Turning a Profit with Green Coffee and Fair Trade

Turning a Profit with Green Coffee and Fair Trade

Starbucks Coffee shops have become so ubiquitous that its baristas are now waiting to take your order in China's ancient Forbidden City - to the dismay of many of Beijing's residents. But in the United States, the coffee giant is getting some unexpected, foreign competition.

On a downtown street in Atlanta, Café la Selva, part of an up-and-coming Mexico-based coffee chain, has opened its doors and is doing brisk sales. The shop is one of several started since 1997 by a group of Mexican small investors working together with a nonprofit organization of peasant coffee farmers. With gourmet coffee gaining in popularity in Mexico, La Selva has been making inroads around the country. And the coffee franchise has big plans to expand in Mexico as well as in the United States and Europe.

"We now have 19 shops - we just opened another one in Mexico City a few days ago," said Emiliano Quintero, one of the company's managers. "We have a shop in Spain, one in Atlanta, and we are planning on starting another. In the next 5 years we would like to start 50 more cafés around the world."

Quintero is building La Selva's business plan with the help of several business graduate students from Boston and Johns Hopkins Universities - a program organized by the World Resources Institute (WRI) to help promote small businesses that are environmentally and socially responsible. In 2002, La Selva won a competition organized by WRI's New Ventures program, which aims to connect sustainable businesses with investors. The coffee chain was awarded free consulting services from Booz Allen Hamilton. "This competition leaves us well-positioned to engage investors," said David Velasco, Café La Selva's project coordinator.

"The Jungle Café," as Café la Selva translates into English, is no ordinary chain of coffee shops. The franchise offers only high-quality organic coffee that protects the biodiversity of the jungles where it is grown, and supports small-scale, indigenous farmers in Chiapas that grow the coffee beans.

Because the shops receive their "fair trade" coffee beans directly from the communities in Chiapas, and not through some middle-man distributor, the farmers make more money. "Our growers in Chiapas make two times the market rate for the coffee they grow," said Quintero. The current market rate for a kilo of beans is 5 pesos (U.S. $0.50). The La Selva growers in Chiapas make 10 pesos (U.S. $1.00).

La Selva's coffee is grown without chemical fertilizers or pesticides, says Quintero. "We have to have the coffee certified organic and fair trade, so that process means the price is somewhat higher than for regular coffee." But so far coffee drinkers have been willing to pay a little bit more for coffee that is fair trade and organic.

"Making money while protecting the environment is a new model," says Luiz Ros of WRI's New Ventures. "We are working to support entrepreneurs who want to make a profit while remaining committed to their communities and surrounding environment."

La Selva is also working with farming communities to provide additional opportunities for education and economic gain. In addition to supporting farmers, a portion of the goods they sell at the cafés are baked by women in Chiapas who wish to make additional income.

The company sells enough coffee to support 1,350 families in indigenous farming communities in Chiapas, which provides crucial economic development for this poor part of the country. With coffee selling at its lowest prices in decades, fair trade coffee provides crucial support to small-scale farmers. With prices so low, hundreds of thousands of Mexican coffee farmers have been forced to abandon their farms in recent years.

La Selva was formed when two nonprofit organizations got together to start a for-profit company to sell Chiapas coffee. About eight years ago Vínculo y Desarrollo, a group of socially conscious small investors, partnered with the peasant organization Union de Ejidos de la Selva and began selling wholesale organic and fair trade coffee to places like New York. Soon after they decided to open franchise coffee shops.

Asked whether La Selva is planning to beat out Starbucks, Emiliano says: "That's right, we're hoping to."