Starbucks Saudi Arabia

Starbucks recently caught some flak when the company stepped up its virtue marketing by publicly vowing to hire 10 000 refugees, signalling opposition to the Trump administration’s 90-day-travel-ban. With Republicans all over the country now boycotting the brand, even though Starbucks made the same vow in 2015 regarding veterans, one could say that move backfired.

Stocks reaction when Starbucks announced to hire 10 000 Refugees
Stocks reaction when Starbucks announced to hire 10 000 Refugees

The corporation publicly positioning itself politically is nothing new: September 2016 CEO Howard Schultz announced his endorsement of Democratic presidential nominee Hillary Clinton, as he similarly had 2008. But even controversial publicity is publicity – and while Starbucks happily basks in its increased brand recognition, the buzz is distracting from the more shady tidbits about Starbucks’ unethical, immoral and illegal business practices.

I. Aside from the avalanche of “I-Hurt-Myself-With-Hot-Coffee” personal injury lawsuits, Starbucks’ history is filled with Scandals:

In 2008 the company settled a lawsuit with over 350 former employees, who sued for being forced to work overtime regularly without any monetary satisfaction, and as recently as 2015, internationally known Brooklyn muralist Maya Hayuk sued the company for copyright infringement, accusing Starbucks of stealing her art, using it on their cups in a publicity campaign without permission. Last year as much as 7000 employees signed a petition to protest the brutal work assignments.

In 2012 it became public that the now multi billion dollar corporation with over 23,500 stores worldwide paid just £8.6m UK tax in 14 years combined. The UK is not the only state appearing to miss out on Starbucks’ phenomenal revenue: in 2014 the company paid below 1% taxes in the Netherlands (the Netherlands was Starbucks’ regional office at that time). When EU investigators started asking questions about a mysterious letterbox company in London, Starbucks quickly settled the issue by paying £8.1m UK corporation tax, a sum nearly matching their total contributions of past 14 years combined, mentioned above.

Starbuck's Estimated Pretax Profits and Taxes in the Netherlands, 2014
Starbucks Estimated Pretax Profits and Taxes in the Netherlands, 2014 (source)
II. Aside from fiscal issues, Starbucks is at least a company living the values it propagates, right?

The internet, and especially Starbucks homepage are awash with positive stories about the charity projects and locally beneficial foundation work the international operating corporation, with subsidiaries in Brazil and the Cayman Islands among others, realised in its history, seemingly securing ethical origin of its main product.

Starbucks international 'ethical development' programs
Starbucks international ethical agriculture development programs (source)

Over the years plantations were bought and established in every major coffee producing nation, rebranded as education and support centers for local farmers or agricultural research facilities.

III. Starbucks invented its own personal fair trade deal: C.A.F.E.

Their operations have been rather successful. U.S. Trade Representative Michael Froman was recently showing off as one of their employees. Furthermore, USAID is allocating US taxpayer funds directly into Starbucks owned facilities under the label of creating research beneficial for educating local farmers. In January, Disobedient Media exposed USAID’s role in funding the Syrian White Helmets, who have been tied to a number of war crimes committed in the Syrian Civil War.

U.S. Trade Representative and Barrista Michael Froman
U.S. Trade Representative and Barista Michael Froman (source)
Starbucks is also partnering with the U.S. Agency for International Development (USAID) to invest $3 million into the security of coffee quality and supply in various regions of Colombia.

USAID and Starbucks will each invest $1.5 million in research to benefit small-plot coffee farmers in Colombia over the next three years.
The funds will go to Starbucks’ farmer support center in Manizales, which will pay for agronomists to analyze soil and inform growers on factors that affect profit and yield, including fertilizers, climate and pests. (source)
IV. C.A.F.E. creates a number of problems Globally

On the surface the program which aims to help farmers in the third world out of poverty sounds positive, but is bad at every level. It created a double standard: While successfully marketed as a fair trade seal (cachet) while not being one, it is downright hostile to competitors in traditional US Coffee House Culture

By supporting Starbucks, and their abnormally low-cost, non-fair-trade coffee, the smaller businesses on campus have to deal with the unfair competition.

By creating different rules for Starbucks, the people fighting for Fair Trade are being harmed along with almost everyone in the surrounding community.(source|alt)

Not only has Starbucks been accused of being ineffective at reducing poverty by renowned branch individuals, it redefines carrying owls to Athens by actions such as importing coffee into Columbia:

“Starbucks came here like demagogues, lying and saying that they would sell only Colombian coffee,” association spokesman Oscar Gutierrez said in a phone interview. “But the facts show that they are not serious; they are selling coffee from all over the world.” (source)

With not only control, but ownership of the whole supply chain from resource production, roasting facilities and retail, Starbucks even manages to bully around whole nations.

When Ethiopia tried to protect its countries’ valuable coffee exports by patenting them as a trademark in 2006, the United States Patent and Trademark Office (USPTO) ultimately turned down 66% of Ethiopia’s applications under massive pressure of the National Coffee Association (NCA). The NCA receives heavy support from the Starbucks Coffee Corporation. (source). The hypocrisy doesn’t end here.

V. Starbucks’ marketing campaign of producing ethical coffee is a complete Lie.

After being questioned repeatedly who exactly is benefiting where, Starbucks answered reluctantly:

"Unfortunately, the information you are requesting is proprietary."

Kelsey Timmerman (alt) wanted to know more and personally traveled to Colombia. Her experience was quite telling. I am tempted to quote the whole article, but the essentials are:

"I have no idea what that sign is," said the woman, who owns a small coffee farm. And she began a rant about how no one helps her. "I've never heard of Starbucks."
"The ones who had would say things like: "We were promised Starbucks was going to help us years ago. We're still waiting."
When Dub Hay, Starbucks senior vice present of global coffee procurement, came to the defense of C.A.F.E. Practices following a negative story on the program in Ethiopia in 2007, he responded: "You go to Nariño, Colombia. We built 1,800 [coffee] washing stations and sanitation facilities and homes.... It's literally changed the face of that whole area.... The same is true throughout Latin America. They call it the Starbucks effect."

No one I met called it the Starbucks effect. Even the farmers who sell knowingly to Starbucks and those who had received assistance prefer to get their beans certified by and sold to Nespresso, which pays 28 cents more per kilogram.
The consensus in this area is that not much has happened with the C.A.F.E. Practices program in the past seven years;
Let me Recapitulate:

A company that is selling an overpriced product, intentionally designed to be addictive with the highest caffeine and sugar concentrations in the branch, is not only virtue signaling all over the place, but is investing majorly into initiatives that will paint the brand as being ethical and ecological.

They politically appeal to their customer core, not even refraining from ideologically driven culture deconstruction attempts, and hypocritically catering to the demands of countries who fail to respect the basic human rights of women (see title picture).

Starbucks deceivingly suggests that they are for fair trade, while abusing third world nations, even importing coffee into third world nations and undermining the purpose of it’s own aid programs.

They avoid taxing their profits by importing their main product, buying it overpriced from their own subsidiaries, artificially bloating their expenses, all while not even paying their taxes properly by using tricks like mailbox companies and tax havens.

This is Starbucks.

Personal Note from the Author:

Sitting in Europe, I am somewhat envious of US American coffee house culture. For the Love of God please conserve it, and fight companies actively destroying it!

3 Thoughts on “Starbucks, the Apple of Coffee”

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