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Costa Rica coffee growers bail out Starbucks?

Deanna Keahey  ·  Dec 17, 2008  ·  5 Comments

Now this is an interesting business approach...  Costa Rica is widely known for its superior coffee, and now their coffee producers could help bail out Starbucks during this downturn. Costa Rica Pages reports:

After a difficult year of sales, Starbucks is looking to widen its sphere of coffee associates within Central and South America... The idea would be to sell shares of the company to the local growers, so that they can have a share in the final profits produced by their own product.

Coffee - in its pre-cup phase

Coffee, in its pre-cup phase!

Starbucks share prices have dropped dramatically during 2008, from $20.45 to $7.17.  It's easy to understand why.  With consumers in the US and elsewhere feeling an economic pinch, they're apt to cut back on pricey lattes.  Like the Planet Money podcast has been reporting, it's one of the small choices consumers make that have a big effect.

Some Costa Rican coffee producers already sell beans to Starbucks, but arrangements like this could possibly increase the number of producers or their quantities.  It wasn't explained in the article, but it seems that since Starbucks' total coffee purchases would go down with demand, this would mean giving preference to suppliers who buy into the system with purchases of Starbucks stock.

For Costa Rican producers (or those in many other countries), buying stock and thereby protecting or increasing their sales could seem like a good solution.  Assuming that Starbucks' fortunes turn around with the economy, they'd be protecting their sales channel while also buying an investment that could make them a profit.

This could be a great solution that benefits all parties involved in the long run, and really bails Starbucks out in the short term. The producers would have a new distribution channel and get shares at a low price and Starbucks will receive a mini bailout, adding more value to the company.

It sounds like an innovative plan that could provide a lot of benefits.  The only thing I'm not sure of is how this would work for smaller growers.  Is it going to benefit mostly the large producers with enough capital to invest?  Or could smaller growers also participate, even though they might have little in the way of investment funds?

I'll be interested to see how it works.  For more, see
Costa Rica Pages: Coffee Producers Could Join Starbucks Brand

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We've just announced a special deal on our women's trip to Costa Rica -- book by Jan 14 and get an extra night free in San Jose.  And if you're going to Costa Rica, could you bring me back a pound of coffee?  Pretty please?
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Categories: Costa Rica · Local news
Posted from:   Phoenix, AZ      Photo credit:   Deanna Keahey

5 responses so far ↓

  • 1 akh // Dec 19, 2008 at 10:27 am

    Wow that came like a surprise to me. I had never thought a country like Costa Rica would bailout Starbucks Corp.. Thats pretty unusual.

  • 2 hald // Dec 19, 2008 at 10:29 am

    Probably the small time coffee growers of that country would finally reap enough benefits by selling coffee to starbucks. Good for them

  • 3 Deanna Keahey // Dec 19, 2008 at 7:12 pm

    Akh - I thought it was pretty unusual too. The small bailing out the big? Oh wait... I guess that's what us taxpayers are doing with Wall Street. :-}

    Hald - I do hope it works out to benefit the small growers. Time will tell!

  • 4 bekyboo // Dec 20, 2008 at 1:21 pm

    That's a fascinating idea to give the growers themselves stock within the company. I have always ADORED Costa Rican coffee and honestly feel it is better than a lot of the African blends that Starbucks is known for. Maybe this will inspire more pride within the product if the growers are all part owners essentially. Now I'm jonesing for a hot cup of java! Thanks a lot!

  • 5 Deanna Keahey // Dec 20, 2008 at 2:23 pm

    Now you've got me wishing I was drinking a nice cup of Costa Rica peaberry myself, instead of this other too-strong coffee I've got going right now! :-)

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