FEATURE - Japan wakes up to Fair Trade coffee
Author: Aya Takada
Japan's coffee market has since matured, but a fresh trend may be brewing: Fair Trade coffee.
On the 20th day of every month, Starbucks, the world's largest coffee shop chain, serves up Fair Trade coffee as a daily special in its nearly 530 stores across Japan.
The strategy is aimed at raising consumer awareness to the plight of coffee farmers in developing countries who are struggling to cope with slumping international prices.
It has also awakened Japan's roasters to a golden marketing opportunity.
"Some consumers (in Japan) see coffee as a luxury item and seek additional value in it," said Akihiko Naganawa, general manager of the corporate planning department at major Japanese coffee roaster Unicafe Inc. (2597.T: Quote, Profile, Research) , explaining the appeal of Fair Trade coffee.
Fair Trade is a poverty-eradicating programme that ensures coffee farmers in developing countries, such as Guatemala and Uganda, get a fair price for their product if they adopt socially and environmentally correct ways of farming.
The programme has come under the spotlight as historically low bean prices in recent years have driven many farmers out of business. Fair Trade constitutes the fastest growing part of many roasters' businesses in the United States and Europe.
In Japan, however, it was almost non-existent until 2002, when Starbucks launched sales of coffee certified by the Japanese unit of German-based Fairtrade Labelling Organisations (FLO) International.
Fair Trade certified coffee guarantees growers minimum prices of $1.26 per pound for regular coffee and $1.41 for organic coffee, about double the current international market price.
To be certified, producers must implement crop management and environmental protection plans. Growers also have to belong to cooperatives controlled by their members and shun child labour.
Fair Trade coffee was initially aimed at socially conscious consumers who wanted to aid struggling farmers, and sold in small shops run by non-profitable organisations.
But it has become available to mass consumers since coffee shops and supermarket chains began selling coffee bearing the Fair Trade certification label in Europe in the 1990s.
Japan's coffee industry initially shunned Fair Trade beans due to views that guaranteeing minimum prices on a widespread scale would only encourage more production, worsen the oversupply situation and further weaken market prices.
Now, six coffee roasters and two merchants currently sell coffee certified by Fairtrade Label Japan, a unit of FLO International. Among them are Asia's top retailer by sales Aeon Co. Ltd. (8267.T: Quote, Profile, Research) and Unicafe.
Koh Kitazawa, a senior member of Fairtrade Label Japan, says five more companies are expected to start marketing Fair Trade certified coffee by the end of this year.
"An increasing number of companies are showing interest in Fair Trade certified coffee because the beans are also quality beans and worth paying a premium for," he said.
Sales of Fair Trade certified coffee in Japan, the world's third-largest coffee importer after the United States and Germany, are expected to reach 100 tonnes this year, more than quadruple last year's 22 tonnes, Kitazawa said.
Still, the volume is only a fraction of overall coffee consumption in Japan, estimated at over 420,000 tonnes a year.
In the United States, Fair Trade coffee represents about 1 percent of total coffee consumption estimated at 1 million tonnes a year, Kitazawa said.
Japanese trading firms such as Kanematsu Corp. (8020.T: Quote, Profile, Research) import coffee certified as eco-friendly and fairly traded by Rainforest Alliance (RA), a New York-based organisation.
Users of RA-certified coffee include top Japanese roasters UCC Ueshima Coffee Co. Ltd. and Key Coffee Inc. (2594.T: Quote, Profile, Research) , and dairy product maker Glico Dairy Products Co. Ltd.