Klatsch Warfare

One of the items in last Friday’s snarky list of one- liners was: ‘“Fair Trade” coffee means that I pay more for the coffee beans, but then to make up for it they taste like crap.’ This (partly) inspired fair-trade coffee fan Green LA Girl (there’s only one?) to write a couple of articles on fair trade vs. taste, including an interesting conversation with a company that buys a lot of fair trade coffee, but has not bothered to seek certification themselves.

The summary of the point of view of the coffee company was essentially “the desire for fair trade does not trump our duty to provide quality coffee.” I thought it was an interesting read, and I wanted to elaborate on this a little.

“Fair trade” coffee is doomed, as long as the business model is for it to be marketed directly at the individual coffee buyer. “Fair Trade”, as currently envisioned and marketed, concentrates solely on the value provided to the supplier rather than on that provided to the consumer. As long as this is true, it will remain little more than a sad footnote in the history of commerce. If the primary message behind the marketing of a product is “buy this because of a moral imperative,” rather than “buy this because it tastes better” or “buy this because it’s cheaper,” that product is doomed.

Consider the organic movement. Those of us who buy organic milk don’t spend twice as much on it than we do on non-organic milk because we think organic farmers are somehow more deserving than the non-organic cooperatives in, say, Vermont. We spend twice as much on it because, rightly or wrongly, we have been convinced that it tastes better and is better for us. Whereas fair trade coffee is marketed solely on the basis of where the money goes rather than on the basis of what the product is. That’s a losing proposition.

Not only don’t I particularly care where my money goes when I buy a cup of coffee, but even asking me to think about it is demanding far too much of me, especially before I’ve had my first cup of coffee of the day. It’s a cup of coffee. This is not exactly a high-ticket item: it’s not a car, or a house, or a major investment in a mutual fund. Fair trade coffee as marketed to the consumer is doomed to eternal marginalization, fundamentally, because it is asking the consumer to evaluate a nonsequiteur when making a trivial purchase. Merely having to think about where the money goes on a cup-by-cup basis increases the transaction cost on the part of the consumer. Consumers will respond by telling you, with their dollars, that they don’t care.

The way I see it, there are exactly two ways for fair trade coffee to make inroads among anyone other than people who don’t actually care about how their coffee tastes:

(1) Have “fair trade” also imply a guarantee of some minimal standard of taste and quality, in which case the consumer may actually care. Some people will point out that this isn’t the “purpose” of “fair trade.” So what? The “purpose” of Whole Foods is to make money, yet somehow they manage to convey the idea that they have other corporate goals as well. Alternatively…

(2) Market fair trade at the corporate level. If your fair trade coffee isn’t going to taste better then the average consumer won’t care at all. But you might convince a coffee shop that they care, because they can then pass that on to the consumer: “Hey, we only sell fair trade coffees, and here are the ones we recommend.” This increases the impact of the transaction on the fair-traders, and simultaneously eliminates the psychic transaction cost to the consumer of choosing between fair-trade coffee that tastes ok or non-fair- trade coffee that tastes better. All the consumer has to decide is whether she or he likes the coffee shop.

Now, I can already hear the protests: “but there is fair trade coffee that is just as good as non-fair-trade coffee, at the same price!” To which the only reply is: poppycock. If fair trade coffee was as good as non-fair-trade coffee at the same price, then coffee shops would have to be insane to sell anything else.

We can analogize this to the decaf coffee market. Yes, caffeine is a flavor component of real coffee. Removing the caffeine changes the taste subtly. But the fact is that most decaf coffee tastes much worse than it needs to. Why? Because all decaffeination processes cost money. The good processes cost more. And consumers have demonstrated that they are unwilling to pay more for a cup of decaf coffee than for a cup of regular coffee. The nearly universal solution chosen by coffee roasters and packages is to use cheaper, lower quality beans for their decaf products, and present a lower quality (but “same customer price”) product to the customer. I have seen no argument that convincingly explains why this same dynamic won’t affect “fair-trade” coffee as well.

Another interesting analogy here, of course, is to vegan food, which is a phenomenon marketed solely at people who don’t care if their food tastes good. There seems to be just enough of these people to make the market viable, with a number of firms competing for their dollars. But each vegan consumes much more food per capita than a coffee drinker drinks coffee. Are there enough people who are willing to purchase coffee solely on the basis of where the money goes to meet the needs of the business model?

For the sake of small coffee growers, I hope so. But as a consumer of the product, I suspect not.