Starbucks Corp decides that Flagstaff is a good place to expand its operations

By Lisa Rayner
Tea Party Publisher

You may have noticed that in mid June, without much fanfare, a Starbucks opened in the Albertson’s shopping center on the corner of Route 66 and Switzer Canyon Drive.

More Starbucks’ appear to be on the way. The Safeway grocery in the University Plaza shopping center off of Milton Road is currently in negotiations to open a Safeway-owned Starbucks café inside the store, according to Store Manager Don Kloppenburg. Though the deal was not complete as of this writing, other Safeway employees seemed confident that the deal would be approved. No date has been announced for the opening of a Starbucks inside Safeway.

In the fall of 1999, the Barnes & Noble bookstore on Milton Road opened Flagstaff’s first Starbucks just three blocks from Safeway. Barnes & Noble owns the café. The company leases the equipment and logo from Starbucks, sells Starbucks coffee, and uses Barnes & Noble employees to run the coffee shop.

Starbucks coffee has also been available on the Northern Arizona University campus for four years, according to Sam Wheeler, director of the University Union. Java Jacks in the university union, South Perk in the Du Bois center and the Timber Inn snack bar on north campus “proudly serve Starbucks coffee,” through special arrangements with Starbucks.

“They’re hugely successful with students. I don’t think it’s hurting anyone else in town. We’re kind of the only game in town over here on campus,” says Wheeler.

Rumors of yet another Starbucks proposed for Flagstaff in addition to the one proposed for Safeway could not be confirmed. Efforts to reach a Starbucks spokesperson for comment were unsuccessful.

David Dobrick, owner of the Late for the Train coffee shops in Flagstaff, is not surprised to see Starbucks expanding its operations in Flagstaff.

“(Starbucks representatives) have come into my stores the last few years scouting,” said Dobrick. “I knew they were coming. It’s part of their strategy to go to a big metropolitan area like Phoenix and use that as a hub and then spoke into the smaller communities outside it.”

A cannibal grows
The Seattle-based Starbucks Corp is the top global retailer of specialty coffee, with over 4,100 stores and counting. The chain owns 20 percent of all U.S. coffeehouses.
The chain is growing so fast that new stores take away customers from older stores. Starbucks’ former CEO Howard Schultz said in 1999, “We have self-cannibalized over 30 percent of our stores each year.

However, “We have less than 10 percent of the market share of coffee consumption in America. So, we believe that we are still in the infant stages of the growth, the development, and the number of new retail stores that we’re going to put, not only in North America, but around the world,” said Schultz.

Starbucks opens one new store per day.

That doesn’t count leasing arrangements like the Flagstaff Barnes & Noble and Safeway cafés. Starbucks heavily promotes its coffee-leasing options. Hospitals, university unions, offices, hotels, casinos, supermarkets and other businesses are encouraged to exclusively provide Starbucks coffee to employees or customers or to open a full-fledged Starbucks café on their premises.
Adbusters magazine reports that “the Family Christian Center in Munster, Indiana has a Starbucks built right into the lobby.”

How to earn Starbuck$
Starbucks says it is “committed to sourcing coffees of the highest quality that support a sustainable social, ecological and economic model for production and trade.”

However, environmental and worker rights groups tell a different story, saying that Starbucks has had to be repeatedly pressured into buying coffee that doesn’t exploit coffee farmers or the environment.

The nonprofit organization Global Exchange says “Coffee producers, like most agricultural workers around the world, are kept in a cycle of poverty and debt by the current global economy designed to exploit cheap labor and keep consumer prices low.”

In 1995, the U.S./Guatemala Labor Education Project, a human rights group, revealed that the price of one pound of Starbucks coffee equaled a week’s wages for a Guatemalan bean picker. The farmers were earning less than the country’s $2.50 daily minimum wage. The group organized a 25-city protest against Starbucks.

“At its shareholder’s meeting four days later, Starbucks announced it would produce a “Corporate Code of Conduct,” says The Interhemispheric Resource Center, a policy studies institute.
The Framework for a Code of Conduct says the company will “limit” child labor and support wage levels adequate to meet the basic needs of workers and their families. The code also says Starbucks believes “in the importance of progressive environmental practices and conservation efforts,” and that “people have the right to freely associate with whichever organizations they choose.”

However, the IRC says the code “lacks any reference to enforcement mechanisms and, as such, its implementation has been continually delayed.”

In 1998, Global Exchange began negotiations with Starbucks to convince the company to sell Fair Trade coffee. Fair Trade Certified coffee is grown by small farmers in 21 tropical countries who have organized into worker-owned cooperatives. This coffee must be sold for at least $1.26 per pound. The full amount goes to coffee farmers, not to “coyotes,” or middlemen, who pay farmers as little as 35 cents per pound. TransFair USA is the official certifier of Fair Trade coffee.
Starbucks kept stalling. Global Exchange founding director Medea Benjamin said, “All we kept getting was how they were this big ship that just couldn’t be ‘instantly’ turned around.”

Then, “In February 2000, an investigative report by ABC-affiliate KGO in San Francisco exposed child labor and incredibly low wages in plantations in Guatemala, some of which sell coffee to Starbucks,” says Global Exchange.

Global Exchange initiated “a campaign by thousands of activists across the country (that) pressured Starbucks to carry Fair Trade coffee in all their cafés.

“Three days before the launch of dozens of national demonstrations against the chain, Starbucks capitulated to our demands. … On October 4 (2000) Starbucks introduced whole bean Fair Trade Certified coffee in over 2,300 locations (in the U.S.). … This was achieved because of the pressure of our grassroots campaign, including 84 organizations that signed an Open Letter to Starbucks.”

Starbucks is only committing itself to selling the coffee for one year, and then it will reevaluate the program.

The Organic Consumers Association says in a recent letter of protest to Starbucks’ new CEO Orin Smith, “Starbucks up until now has never brewed Fair Trade coffee as its “coffee of the day” except on two occasions (March 20, when we mobilized protesters outside your cafés in 100 cities in the U.S. and Canada, and again on May 18). … Your excuse that … there isn’t a big enough supply, is not true. As TransFair USA points out, there is available right now a massive amount (135 million pounds) of high quality Fair Trade coffee beans sitting in warehouses ready for Starbucks to purchase.

“You were quoted in the Chicago Tribune April 22, 2001 as saying that your coffee supplier in Guatemala will not even tell you the location of the plantations and the farms that supply them with the coffee beans that Starbucks buys from that country. Can you imagine Nike or some other company, facing criticisms for using sweatshop contractors, telling the media and the public that they would like to apply Nike’s Company Code of Conduct to their suppliers, and make sure their products are not being produced under sweatshop conditions, but that they can’t do this because they don’t know where their factories are located?”

Shortly before agreeing to sell Fair Trade coffee, Starbucks began offering “shade grown” and organic whole bean coffee, also due to public pressure. As with Fair Trade coffee, Starbucks does not promote sales of organic, shade grown whole beans or coffee drinks.

Coffee is naturally an understory tree. The overarching shade trees provide habitat for birds, butterflies, insects and animals. In the ‘70s and ‘80s, shade grown farming was mostly replaced with “sun cultivation” techniques to increase yields. This trend resulted in the destruction of forests and biodiversity and greatly increased use of chemical fertilizers and pesticides. The Smithsonian Institute says industrial coffee production is one of the major threats to songbirds in the Western Hemisphere.

About 85 percent of Fair Trade Certified coffee is also shade grown and organic. 50 percent of certified organic coffee is grown by Fair Trade cooperatives. Further complicating the issue, not all shade grown coffee is organic.

Many small coffee farmers do not grow certified organic coffee, simply because of the costs involved to either use synthetic chemicals or to have their farms certified. However, many grow their coffee without the use of synthetic fertilizers and pesticides in traditional garden polycultures that include a diversity of useful plants and shade trees. Smaller, independent coffeehouses have the choice to buy coffee from such small farmers and to pay them fair wages. In contrast, large chains like Starbucks tend to purchase large volumes of coffee beans from large industrial plantations.
Meanwhile, economic conditions for coffee farmers have worsened. Global deregulation of the coffee market contributed to a collapse in coffee prices three years ago. The last few months, the average price has remained below $.60 per pound. The average coffee farmer only earns $2-3 a day. A grande latté at a Flagstaff Starbucks costs $3.10.

Global Exchange says because of the price collapse, coffee farmers are “becoming even more impoverished, going further into debt and losing their land. Meanwhile coffee companies such as Starbucks have not lowered consumer prices but are pocketing the difference, even taking into account the quality premiums in the specialty industry.”

A May 20, 2001 article in the San Francisco Chronicle by Robert Collier says “The (coffee price) collapse has worsened rural poverty, spurred immigration to the United States and, in some areas, raised the specter of civil unrest.

“U.S. corporations are making windfall profits on coffee — Starbucks, for example, reported a 38 percent rise in profits this year, caused in part by decreased raw-materials cost and increased prices for its coffee drinks.”

Thousands of destitute coffee farmers from coffee growing regions of Mexico and Central and South America have attempted to cross the U.S.-Mexico border in southern Arizona to seek work in the U.S. 106 immigrants died in the Sonoran desert during the 12-month period that ended last Sept. 30. On May 24, 2001, 14 out of a party of 26 coffee, citrus and banana farmers (7 coffee farmers) from the Mexican State of Veracruz died of dehydration trying to reach Interstate-8.
The Economist noted in a May 17, 2001 article that “Soaring production has come about while coffee consumption, despite the proliferation of coffee shop chains, remains relatively flat.”
The Organic Consumers Association has just launched the Frankenbuck$ campaign to protest Starbucks’ use of genetically engineered foods in coffee drinks, milk, chocolate and baked goods. OCA is also taking Starbucks to task for its continued lack of enforcement of its commitment to worker rights, calling the corporation’s efforts so far “greenwashing.” Frankenbuck$ is the largest consumer campaign ever mounted against a major U.S. food and beverage company around the issues of genetic engineering and Fair Trade.

OCA is asking Starbucks to:

Remove genetically engineered ingredients from its products, including rBGH, a hormone which increases milk production in cows.
Pledge never to use genetically engineered coffee beans.
Brew Fair Trade coffee as Coffee of the Day regularly in all stores.
Reaffirm their commitment to raise the wages and improve the working conditions of coffee farmers.

On March 20th 2001, in cooperation with other consumer, environmental and human rights groups, OCA held a Starbucks Global Day of Action. Thousands of people protested and leafleted outside Starbucks in over 100 cities in the U.S. and Canada. The campaign is now expanding into Europe and Asia.

More Global Days of Action protests occurred June 25 and 26. The event coincided with the annual convention of the Biotechnology Industry Organization in San Diego, Calif.

Unionizing Starbucks
Starbucks says it offers “one of the most progressive benefits programs in North America.” Employees, called “partners,’’ receive a benefits package that includes medical and dental insurance and the ability to buy Starbucks stock at a 15 percent discount. The benefits are offered to employees who work 20 hours or more for 90 days.

However, not everyone thinks the benefits package is a good deal.

Only 12 Starbucks, all on Vancouver Island, British Columbia, are unionized. The stores were unionized in 1997 and 1998 under the Canadian Auto Workers’ Local 3000. During the negotiations, CAW charged Starbucks with “bargaining in bad faith and failing to make every reasonable effort to conclude a collective agreement.”

In 1999, CAW began an “UnStrike” against Starbucks. A memo to union members said, “The issues on the bargaining table are very basic: fair wages, earned sick leave, scheduling of work and training procedures. … In an UnStrike we continue to work, get paid and provide service to our customers, but with a difference. In order to draw attention to our dispute we are refusing to adhere to the Starbucks dress code. Instead we are wearing what we please, including one member who served customers wearing a dressing gown and bedroom slippers.”

The workers said that Starbucks wages are “less than the rate of inflation. Despite Starbucks’ carefully constructed public image of ‘the-small-L-liberal- enlightened-employer,’ what we see at the bargaining table is a heavy dose of good old-fashioned corporate arrogance and greed. Our income is far from ‘enlightened’ or ‘liberal.’ Most of us work part-time, average around $ 8.60 per hour (Canadian dollars) and take home less than $800 per month. Even our highest paid members, shift supervisors, take home about $ 1,000 per month. We need a living wage.”

In addition, employees say the stated benefits are subject to many conditions that not all employees are able to meet.

The UnStrike finally ended when some of the employees’ demands were met.

However, Starbucks now appears to be trying to get rid of the union altogether. Jef Keighley, the CAW representative who services the Starbucks stores told Flagstaff Tea Party that, “Two of the (stores) are wanting to decertify in an employer-driven scheme to rid their happy corporate nirvana of the (union) pestilence. We are going into bargaining in the next few weeks.

“I took our Starbucks Bargaining Committee down to Seattle last fall to participate in a public exposé of Starbucks, organized in conjunction with the Operating Engineers who had organized some 25 maintenance workers at the Starbucks Roasting Plant in Kent, Washington.”

Getting Starbucked

Coffee shops have long been an important part of the “commons,” a public space where neighbors, artists and revolutionaries gather to talk, exchange news, hang out, read poetry, discuss philosophy and organize. The interaction made possible by such commons forges priceless community bonds.
When chains like Starbucks dominate a community’s coffeehouse market, this “commons” becomes corporately owned property where people are not as free to interact with one another. In addition, communities become increasingly homogenized. The loss of unique local coffeehouses degrades local culture.

Late for the Train owner David Dobrick says that the reason Starbucks is such a draw for some people when they have local options is that “There’s a big chain store mentality in America. Starbucks offers a very clean, corporate image that a lot of people are very comfortable with.”
In contrast, “When you come into Late for the Train and you have a cup of coffee, you know you have something that you couldn’t do at home. … I assume anyone walking into my store either wants to become something of a connoisseur or already is. They have a discerning palate. … They have a desire to have something that has a kick to it, in terms of the amount of flavor,” says Dobrick.

Furthermore, “The serving of coffee to me is hugely community-oriented. That’s the other thing that I think my company can say it offers people that Starbucks (doesn’t). As much as they may want to lay claim to doing it, we will always do a better job (of) being a part of the community.”
Late for the Train rotates 30-40 coffee varieties at its historic downtown location, its coffee roasting “station” on Fort Valley Road and at its Flagstaff Medical Center coffee kiosks.

Starbucks is known for predatory actions against independent coffeehouses. An article by Nicole Nolan in the November 1997 issue of In These Times included comments from Roger Scheumann, “a former Starbucks wholesale sales representative who left the company in 1991 to start his own business, Quartermaine Coffee Roasters, on the East Coast.”

Scheumann reportedly said, “Starbucks is very aggressive in real estate and that’s resulted in Starbucks getting a lot of very good locations.”

According to Nolan, “Scheumann should know. When he was negotiating to lease space for the second of Quartermaine’s three retail stores in an exclusive food shopping district in Bethesda, Maryland, in 1993, Starbucks intervened. They offered the landlord what Scheumann describes as ‘considerably more rent’ to take over the space. When the landlord refused, Starbucks offered to buy the building.”

Dobrick says he has heard similar stories:
“Because they have the financial clout to buy into retail locations that I can’t, is that unfair? Or are they just taking advantage of their abilities? I know that when they seek out locations, they’re like sharks.

“I’ve seen them go into places that were leased to the same, like say, donut shop for 25 years, and they go in there and they determine that that spot is the best spot for Starbucks, and what they’ll do is they’ll find out who owns the building, who’s in charge of leasing the space, find out when the lease is coming up, what it would take to buy out the lease, and they do it. ... Rent is nothing to these people.”

Dobrick says if new Starbucks’ open away from the vicinity of Late for the Train coffeehouses, he doesn’t think the chain will have much of an impact on his business.
However, “If they were to locate close to one of my locations, they could have a severe impact. … Hopefully we’ll survive.”

A proliferation of Starbucks in Flagstaff could “very, very quickly change the face of Flagstaff,” says Dobrick. “There’s something about a burger joint that doesn’t go to the core soul of a community, but something about a coffee establishment does to me.”

Tim Macy, the owner of Macy’s coffeehouse on South Beaver Street also thinks he offers both top quality coffee and a unique atmosphere to his customers, many of whom are regulars.
He says that if people go elsewhere for coffee, They may find coffee that is as good as what he offers, “but you’ll never find better coffee than we have. We buy the best, and it’s just from very small, little tiny farms, little plantations.

“I have two certified organics. All my coffees, they might as well be organic, they’re not sprayed. These farmers are old traditional farmers. They can’t even afford to certify their farms. They don’t spray anything. They’re just old, traditional coffees usually grown amongst other trees, other crops.”

Macy also says his broker, Erna Knudson, pays these small, independent coffee farmers fairly.
Macy learned the business from Carl Dietrich, whose family owned a farm in Guatemala. Macy had an informal apprenticeship with Dietrich, working with him for several hours every week for three years, before Macy even knew that he wanted to go into the coffee business.

Macy says he’s not going to worry about more Starbucks opening in Flagstaff.

“To me Macy’s is a spiritual place. What draws people here obviously is that we have good coffee and we’re the only vegetarian restaurant, but it’s (really) the spirit of Macy’s. God blesses this place.

“I’m doing this project right now, it’s really fun. I’m taking pictures of all my local, my regular customers, and I’m making this huge collage that I’m going to hang on the wall just as appreciation.”

Macy also gives local customers a 20 percent discount if they buy a prepaid discount card, saying, “We wanted to say thank you to our local customers.”
Macy dislikes seeing the proliferation of chain businesses in Flagstaff.

“I hate to see that. Whenever I go travel I go to the little places, I always seek out hole-in-the-wall places. I like to support locals. … I hate the idea of chains. I won’t go to Wal-Mart. It doesn’t feel right.”

He hopes that more people become aware of the need to support local businesses.

Sharlene Fouser, owner of Jitters Gourmet Coffee in the Park Santa Fe shopping center on East Route 66 doesn’t think that competition from Starbucks will hurt her business: “I think competition is good, because with competition, it makes you constantly stay on your toes, reevaluate your operation, make sure that you’re providing the very best customer service, quality of goods, to your customers, already faithful. And, also, another issue is that Jitters and Starbucks are very different. We get a different clientele for the most part. Our big thing is our lunches, our non-coffee type items.”

Fouser says she and her husband Reggie opened the café, part of a small regional franchise, four years ago. They decided to work with the franchise because of the networking and support it offers to shop owners.

Fouser says, “What I love most about Flagstaff is, people support locally owned, locally operated businesses, and so they know that we’re a mom and pop operation and our customers are very loyal. As long as we continue to do a good job for them, I think they’ll continue to go out of their way to support us.”

Coffee aficionado Norm Wallen thinks that Starbucks is a real threat to Flagstaff’s locally owned coffeehouses due to the corporation’s predatory tactics and high growth aspirations. He believes that Flagstaff residents who don’t want to see local coffeehouses go out of business need to stay away from Starbucks.

“Local coffee houses who aren’t worried obviously don’t know the history of Starbucks in other cities; they should be worried. Starbucks has the ‘image’ but not the quality. Unfortunately, image sells. How many of their loyal customers will avoid (dare I say boycott) Starbucks? I will.”