Wednesday, July 23, 2008

Marketing Ploy: "It's for a Good Cause."


Just for a a little context, my liberal friend recently sent me an e-mail with a link to the Thanksgiving Coffee Company, which purports to better the lives of poor African coffee farmers by buying coffee from them at the Fair Trade price and to bring together Christians, Muslims, and Jews by having them plant coffee together. She wanted me to start buying my coffee from this company because it was for a "good cause." Below was my reply:

"This is interesting Laurie. Well, as sort of a coffee snob, I'm always looking for great coffee. I visited the website more out of an interest in the coffee than out of an interest in the company's purported "good cause." My government taxes me aplenty and sends much of it as aid to Africa and beyond, and obviously, no one appreciates our generosity, so, forgive me if I'm not constantly looking for ways to give away my hard-earned money.

At any rate, I noticed a couple things about this company. But here's my preface: I praise the creative entrepreneurial spirit of the CEO. It seems these days, for good or ill, companies are finding that a great way to sell a product (that perhaps wouldn't survive in a competitive market that runs purely on quality) is to tap into people's conscience. As a free-marketeer, I don't have any qualms about that. A great example of such a company is the Ethos Water Bottle Company recently bought up by Starbucks. It purports to give "a portion" of the price to help a "good cause." Well, the founders got a huge payout by Starbucks when it was bought out. (But I've always wondered whether they knew that their plastic bottles were a large contributing factor to the world's pollution problem.)

Anyway, you can correct me if I'm wrong, since I only briefly perused the website, but they purport to purchase a pound of coffee (16 oz) from the cooperative at the Fair Trade price of $1.61. And they also purport to send the cooperative an extra $1 for every pound as part of their profit-sharing plan, which, by the way, they make it sound like the farmers are seriously partners to this enterprise (uh, not quite).

The company then sells 12 oz (less than a pound) at a range from $10.50 up to $25! So, looking at this in the light most favorable to the company, for every 12 oz of coffee they sell at $10.50, they're giving back less than $1. Don't forget the $1.61 is their overhead. So in essence, the company is marking up their product almost seven-fold! Just to put this in perspective, this mark-up is very similar to how much big (bad) multi-national companies like Walmart and Nike mark up their products after buying them from third world countries like Africa. What would people say if the CEO of Nike said, well, we're giving jobs to these poor indigents, giving them a better life, so buy from us. People would laugh.

Moreover, they have a coffee bag with Che Guevara on it, and appear very proud of it. I mean come on, he was to Castro what Himmler was to Hitler - his chief executioner! He killed hundreds and thousands of people with his travelling death squad. He set up death camps where he killed gays, dissidents and people with AIDS. To spin it in another way, he was a miserable failure. He was Castro's bitch his whole life and nothing but a wanna-be revolutionary. I mean, if you want to lionize a totalitarian on your coffee package, put Stalin, or Mao, or Hitler.

Point being, don't get sucked into their marketing campaign. Like all other marketing campaigns, this one is solely to turn a profit, and a big one at that. Again, I'm not saying there's anything wrong with turning a profit, but, I do have a problem with companies feigning righteousness and trying to pull a quick one over consumers, when, in fact, they're like any other company operating out of self-interest and profit. For these reasons, I won't buy coffee from this company. But who knows, their coffee could be really really good, in which case, they don't have to feign anything! Sad...

By the way, this is good material for my blog. :) Thanks."

8 comments:

Anonymous said...

16 oz green coffee equates 12 oz roasted. Therefore, the amount that is bought is the same that is sold. A self-proclaimed "snob" should know at least that much.

Marsha Cohlan said...

“Briefly pursing” doesn’t work with Mirembe, since this project is very deep. Before lashing out, you should have done more research. Standard Fair Trade price for Organic coffee is $1.51; Thanksgiving Coffee is paying $1.61/pound up front to the farmers for their coffee. The $1 that Thanksgiving Coffee Co. donates to the Cooperative is on top of the $1.61, and it is per package (12oz) or pound. Let me break it down for you, on a 12oz package, TCC donates $1.00, on a 5 pound bulk bag (80oz), $5.00 is donated. Seems pretty transparent to me.

$10.50 is the retail price of Dark and Light coffee from Uganda. Their decaf, at retail, is $11.50. They have a wonderful wholesale program which lowers the price per bag to $8.00 regular / $9.00 decaf. We have been buying wholesale from them for our buying club for the last 3 years. $8.00 for Fair Trade Organic coffee is a great price, plus $2.61 of that goes back to the farmers / Cooperative.

$25.00 is for their 100% Pure Kona coffee...which is a good price for 100% Kona.

I support Thanksgiving Coffee Co said...

As a shareholder in Thanksgiving Coffee Company, I can assure you that Thanksgiving Coffee is not turning a seven-fold profit. Thanksgiving Coffee Company hasn’t been profitable in the last 5 years.

Holly Moskowitz said...

Hello,
My name is Holly Moskowitz and I am the Director of National Sales and Grassroots Outreach for the Delicious Peace Coffee Project at Thanksgiving Coffee Company. It would be my pleasure to talk to you about our programs, and explain how we do business. It makes me happy to read the 3 posts before mine (I apologize to the shareholder; we are trying to be profitable), for it shows that those who are actually involved in the project and our company understand what we are doing, and the impact it has on the world.
Please, give me a call. 800-462-1999 ext 49

American Confucius said...

First off, I appreciate all the comments:

anonymous: I call myself a coffee snob tongue-in-cheek. Nonetheless, I find your point interesting. I guess the roasting evaporates the water inside the coffee beans making them lighter.

marsha cohlan: I don't think I was lashing out - (well, maybe a little against the Che Guevara package). And I don't disagree with anything you said, as I got all the info from their website. It is transparent. They say they pay the farmers $1.61 per pound of coffee and pay them an extra $1 as their profit-sharing plan. Then I saw how much TCC was charging for the roasted coffee and I did simple math. And you say $2.61 is going back to the farmers. Well, you're right. But don't forget that the $1.61 is not part of the profit sharing plan. Its the cost of the coffee. I don't think I'm being altruistic when I go to a store a buy something. It's simply two merchants doing business.

Holly: it may show that people involved with the company understand it, but, apparently, people like me who aren't part of the company do not. Maybe you should revamp the info on the website and be more specific with TCC's business model. For instance, do the different muslims, christians and jews work together on a regular basis truly creating a bond between them?

American Confucius said...

Plus, I just personally think having Che Guevara on a package is completely inappropriate.

Holly Moskowitz said...

Thank you for responding to the posts. First to comment on Marsha’s comment, I think her point is that the $1.61 is the “fair” cost of the coffee. If you buy conventional coffee, which is not certified Fair Trade, or if the farmers don’t have a Fair Trade buyer which means they end up selling at the local market to a middleman, the farmer could be making as little as 25 cents a pound for their coffee. So the fact that TCC pays above FT market price, it sort of is altruistic. It’s unfortunate that the rest of the world doesn’t pay a fair price, but we are trying to raise awareness. If you haven’t already done so, you should watch the movie “Black Gold.” It is about the international coffee trade and price crisis.

To answer your question, yes, the Muslim, Christian, and Jewish farmers work together on a regular basis. Each faith is represented on the Cooperative’s executive board. Through our profit-sharing partnership, the community built a school together, which children of the Cooperative, regardless of their faith, can attend. Earlier this year, the Peace Kawomera Cooperative and Thanksgiving Coffee Co received The Tufts Institute for Global Leadership’s Dr. Jean Mayer Global Citizenship Award. The award was given for innovative and powerful efforts on behalf of alleviating poverty, creating accountable and sustainable trade practices, encouraging community peace and promoting interfaith harmony.

This link is to the trailer of a documentary that is in progress on the coffee project. It’s 7 minutes long, and gives insight to what happens on the ground. http://www.mirembekawomera.com/movie

Please feel free to ask any other questions you have.

In peace,

Holly

Anonymous said...

It is interesting to note the original comment that started this discussion. It was the Fucking Ridiculous author that could not believe that something good was not something either fake or a lie to make money. It speaks to the depths our society has sunk . Good news has been co-opted so often by multinational corporations that we have begun to suspect anything that is done in the business sector is a ruse on the a
American People.
When I got the call from Uganda describing the multi racial make up of the coffee coop I believed it immediately. Because it was too good to be true, I explored it further and decided to purchase the coops entire crop which was then(2004) 37,500 pounds. I purchased it without tasting a sample because I believed that people with so much love to share, would be people who would give much attention and love to their coffee trees. It is that attention and love that creates good coffee . I flew to Uganda and met the farmers, signed a long term contract and began to spread the word about them and their amazing story of religious tolerance and love. This for me was the moment I had been unknowingly waiting for. The chance to use coffee to promote peace through prosperity. I thought I was God's gift to this coffee but I soon discovered that this coffee was God's gift to me and that I needed to consider just how important it was to market this coffee in a way that respected the intrinsic values it contained. It was not about the product, but about the people.
Who ever you are and where ever you are Mr. Rucking, it can be said that you have a deep rooted cynical bent that may be a healthy way to live in our demoralized society, but to really be effective in helping you become the righteous person you wish to become, you will be best served by leaning a bit more to the optimistic and do us all a favor and use your voice to help my little company of 30 people sell this coffee for the farmers who now produce 112,500 lbs yearly. Last year we were able to sell 25,000 lbs as Mirembe Kawomera and that generated $25,000 extra for the cooperative's members. Help us with your voice. This economic model is a fair and honest one you can trust.
Paul Katzeff
CEO,
Thanksgiving Coffee Company