mail) coming to destroy your neighborhood, or provide good coffee where the thrice-boiled muck beaker has reigned supreme, commands an opinion. Whether that opinion is entirely positive or of the more negative nature, the fact is that the company is firmly entrenched in pop culture and has transformed the ritual of morning coffee for millions around the world. The sin of over-expansion has moved from the realm of pundit commentary to a Wall Street factoid and has management pursuing a new strategy of closing down some outlets in oversaturated markets. Despite the slowed openings and some closings, the company has managed to stand by its commitments to the coffee growing community that while not exactly earth-shaking, are tangible.

Your Genteel Moderator is no fan of corporate social responsibility reporting. While occupying armies of people and consuming vast resources and time within a company, they have little to no impact on critics, and the rest of the world would rather make incisions in their own eyeballs with dull and rusty razor blades than read through the politically correct drudgery of such reports. Having attended, and even spoken at, a number of conferences dedicated to the topic of corporate social responsibility, it is my humble opinion that this is a field of activity so self-indulgent, self-congratulatory, and self-fulfilling as to rank right up there with the great Y2K consulting hoax. Nevertheless, serious companies that are willing to endure the horrors of the process, and the reasonable questions from their shareholders about the expense involved, and have their reports reviewed and verified by credible third parties, as Starbucks have done, do deserve some recognition for their efforts. It is reasonably certain that such recognition will not translate directly into share price increases, but they may have some positive impact on consumer off-take, and the congratulatory tone of some obscure blog will undoubtedly assuage any queries from the Board about the expense…

The Bloated Plutocrat was derisive. “I don’t know which so called ‘management consulting' firm invented this corporate social responsibility lark, but I’d like to buy their shares. They may have more fluff to sell. On the other hand, I better not hear about any companies in which I have a Board voice spending money on this nonsense. If people want to know whether companies are socially responsible or not (and why this should matter is beyond me – it should be profitability that they focus on), they should read the newspapers. Those bone-idle twits that call themselves journalists are forever harping on about the evil done by companies, except of course when they’re falling over themselves to print the bumpf fed to them by the PR agencies of the same companies!”

The Bleeding Heart was typically conflicted. “I do love a venti machiatto in the morning. But Starbucks is so ubiquitous and we certainly don’t want them running the little bakeries and coffee shops in Fairfield County into the ground. I suppose that as long as they are paying top dollar to coffee growers they are acting responsibly, but I wish they would keep the Pumpkin Latte on the menu year round…”

The fact is that any company that relies on CSR reporting to shore-up an image damaged by irresponsible business practices will have wasted time and money for either little result or a substantial backfire. If one is going to trumpet one’s own responsibility, it had better be reflected in the company’s core business practices. Regardless of the pundit opinions about Starbucks’ community impact, its pricing, whether it promotes homosexuality, is for or against Israel, or whether its logo is crypto-sexual, (people really have too much time on their hands) the biggest issues at the core of Starbucks business (besides sustained profitability) are its treatment of employees and the ethics of its coffee bean purchases.

The fact of the matter is that on both these issues the company does well enough to merit an above expectations conclusion. With the cost of healthcare benefits for its employees exceeding its total green coffee purchases, and a majority of those purchases being Fair Trade Certified (and, on average, some $0.20/pound higher than the Fair Trade mandated minimum), Starbucks has some empirically verifiable data to make the case that they are indeed acting responsibly in the daily conduct of their business. So, the next time you’re in a Starbucks, have paid your $7.50 for a bizarrely named mix of coffee and milk savagely beaten into a froth that occupies nearly half of your grande, and decided not to plump for a wireless connection, take a moment to read the treacle-sweet summary of their annual CSR Report. If you are able to stay-awake and/or quash the feelings of suicidal rage that it will produce in most people, perhaps you should consider a well-paid career in social reporting. If that doesn’t sound interesting to you, then simply note that while it is easy to take pot-shots at Starbucks, it turns out that they are pretty responsible when it comes to the things that really matter.

2 comments:

Russ said...

Responsibility be damned! I think their coffee is good and I will splurge for one, (just black coffee, nothing more) every couple months. Miraculously in my daily travels I am able to avoid encountering a Starbucks. Or, perhaps they are buried behind the plethora of Dunkin' Donuts that are like a plague around these parts and I can't see them. So large turbo black for me please! Talk about responsibility? There is more debris with the pink and orange colors of DD blowing around this city than any other single company. They could care less about the pollution of our streets as long as folks are getting their bowtie on.

If only there were more Peet's available. Now that's good coffee.

Hmmm said...

Who are you? Well I am a venti skim sugar free vanilla latte,hellooo? And who are you? Me? Well a venti skim super dry cappuccino, duh! And that's how the Starbucks story goes. You have a personality? I have a drink to match it -- enhance it, make it your own. I've never met anyone else who was a venti skim dry cappuccino...have you ever met someone else with your same drink at SB> Responsible or not in this whole arena of having things mean something, SB has it covered. In my travels I often hit the Miami airport and I am just waiting for the immigration line to move along -- which by the way as a side note you should do something on personality and looks for those working immigration lines in the US (MIA being up there) -- so I can get my fix. I make a b-line to the one lousy stand existing at terminal C at MIA and I wait, and I wait and I wait and I don't care how many are in front I still wait. To get my own personal drink that will cost me more than any cup of coffee should cost but I wait because it's me, because it's mine, and because in the green, white and black I see the so red white and blue.