#66 | Re:co Podcast – Michelle Johnson on An Exploration of a Sustainable Value Chain (S3, Ep. 2)

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Today, we’re very happy to present the second episode of “Value Chains: Transparency and Market Linkages,” a session recorded at Re:co Symposium this past April. Acknowledging that this isn’t the first coffee price crisis, this session brought leaders together to ask: How successful were the tools we employed previously? What new tools offer potential solutions? 

If you haven’t listened to the previous episode in this series, we strongly recommend going back to listen before you continue with this episode. 

Through the story of McDonald’s’ dedication to achieving full sustainability in their business’s coffee value chain, Michelle Johnson challenges and explores our ideas of what sustainability in coffee means—and who is truly setting the bar for creating a future for the industry.

Special Thanks to Toddy

This talk from Re:co Boston is supported by Toddy. For over 50 years, Toddy brand cold brew systems have delighted baristas, food critics, and regular folks alike. By extracting all the natural and delicious flavors of coffee and tea, Toddy Cold Brew Systems turn your favorite coffee beans and tea leaves into fresh cold brew concentrates, that are ready to serve and enjoy. Learn more about Toddy at http://www.toddycafe.com.

Related Links 
Table of Contents

2:15 The specialty coffee industry has an us-vs-them mentality with commodity coffee and a humanitarian angle in our marketing
5:15 The story of McCafe and its journey with its sustainability initiative, SIP
11:50 Specialty coffee should applaud what McDonald’s is doing, and there is space for collaboration between the two
14:30 Outro

Full Episode Transcript

0:00 Introduction

Peter Giuliano: Hello everybody, I’m Peter Giuliano, SCA’s Chief Research Officer. You’re listening to an episode of the Re:co Podcast, a series of the SCA Podcast. The Re:co podcast is dedicated to new thinking, discussion, and leadership in Specialty Coffee, featuring talks, discussions, and interviews from Re:co Symposium, the SCA’s premier event dedicated to amplifying the voices of those who are driving specialty coffee forward. Check out the show notes for links to our YouTube channel where you can find videos of these talks.

This episode of the Re:co Podcast is supported by Toddy. For over 50 years, Toddy brand cold brew systems have delighted baristas, food critics, and regular folks alike. By extracting all the natural and delicious flavors of coffee and tea, Toddy Cold Brew Systems turn your favorite coffee beans and tea leaves into fresh cold brew concentrates that are ready to serve and enjoy. Learn more about Toddy at toddycafe.com. Toddy: Cold brewed, simply better.

Re:co Symposium and the Specialty Coffee Expo are coming to Portland in April 2020. Don’t miss the forthcoming early-bird ticket release – find us on social media or sign up for our monthly newsletter to keep up-to-date with all our announcements.

Today, we’re very happy to present the second episode of “Value Chains: Transparency and Market Linkages,” a session recorded at Re:co Symposium this past April. Acknowledging that this isn’t the first coffee price crisis, this session brought leaders together to ask: How successful were the tools we employed previously? What other new tools offer potential solutions?

If you haven’t listened to the previous episodes in this series, we strongly recommend going back to listen before you continue to this episode.

Through the story of McDonald’s’ dedication to achieving full sustainability in their business’s coffee value chain, Michelle Johnson challenges and explores our ideas of what sustainability in coffee means—and who’s truly setting the bar for creating a future for the industry.

Also, to help you follow along in this podcast, I will chime in occasionally to help you visualize what you can’t see.

 

2:15 The specialty coffee industry has an us-vs-them mentality with commodity coffee  and  a humanitarian angle in our marketing

Michelle Johnson: Hi, everyone. I’m very excited to be up here talking again. My name is Michelle, and yes, I’m a journalist, but I also do a lot of work in the coffee industry that’s focusing on diversity and inclusion. And we talked about that last year at Re:co but this year they didn’t ask me to talk about that and I don’t know who’s more stoked, me or you all. So, let’s go ahead and get started.

Here we go. I’m loving it. An exploration of a sustainable coffee chain. So, today I’m here to tell you a story and the story I really hope that it opens up our minds, especially us in the specialty coffee world to understand that maybe we don’t necessarily have all the answers when it comes to sustainability, But I want to talk to my specialty coffee people for a second. I want to tell us a little bit about ourselves. In coffee, in specialty anyway, we tend to think of ourselves a little bit exclusively. We offer something that everyone should want to be a part of that’s different than everyone else. It’s always sort of an us versus them mentality when its specialty versus commercial. We’re not like those type of people. You see it in the way that we market ourselves to the rest of the world. What we have going on, you should want to be a part of. We have good coffee, it’s special, and only we have the keys for you to be able to repeat that special cup of coffee every single time. We also talk about it in our ethos as a sector of the industry. We’re humanitarian and we have a mission that focuses on small shareholders and farmers and we have the special personal relationship with them that we love to market and tell everyone about.

We also tell them that we contribute to their economic and social success so that they can produce cups of coffee, that are a level above what the basic standard would be. This shapes how we and specialty define sustainability and like I said, we have a monopoly over it apparently. We hear a lot about fair trade and direct trade and the relationships that we have. We talk about the premiums that we’re paying to give more money to get this level above cup of coffee and we encourage and promote traceability and transparency with how the coffee is produced and how we’re paying for it and although improvements can still be made, we still market this to the general public. We hold all of this near and dear, and it’s supposed to separate us from what everyone else is doing. But what if I told you all that there’s someone who’s not in specialty, who’s not just doing what we consider makes us special, but is doing more? What if I told you that this story, my pants might give it away, is actually about McDonald’s? I think as I go through this talk, that we’ll begin to reshape our idea of who’s actually leading the charge and instead of forcing ourselves further into this us versus them mentality we can open ourselves up for collaboration and improvement.

5:40 The story of McCafe and its journey with its sustainability initiative, Sustainability Improvement Platform

Michelle Johnson: So, in 2009 McDonald’s, “Macky D’s”, in Australia we called it Macca’s. They started McCafé, which is their coffee portion, and it was widely accepted by the general public. It’s affordable, it’s consistent, and depending on where you are in the world, McCafé looks a little bit different. So down in Australia, we had full La Marzocco machines. At McDonald’s in Spain, you’ll find it looking like a beautiful, regular coffee shop and in a wider push for McDonald’s to create better McDonald’s, they made a commitment with McCafé to address the growing coffee crisis with climate change. So, in 2014 McDonald’s fully committed to sourcing 100% of their coffee sustainably by 2020 next year, and so far they’re completely on track. In 84% of all McCafés in the US, their coffee is sourced sustainably, and 54% of McCafé coffee worldwide is. But what does sourcing sustainably mean for McDonald’s? They are a massive company? They have a ton of money. A lot of resources and we might think it’s all just for marketing, but it’s actually not. Maybe you might think they’re probably just doing the bare minimum. The bare minimum to us might look like sourcing just certified coffees that are certified through Fair Trade USA, Fair Trade International, and Rainforest Alliance. But Mr. Ronald McDonald said that’s not going to be enough.

Certifications are an excellent starting point, and they’re a great place to go to but they can be limited in their scope. They check off a box for standards of auditing, but they don’t always make a deep enough impact at origin. So, in parallel with certifications, McDonald’s decided they wanted to do and have more direct impact with farmers, so they created their own program that was complimentary. They still wanted to support certifications, but they wanted to do a little bit more than that. So, in partnership with Conservation International, they created McCafé SIP or the Sustainability Improvement Platform. This is not a certification and it’s not meant to replace certifications. It’s a means to verify positive impact of the farm through continuous improvement tracking. Through this program, McDonald’s has a better way of validating farmer information through independent third parties, many of which are in specialty to know them better and to ensure that their training, their resources and the support that they receive our customized to the regions that they’re in. This also ensures long-term investment and not just sourcing their coffee, but the coffee farmers themselves in the communities at their end. Additionally, the roasters that supplied McCafé coffee are also a part of this program and it looks like this with four different parts.

Peter Giuliano: Michelle’s slide shows the four pillars of the SIP initiative.

Michelle Johnson: Its transparency, producer collaboration, measured performance, and assurance.

With transparency, McDonald’s chooses clusters of farms and gather information about the farmers. They ask the roaster to trace all of the coffee to the Co-op or the trader that supplies it and identify all participating farms in the program. In producer collaboration, they provide farmers and roasters with the skills and tools necessary to meet all of their quality and sustainability standards. Through measured performance, they establish regular check-ins with the farms, and they track their progress and finally, they assure and verify through the data that through their independent third-party audits to assess the program and ensure accurate reporting and so far it’s working. The roasters that are in the McCafé SIP program are able to use their on the ground expertise and leverage the relationships they already have with producers to advance sustainable farming and livelihood improvement.

I have a couple of examples. 500 farmers in Quindío, Colombia nearly doubled their initial yield in 2017 due to field farmer schools that McDonald’s provided in technical insistence. Over in Chiapas, Mexico, another 500 farms participated in the program and they were given 590,000 trees, a plant that were part of a renovation program led by roasters. Additionally, they were given six agronomists on the field so that they could have access to soil information and learn how to better that as well. But McDonald’s then took it one step further. They brought it to us, the general public, the consumers. McDonald’s is based in Chicago.

So, last year in November, they created this mini coffee farm. It’s supposed to replicate a South American coffee farm in the middle of Chicago.

Peter Giuliano: Michelle’s showing an image of a round tent in a city square with sacks of coffee on the outside and coffee trees on the inside.

Michelle Johnson: And they had coffee produces there for people to meet. They had cups of coffee for people to try and were able to give them the information about what was happening at the farm and what McDonald’s was doing to make sure that the global crisis with climate change was being tended to and so you would think this has to just all be marketing, it’s McDonald’s. But this might be for most of you the first time that you’re hearing about this. So, it’s not just marketing. McDonald’s actually feels like that. They have a responsibility with their scale and their size, and their resource is to do something, and it’s something to admire.

 

11:50 Specialty coffee should applaud what McDonald’s is doing, and there is space for collaboration between the two

Michelle Johnson: So, for me as a specialty coffee professional. I think to myself; this is exactly what we want. We want someone like McDonald’s, and we want someone like, you know, Starbucks is already doing this and Dunkin’ to come in and to put their money where their mouth is to help. But what’s true about specialty is that we’re made up of thousands of smaller roasters and we each try to do our own thing when it comes to promoting sustainability and helping to push forward farmers livelihoods and even though our impacts may be small, they’re still very important. Additionally, specialty absolutely influences companies like McDonald’s to reach a standard like this and then set a new standard. What’s also true is that we don’t have McDonald’s money. We also don’t have Intelligentsia money. We don’t have Counter Culture money or Café Imports so there’s only so much that we think that we can do but I don’t necessarily think so.

So, where does that leave us? What can we take away from McDonald’s and take to use in the specialty coffee world? I’m going to stop myself because I don’t think we need to take anything away from McDonald’s and do our own thing. I think that there’s space for collaboration between the two, between commercial, between specialty, between small companies, between large companies with a lot of money. An idea of mine that I think of as possibly what if roasters, and this is in the specialty world, became SIP approved roasters with McDonald’s and so we go and we go to these farms and for the coffee that’s being cultivated just for specialty their standards can go a level above where it is because they are utilizing the infrastructure that McDonald’s has to improve their farms and then what McDonald’s needs they can buy the rest of it, but that’s just an idea.

Tomorrow, we’ll be able to talk more about this in the change-making sessions, because this year at Re:co, it’s not just about talking about, it’s about being about it. It’s about taking action, and we’re going to be pledging and everyone in this room has a place where we can take away and do something starting now and ultimately that’s what I want. I just want there to be more collaboration. We love a good stock photo about collaboration, and you know what? I’m loving that.

Thank you.

 

14:30 Outro

Peter Giuliano: That was Michelle Johnson at Re:co Symposium this past April.

Remember to check out our show notes to find a link to the YouTube video of this talk, a full episode transcript, and a link to speaker bios on the Re:co website.

Re:co Symposium and the Specialty Coffee Expo are coming to Portland in April 2020. Don’t miss the forthcoming early-bird ticket release – find us on social media or sign up for our monthly newsletter to keep up-to-date with all our announcements.

This has been an episode of the Re:co Podcast, brought to you by the members of the Specialty Coffee Association, an

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