Oxfam to open fair trade coffee shops

Posted: 14 May 2004

Oxfam is to launch a chain of fair trade coffee shops in the UK, called Progreso, in a bid to pioneer a new style of business which guarantees a fair price to coffee producers in developing countries while serving the country's coffee lovers.

But can this aid agency hope to muscle in on the coffee shop market already cornered by the multinational café Goliath, Starbucks? coffee cup

Progreso hopes to launch three outlets by the end of 2004 and have a chain of 20 within the next three years.

Oxfam hopes that the Progreso chain coffee bars will serve as the antithesis to the global corporate café, with its emphasis on fairly trade coffee and profit-sharing being the cornerstones of the brand.

Profit-sharing

Currently, coffee growers around the world are suffering from low prices that have fallen 70 per cent since 1997. The Progreso model aims to help redress that balance.

The new chain will be supplied with a fair trade blend of coffee beans from three co-operatives in Honduras, Ethiopia and Indonesia, who will have partial ownership of the venture.

The co-operatives will own 25 per cent of the firm's shares and 25 per cent will be held in trust for projects in the wider grower community. Oxfam will own the remaining 50 per cent of Progreso, which will be a standalone operation.

"Coffee growers will win three times with Progreso. They'll be selling their coffee at a fair trade price; they'll share directly in the profits and will also showcase their coffee to the UK," said Chris Coe, Oxfam's Trading Director and one of the originators of the Progreso concept.

Growing market

Fair trade coffee is the fastest growing sector of the UK coffee market. In 2003, consumers purchased 2083 tonnes of fair trade coffee from shops and supermarkets - an increase of 42 per cent from 2002. Coffee shops sold 385 tonnes of fair trade coffee during the same period - an annual increase of 67 per cent.

Teaming up with, Matthew Algie, the UK's largest supplier of fair trade coffee to the foodservice industry, Oxfam hopes to open three cafes in London and Scotland by the end of 2004 and have a chain of 20 by 2007. Fair trade food, such as cakes and biscuits, will also be sold. Retailers like bookshops will be targeted as concession partners to avoid the costly bill for renting their own premises.

Oxfam was one of the joint founders of Cafédirect - the UK's largest fair trade hot drinks company - in 1991 and the charity currently sells fair trade coffee and many other ethically-sourced products in its shops in the UK.

'Moral obligation'

The Progresso concept originated from discussions between Oxfam and one of the three co-operatives, La Central in Honduras, which came up with the idea of creating fair trade outlets in the UK selling their coffee.

"This is a bona fide commercial venture," said Wyndham James, managing director of Progreso. "We will be launching smart, contemporary outlets that provide consumers with fantastic coffee and help growers through ready-made retail outlets."

"We have a moral obligation to assist people involved in producing the raw material on which our business is based. To sit on our hands in the current crisis and wait for a correction in the market is not an option we are comfortable with," said David Williamson, Managing Director of Matthew Algie.

The annaul sales of fair trade products are already worth around £100 millon in the UK and the brand has expanded from first selling coffee to now selling 130 foods, including fruit, juices, vegetables, snacks, wine, tea, sugar, honey and nuts. After Switzerland, Britain is now the second largest market. Sales are also rocketing in the US and Europe's market grew 30 per cent last year to almost £400 million.

Related links:

Progreso

Oxfam

Matthew Algie

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