How Is GMCR Doing?

Green Mountain’s success is best reflected in the rise of its stock price. From 2007 to 2010, GMCR’s stock rose by more than 2,700 percent, while the S&P 500 declined by 8 percent. From Green Mountain’s initial IPO in September 1993, its stock had increased by 15,400 percent, significantly better than the S&P 500’s 165 percent gain.Green Mountain Coffee Roasters, Inc., Annual Report 2009, accessed April 16, 2010, http://www.gmcr.com/Investors/AnnualReport.aspx.

Along with continued outstanding growth in sales, profits, and earnings per share, Green Mountain has received numerous industry, social, and humanitarian awards. The company reported that 2011 “was another step on our path to creating a more sustainable future. Along the way, we were pleased to be recognized for our efforts to create both profit and positive change.” (See the following sidebar.)Green Mountain Coffee Roasters, Inc., Brewing a Better World: VOICES, accessed May 30, 2010, http://www.gmcr.com/PDF/gmcr_csr_2008.pdf.

GMCR keeps track of its social and sustainability efforts in three areas: the amount of fair trade coffee (organic and nonorganic) purchased as a percentage of total coffee purchased (with a goal of at least 30 percent of all coffee purchased to be Fair Trade Certified coffee); the price it pays to farmers for premium coffee over the prevailing market price; and the dollars contributed in grants to aid its numerous supply chain partners, especially to its farmers and community partners (with a goal of at least 5 percent of profits going to aid supply chain partners and other community partners). Fair Trade USA, the leading third-party certifier of fair trade products, named GMCR the largest purchaser of Fair Trade Certified coffee in the world for 2010. GMCR purchased more than twenty-six million pounds of Fair Trade Certified coffee in 2010.

With its purchase of Fair Trade Certified (FTC) coffee, GMCR was able to identify early on and exploit market opportunities in the United States for the growing consumer interest in Fair Trade Certified organic and nonorganic coffee. With FTC coffee purchases, GMCR was able to help address the well-being of farmers in coffee exporting countries. The company did this by providing farmers and their workers a fair (also known as “living”) wage and grants to help them with medical, educational, and other economic and social needs. With the purchase of Fair Trade Certified organic coffeeCoffee that is grown under standards and guidelines that attempt to reduce the environmental impact (devastation) that is occurring in coffee-producing countries., GMCR also attempted to reduce the environmental devastation that occurred in coffee producing countries brought on by mass clearing and mass production of coffee crops. Management used these innovative supply chain practices and associated social investments as a source of a competitive advantage in the highly competitive specialty coffee industry.

GMCR senior managers believed that once consumers understood the company’s sustainability goals and practices—protecting scarce resources, strengthening communities, reducing poverty, and ensuring equity in commercial relationships—they would be more likely to purchase the company’s products and thereby “partner” with the company to help build a better world.Green Mountain Coffee Roasters, Inc., Brewing a Better World: VOICES, accessed May 30, 2010, http://www.gmcr.com/PDF/gmcr_csr_2008.pdf.

GMCR’s Fair Trade Coffee Goals and Statistics

Management believed that its fair trade approach also created a “win-win” situation for the company and supply chain partners. By improving the quality of life for farmers, their families, and workers, Green Mountain sought to foster trust and closer working relationships in its supply chain. And management viewed this as investments that could help GMCR more effectively monitor quality and lower costs by assisting and negotiating directly with farm cooperatives. By lowering dependency on other supply chain intermediatesFirm or person (such as a broker or consultant) who acts as a mediator on a link between parties to a business deal, investment decision, negotiation, and so on. In the coffee supply chain, a trader, for example, acts as intermediary between farmers seeking a fair price for their coffee and roasters looking to buy coffee at a fair price. Intermediaries usually specialize in specific areas and serve as conduits for market and other types of information. Also sometimes called a “middleman.” in procuring its coffee, the company could lower supply chain logistical and procurements costs, improve turnaround time, and respond more quickly to customer preferences.

By 2009, Green Mountain was one of the largest purveyors of fair trade coffee in the United States. Fair Trade Certified coffee represented about 30 percent of Green Mountain’s overall coffee pounds sold in 2009, which was a 36 percent increase over 2008.

Partnerships and Outreach in the Supply Chain

In 2008, GMCR began sharing and measuring vendorAlso known as a supplier. A firm that provides raw materials or services to another firm. A vendor can be a manufacturer, producer, or seller. compliance to a set of guidelines. These guidelines outlined what Green Mountain expected from its vendors regarding environmental, health, and safety standards. These standards included vendor legal compliance, labor conditions, and environmental responsibility. For measuring compliance, GMCR created a set of tools, including self-assessments, surveys, on-site assessments by GMCR staff, and commissioned audits of vendor facilities. Management tested these tools by auditing its Waterbury, Vermont, facility.Green Mountain Coffee Roasters, Inc., Brewing a Better World: VOICES, accessed May 30, 2010, http://www.gmcr.com/PDF/gmcr_csr_2008.pdf.

GMCR’s goal for its coffee supply chain was ambitious: to help the people in coffee-growing communities lead healthier and more prosperous lives. To facilitate the accomplishment of this goal, GMCR’s used two outreach initiatives. First, the company provided on-the-ground assistance by helping suppliers improve their ability to deliver high-quality specialty coffee to the marketplace. Areas of assistance included advice on cultivation techniques, training on cupping skills, and connecting suppliers with industry resources to help farmers strengthen and grow their business. Second, GMCR provided financial grants to nonprofits that both provided technical skills and helped communities achieve a more sustainable future.John M. Talbot, Grounds for Agreement: The Political Economy of the Coffee Commodity Chain (London: Rowman & Littlefield, 2004), 44.