“Based on my family’s history in business, being a sustainable company was always at our core. We care about the environment; we care about the people we work with; and we are for profit. If coffee companies are not looking after the product that keeps them in business, those businesses are not fiscally stable,” says Smith.
In his office hangs a seemingly innocuous note that reads; ‘Counter Culture Coffee is the relentless pursuit of coffee perfection. It is commitment to real environmental and fiscal sustainability. It is a commitment to creating cutting-edge coffee people’.
Penned in 2002 by Smith and his colleagues, including revered specialty coffee professional Peter Juliano, this mission statement was one of the first formalizations of Counter Culture’s continually evolving sustainability program. It is all part of Counter Culture’s overture to be frank about coffee industry sustainability.
A clearer cup of coffee
The global coffee industry generates some $100bn revenue annually, yet the International Coffee Organization estimates that the value of global coffee exports among coffee producing countries accounts for less than one fifth of that figure. With current coffee prices at 13-year lows, and many coffee farmers struggling to make a living, it is clear the global system for coffee procurement is inadequately remunerating vast numbers of coffee producers.
In 2019 Counter Culture released its tenth Transparency Report, a landmark document that promotes visibility across coffee supply chains often mired in complexity. Much more than a series of vision statements, platitudes or KPIs, the 30-page document contains carbon emissions data covering air travel, staff commuter journeys, shipping, and even details on plastic usage.
Anyone can view Counter Culture’s coffee purchasing volumes, Free on Board (FOB) prices (the price of coffee that is ready for export), quality scores and partner model types for its 318 coffees sourced from 17 countries.
The average weighted FOB price of all Counter Culture’s coffee between October 2017 and September 2018 was $3.08 – more than three times the average global price of $1.01 recorded by the International Coffee Organization (ICO) in 2018. Furthermore, Counter Culture has had continuous purchasing arrangements with 23 of its 55 coffee suppliers. These long-term producer relationships generate further supply chain efficiencies by negating the need for both parties to start price negotiations from scratch.
Counter Culture also donates one cent per pound of coffee sold to its Seeds Program, a grant scheme that assists with the creation of community facilities and the improvement of farmer income through crop diversification, such as macadamia nuts.
“If there is a better opportunity for a farmer to change their crop, who am I to question that? If there is not a market for the product we’re purchasing, ultimately coffee might not be sustainable for some farmers. This is a hard reality to face,” says Smith.
Counter Culture Coffee founders, Brett Smith and Fred Houk, pictured in 1995.
The sustainable mindset
Counter Culture’s focus on supply chain sustainability is as much an exercise in fiscal discipline as in ethical trade. In fact, Smith asserts that the practices are inextricably linked and traces the businesses’s innovative approach to his formative years in commercial banking.
After completing an economics degree and earning a Masters in Business Administration in 1994, Smith was drawn to the growing business potential of premium coffee in the US. While searching for his entrepreneurial niche he connected with Fred Houk, who was working for a small specialty roaster in Durham, North Carolina. Soon after, the two began crystallising a new kind of coffee business utilising their respective skills.
“In the beginning it was less about a real passion for coffee and more about a passion for business. Fred was the coffee guy, and I was the business guy – and it was off to the races,” Smith recalls.
In 1995 Counter Culture cut its teeth in North Carolina’s Raleigh, Durham and Chapel Hill areas, a thriving and innovative hospitality scene still known today as ‘The Triangle’. The roastery had always traded premium and specialty coffee, but fulfilling clients’ high expectations pushed the business to continually enhance and refine quality.
“I certainly could not anticipate specialty coffee would grow as much as it has, but I could see a growing appreciation,” says Smith. “We were very fortunate The Triangle had an incredible culinary scene with amazing chefs pioneering ‘farm to table’ and really amazing quality. As a result, our customers set the bar very high for us.”
The combination of Smith’s financial acumen and Houk’s coffee skills paid off. In its first decade Counter Culture meticulously constructed its own direct trade certification, launched early sustainability initiatives such as shade grown coffee and built a reputation for excellence among its growing client base. Today, Counter Culture’s average coffee score is an impressive 86.3, with two-thirds USDA Organic certified.
A frank discussion
When Counter Culture began preparing its first Transparency Report in 2009, the risk of jeopardizing the company’s competitive market edge, built over nearly 15 years, was a very real concern.
“I have a traditional business background of sustainable competitive advantage and this went completely against everything I had learned in business school. It went completely against the traditional mindset that ‘knowledge is king’,” Smith recalls.
Yet, since the first Transparency Report was released, Counter Culture has thrived as one of the foremost specialty roasters in the US and is now a key proponent of sustainable coffee practices globally. Allegra World Coffee Portal research shows three-quarters of US coffee industry leaders surveyed in 2019 agree that sustainability and environmental issues affect their business to a large or moderate extent. Indicating a shift away from traditional sustainability labels, nearly half now feel direct trade policies are more desirable than certification schemes.
Smith is realistic that transparency is no panacea for the economic problems facing coffee producers globally. Instead, a process of continual dialogue and re-evaluation is the only way to adapt to the complexities of global coffee supply chains.
“The challenge with certifications is that they sometimes fail to capture nuances or the much larger picture. In our very busy world consumers can gravitate toward certifications that might not show the whole picture. I do not think certifications are intentionally deceiving, but consumers need to understand their limitations,” says Smith.
There is much at stake for the coffee industry, not just for producers, but also businesses across global consumer markets. In 2019 a major study from the UK’s Royal Botanical Gardens, Kew, warned that 60% of wild coffee species face extinction if action is not taken to tackle dangerous climate change.
"We are part of a supply chain that is not only compromising the long-term supply of coffee, but the availability of coffees that are special or unique. Rare coffee varieties provide the opportunity for us to grow a specialty customer base. If we compromise that then we are in trouble."
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Coffee growing in Ihuamaca, Peru.
The conversation continues
Achieving sustainable business operations presents a fundamental imperative, not just for the coffee industry, but for the entire global economy. With a growing chorus of international companies joining the debate, it seems Counter Culture has succeeded in striking a frank conversation about the continued prosperity of coffee across the supply chain. Today, a number of prestigious coffee roasters, including fellow US specialty roaster Onyx Coffee Lab, Norway’s Tim Wendelboe and Denmark’s Coffee Collective, make procurement data public.
In September 2019, major coffee firms including Nestlé, Starbucks, Lavazza, illycaffè and Jacobs Douwe Egberts signed an ICO declaration pledging to promote competitive and sustainable production; foster responsible and equitable growth; promote responsible consumption; and promote public-private dialogue regarding policy development.
“Transparency is difficult; it has turned my stomach at times. It is hard to look in the mirror and be truly honest with yourself. But ultimately you will not regret it,” says Smith.
As for Counter Culture’s future, Smith is hopeful he can continue the important conversations started 25 years ago. “I hope in ten years we can say we continue to challenge ourselves,” he says.
Climate change and the ongoing coffee price crisis represent a fundamental challenge to the future of coffee, but also present an opportunity for radical business innovation. Though he concedes much more work is needed to safeguard the future prosperity of the global coffee industry, Smith is heartened by the growing number of conversations about sustainability occurring worldwide. It is now up to the global coffee industry to decide just how many of those discussions will turn into reality.
First published in issue 3 of 5THWAVE magazine - available to read in full online here. All images courtesy of Counter Culture Coffee.