Coffee beans shipped to U.S. for roasting, sent back to Central America for consumption

Central America has long supplied Starbucks with some of its most popular coffees, but not until this month did the company sell a single cup of coffee there.

Doors opened to the region's first store in El Salvador's capital Nov. 5. It marked Starbucks' foray into an area where some of the world's best coffee is grown — but where the majority of residents is said to drink instant coffee at home.

Officials and even competitors believe Starbucks' presence will grow local demand for lattes and cappuccinos, create hundreds of jobs in countries where most residents live in poverty and increase competition between cafes that could lower prices for consumers.

"We're expecting that they will popularize specialty coffees and grow the market," said Frederico Bolano, owner of Viva Espresso, a popular cafe in San Salvador.

But entering the Central America market also presents an environmental quandary: The company buys huge quantities of coffee from the region. It ships that coffee to the U.S. for roasting and then sends some back to Central America to be served. Transporting the beans creates thousands of pounds of carbon dioxide, a greenhouse gas that contributes to warming temperatures that threaten coffee crops across the globe.

As an alternative, the company could set up a roasting facility in the region or outsource the job to a local roaster.

"It's a missed opportunity," said Christopher Bacon, a coffee researcher and professor at the Environmental Studies Institute at Santa Clara University in California.

"Partnering with someone locally — even a company supplying their coffee — would be a much more socially and environmentally beneficial approach," he said.

Starbucks said it would be "prohibitively expensive to roast our whole bean coffee in Central America," even though the isthmus is a principal supplier of the company's beans. Starbucks does not break down its purchases by country, but it said that Latin America — from Mexico to South America — supplies 85 percent of its coffee. The company also opened its first support center for farmers in Costa Rica and has 336 stores in Mexico, Peru and Argentina.

"The challenge we face is that many coffee-producing countries don't allow the importation of green coffee to protect their local industry. Given that we blend coffee from 25 countries, it would be difficult to offer our wide range of products with such restrictions," the company said in a statement responding to questions from The Seattle Times.

Neither Guatemala nor El Salvador restricts green coffee imports, customs representatives in those countries said.

The company's reasoning illuminates how tightly it controls the beans it serves. Starbucks is tirelessly concerned with the taste of its coffee, entrusting a team of just 13 employees to set standards for the roasts served in stores worldwide. As a result, the customer can walk into a shop in the Philippines and expect a latte that tastes the same as one served in New York.

"Our roast profile is part of the defining taste of our coffee and is therefore proprietary," the statement said. "Being an independent roaster is part of who we are and helps ensure our beans are always roasted to our high standards."

All Starbucks coffee is roasted in one of five worldwide plants, including one international location in Amsterdam.

That means the coffee served in the new shop in San Salvador might be grown in Central America, but it will be roasted in the U.S., most likely in York, Pa., the company said. In addition to the environmental footprint, the length of time between roasting and serving has an impact on taste, Bolano said.

Starbucks coffees will arrive "in stores several days after roasting," he said. "It doesn't compare to a freshly roasted coffee. I think consumers will know the difference."

Everything that goes into creating one pound of roasted coffee — including fertilizing the plants, processing the beans, shipping, roasting, and packaging — produces five pounds or more of carbon dioxide, said Dave Rochlin, founder of ClimatePath, which seeks to work with companies to address climate change.

Transportation accounts for about one-half of one pound of carbon. "It's about as much as roasting the coffee," he said.

Other companies that deal in coffee have started roasting in the countries where the beans are grown to reduce shipping costs. Roasted coffee weighs about 20 percent less than green coffee — because roasting removes water.

When Wal-Mart Stores vowed to sell cheap Fair Trade certified coffee in Brazil, it did so by roasting it in that country.

"It's an example of a business decision that benefits the environment," Rochlin said. "It makes business sense to cut down on transportation costs."

McDonald's McCafe will be one of Starbucks' biggest competitors in Central America. The fast-food chain operates 31 cafes in Guatemala and is opening its second in El Salvador. It roasts all its coffee locally but does not blend the beans with coffees from other regions.

Starbucks last studied its carbon footprint in 2007, finding that its operations created 2 billion pounds of carbon dioxide that year, according to a filing with Carbon Disclosure Project. The study did not measure emissions from transportation because the company does not own the fleet of trucks and ocean liners, said Jim Hanna, Starbucks' director of Environmental Impact.

The company's 2003 analysis found transportation accounted for 14 percent of the carbon output, a percentage that Hanna believes is roughly the same today.

"We wanted to mitigate our carbon footprint in areas we could control," Hanna said. "As a company, we could have the greatest impact by focusing on our stores."

Starbucks pledged to reduce the energy its stores use by 25 percent, cut water consumption and to make all new stores LEED-certified, a standard for sustainable design.

In coffee-growing communities, the company is working to preserve and replant trees. With environmental group Conservation International, it launched a pilot project that studies ways to allow coffee farmers to sell carbon credits on the worldwide carbon market in exchange for preserving local forests. The company said that project would be expanded once the pilot phase concludes.

How Starbucks deals with the environmental impact of shipping coffee will come into sharper relief as it continues to expand internationally.

With markets in the U.S. and other countries saturated, the company needs to look to new frontiers, analysts said. In the 2010 fiscal year, it opened 235 international stores, compared to just 60 in the U.S., where it also closed 57 company-operated stores.

"Starbucks' biggest international markets already show U.S.-like store densities, suggesting that Starbucks will need to rely more on less-proven markets for international growth going forward," Morgan Stanley analysts John Glass and Jon Tower wrote to investors in October.

CEO Howard Schultz told reporters earlier this year that Asia represents the "most significant growth opportunity" and thousands of stores would be opened in China in coming years.

Starbucks said this month that it will for the first time grow its own coffee in China. It signed an agreement with the Yunnan provincial government and expects to harvest its first beans in three years.

The company plans another carbon footprint analysis in 2011, but hasn't decided whether it will measure transportation, Hanna said.

The company is cognizant of its output, in part, because climate change affects its core business.

Coffee grows well in places like Guatemala because of the combination of altitude, rainfall and temperatures, all of which are ideal for coffee plants — and vulnerable to climate change.

As temperatures increase, coffee farmers will be forced to seek out higher elevations, where there is less land, according to the International Center for Tropical Agriculture

That means less ground for growing the high-quality beans Starbucks' depends on. It also means coffee companies should focus even more on their environmental impact, Bacon said.

"The specialty-coffee industry, including Starbucks, has been the early movers in the sustainable business activities in the last 10 years or so. But the question now is: Are they now going to take the next steps," he said. "Are they going to go deeper into their effects on climate change?"

This story was originally published Nov. 27, 2010, and corrected Nov. 29, 2010. The first name of the reporter on this story, Ezra Fieser, had been misspelled in the original version.