Beyond Fair Trade

by Mark Pendergrast

  So were the marketing challenges. They were a new company trying to introduce an expensive new coffee brand called Doi Chaang, which sounded more like Chinese tea to most consumers. No one had heard of good coffee from China (or Thailand, for that matter), and the picture of Piko, which they kept on their bags, didn’t help. Who was this severe-looking man with the turban? They could attract attention if they could get people to read the story of the Akha on the back of the bag, but how to get them to pick up the bag in the first place?

  Katharine stepped in. While she was developing the marketing material for the firm, her father told her that he wanted to get the coffee certified as Fair Trade to help promote sales. Katharine wasn’t convinced. “This coffee is way beyond Fair Trade. We’re offering a real partnership, not just a higher price for their green beans. In addition, we’re paying much more than Fair Trade requires.” Thus was created the slogan for the Doi Chaang brand: Beyond Fair Trade.

  That helped to entice customers to pick up and sample the product, but it also created a new problem. The beans were certified as Fair Trade by the Fair Trade Labeling Organization (FLO), and FLO managers told Darch Senior that he was infringing on their trademark by calling his beans “Beyond Fair Trade.” He had to take it off the label and throw away all the bags featuring the phrase if he wished to continue to use the Fair Trade mark on Doi Chaang beans.

  Outraged, Darch Senior e-mailed back. It was rather ironic, he noted, that the Fair Trade movement was created to make sure that impoverished farmers were paid a reasonable amount for their hard work. Now he was being punished for doing exactly that—for going beyond the Fair Trade criteria to help the Akha farmers. He agreed to change his logo if FLO would put in writing what it was requiring, and why. He promised to then publicize this letter widely in order to embarrass them. No letter arrived, and Doi Chaang Coffee continued to proclaim that it went Beyond Fair Trade.

  Nearly Pulling the Plug

  AT THIS POINT, near the end of 2007, Wayne Fallis balked at putting more money into the venture. Coffee was a complex business, and he was over his head. He told Darch Senior that he was bailing out, chalking it up as a lost cause. Darch consequently contemplated the unthinkable. He might have to fold the company and renege on his commitment to the Akha. He had never believed in charity. He had thought of himself as a pioneer of a new form of sustainable capitalism. He would prove that profits could be equitably shared across continents. Although it might lose money for the first few years, Doi Chaang Coffee could be a thriving enterprise in the long run.

  But his usual self-confidence was shaken. He realized now how naïve he had been, thinking it would be simple to launch a new brand, and that the Akha’s story would ensure large sales. Katharine had also told him that she wouldn’t be working on the project much longer for personal reasons.

  Darch Junior, who had been trying for so long to get his father to face the complex, challenging realities of the specialty coffee business, surprised him now. “Of course we’re going to lose money at first, Dad. But we’ve actually done an amazing thing. Starting from scratch, we’ve created a new brand, and you haven’t given it time to gain traction.” He wanted to keep the company going, and he was willing to buy out Wayne Fallis’s share at a discount. Encouraged by his son’s commitment, Darch Senior agreed to keep going, though it would mean investing more of his own money.

  The next two years saw a few positive developments on the Canadian side. The Darches managed to get bags of Doi Chaang onto the shelves of a few gourmet food stores like Meinhardt Fine Foods in Vancouver. Gross sales increased to $336,000 annually—but profits still came nowhere near expenses.

  In April 2009, Darch Senior missed the third anniversary celebration of the Academy of Coffee in order to attend the annual convention of the Specialty Coffee Association of America (SCAA), held in Atlanta that year. The SCAA, founded in 1982, had grown from a tiny fledgling organization of coffee quality-obsessed rebels to a large, respected rival to the older National Coffee Association, which represented the huge traditional roasters selling Maxwell House, Folgers, and other canned products.

  Darch spent little time roaming the aisles, where a veritable United Nations of coffee countries were represented, choosing instead to remain in the little Doi Chaang Coffee booth he had rented. He felt like a rather small fish in a huge pond, and it was difficult to attract the attention of the crowds wandering by. His British reserve prevented him from yelling out or seeking attention. But one particularly friendly man stopped to sample a cup of Doi Chaang and was impressed. He had seen Doi Chaang bags back in Vancouver in the Meinhardt coffee section and thought that the slick black presentation was “fabulous packaging.” He was intrigued by the Asian slant.

  Now he introduced himself. “My name is Eric Lightheart, and we’re neighbors. I work for Canterbury Coffee, the largest roaster in British Columbia. Here’s my card.” Darch was polite but confused. He had never heard of Canterbury Coffee. Lightheart explained that Canterbury, based near Vancouver, BC, started in 1977 as a small office coffee supply company, founded by Murray Dunlop, who began roasting his own coffee in 1981. Now Canterbury supplied the private label roasted coffee for giant outfits in Western Canada such as Safeway, Costco, and London Drugs, while providing coffee service for major universities, hotels, and restaurants, accounting for $60 million a year in sales. The company was known primarily as a “toll roaster” in the trade. It didn’t have its own brand, which is why few people had heard of it.

  Lightheart listened to Darch tell the story of the Akha and their coffee. He was impressed. “Here was the owner of the company, manning his own booth,” he recalled. “John was warm and gracious. I could tell he had heart.”

  Darch presented a positive front, but it was obvious that the young firm was struggling. Lightheart offered his opinion: “You need better distribution. You need to get Doi Chaang out there into more avenues. We could help you. We’ve got seven branch offices. We could get you into more food service, grocery, and offices. I’ve been wanting to find a coffee to buy directly from the farm, with a great story behind it and a brand name we could promote. With our great distribution and your great brand and story, we could work well together. In fact, we could roast your coffee for you.”

  Darch explained that he had already committed to a roaster in Calgary and didn’t want to move the business, but he was interested in working out some kind of arrangement. Back in Canada, Darch Senior took Darch Junior, office manager Tanya Jacoboni, and Shawn McDonald to visit the Canterbury roasting facility. At that point, McDonald could see the writing beginning to form on the wall. Darch Senior asked him if he would consider moving to BC to work with Canterbury, but McDonald had no interest in uprooting to work for a larger outfit. Darch Junior, uneasy about pulling out of Calgary, procrastinated. His father continued to pump money into his fledgling coffee venture, fulfilling his promise to buy another three containers of Doi Chaang beans for the same price of approximately $3 a pound, paying up front and then hoping to sell them.

  Meanwhile, Back in Thailand…

  MEANWHILE, WICHA AND the Akha were working diligently to expand the coffee business. In the spring of 2007, with the new income from sales to the Canadians, they built the imposing Academy of Coffee, harvesting teak poles from Wicha’s property in Nan Province, to the east of Chiang Rai. They used fifty-seven poles to represent the fifty-seven generations recited by the elders in their oral history. The 3,000-square-foot building had a roof of thick thatched grass, and in the middle of the office on the left-hand side there was a traditional fire pit. The smoke from the fire helped to cure the roof and discourage insects from eating it. Patchanee Suwanwisolkit from Chiang Mai University taught agronomy classes in the classroom area and brought colleagues for other educational offerings.

  In the middle of the building there was room for a coffee-soap-making venture that a young Akha woman named Nuda began, with Wicha’s encouragement. Nuda started with a “soap base,” purchased
in Bangkok, then shaved off pieces and put them in the top of a double boiler to melt, along with coffee pulp, honey, and olive oil infused with a fragrant local flower. She also made espresso soap, with concentrated brewed espresso added, along with some very finely ground coffee that acted as a kind of pumice to scrape off dead skin. Three people could make a thousand bars of soap in one day, to be sold in the coffeeshop and other outlets.

  On April 16, 2007, the facility opened, with John Darch Senior and Wayne Fallis in attendance as honored guests and partners. Both of them struck the ceremonial gong. The Akha women had donned their silver-laden headdresses and brightly embroidered clothing. There were speeches, music, and dancing. This celebration would become an annual event that drew thousands of Akha from many other villages, even from China, Laos, and Burma.

  In September 2007, with money from the Canadian venture, the Akha bought a new ultra-modern Brambati roaster, manufactured in Italy, to replace the ancient German one. Paolo Fantaguzzi, an Italian machinist, took fifteen days to install the roaster for Wicha, who later convinced him to move to Bangkok to build coffee roasters and brewers in cooperation with Doi Chaang. The Brambati roaster featured a computer screen so that Akong, the roastmaster, could monitor every aspect of the process.

  The coffee was harvested and prepared with obsessive care, then sorted several times to make sure that any defective or imperfect beans were removed. The Doi Chaang Coffee Original (the name of the main Akha company) processing plant wasn’t big enough to handle all of the coffee, so twelve loose associations were formed by other Akha (including Adel’s older brother Leehu and cousin Apa) in the village to receive the ripe coffee cherries and supervise the processing and drying, for a small fee of 2 baht per kilogram. Then they would deliver the beans in parchment to the main Doi Chaang Coffee location where they were again sorted and eventually hulled.

  During the sorting, the Akha women also separated “peaberries” from the regular beans. Most coffee beans grow in facing pairs, but peaberries, shaped like tiny footballs, sometimes grow alone in a coffee cherry. They are prized for their rarity and supposedly more concentrated flavor. In April 2008, Kenneth Davids gave Doi Chaang Peaberry an extraordinarily high score of 93 along with high praise: “Pure, refreshing coffee. Sweetly acidy and honey-toned in the aroma, with floral and coffee fruit (tart cherry) notes. In the cup softly acidy, delicate in mouthfeel, crisp but very sweet in structure, with continued notes of tart coffee cherry, honey and flowers, together with a slight, deepening butterscotch-like pungency. In the finish the sweetness fades, but the fundamental flavor notes persist far into the long finish… A pure, lyric, light-roasted breakfast coffee, gently exotic.”

  Wicha was a bundle of creative energy. To display and sell their coffee in the village, he had a coffeehouse built near the Academy, where Akha women pulled shots of espresso and steamed milk for cappuccinos and lattes. He encouraged Lipi, one of Adel’s nephews, in his efforts to grow blue oolong tea to complement coffee sales. The tea, processed in a Chinese factory 40 kilometers to the west in the town of Wawi, was of a high quality, but it couldn’t compete with cheaper Thai teas, and it was also too pricey for the export market. Nonetheless, Doi Chaang tea was sold in the coffeeshop.

  To take advantage of the annual March coffee-blossom season, with its jasmine-like fragrance and explosion of white flowers, the Akha became beekeepers and sold delicately flavored coffee-blossom honey in the coffeehouse, along with the soap and tea. The hives were then trucked to the lowlands, where the bees collected pollen from flowers and orchards for standard (but still delicious) honey.

  Already a seasoned traveler, Wicha began a series of promotional trips for John Darch Senior and his Canadian company. In May of 2008, Wicha flew to Canada, where he charmed the Doi Chaang staff with his charismatic enthusiasm and humanity, although the doorman at the elegant Terminal City Club, where he was staying, at one point refused Wicha entry because of his odd garb. He appeared on several local radio and television shows, which temporarily boosted sales. Darch also took Wicha to the annual Specialty Coffee Association of America conference held in Minneapolis that May, where he won the distinction of being named “the best authentic character” at the event.

  In his suitcase, Wicha had brought what appeared at first glance to be Oh Henry! candy bars. “This is kopi luwak, civet cat coffee,” Wicha said. “Will you try it?” The agglomeration turned out to be coffee beans that had been eaten and excreted by wild civet cats in the coffee groves of Doi Chang. Wicha knew that such beans from Indonesia fetched a ridiculously high price in some countries.

  Darch took the beans to John Gilchrist, a Canadian gourmand and food writer, who told him, “John, I’ve tried this civet poop coffee before, and it’s terrible stuff.” Yet when he washed and roasted these beans, he loved them for their mellow, lingering honey flavor. Darch took them back to Vancouver and arranged for six chefs to test the civet coffee, with positive results. Finally, he sent a sample to Kenneth Davids, who gave the civet beans a score of 90, along with flavor notes: “Intriguing mid-tones throughout the profile: mainly a sort of orangy, floral citrus with a backgrounded complex simultaneously suggesting fresh earth, mushroom and decomposing leaves. All of this takes on a vaguely chocolaty tone in the finish. Gently smooth acidity, medium body.”

  Wicha returned to Doi Chang brimming with ideas for new products, but mostly the Akha would grow more and more coffee. From the 200 acres originally growing in 2002, in 2009 there were nearly 2,000 acres, with plans to plant up to 8,000 acres. Some of those trees were starting to produce cherries, having been planted as seedlings three or four years previously. Others would come into maturity in the next few years. While the Thai market for Doi Chaang beans was growing—there were now a dozen Doi Chaang coffeehouses in Chiang Rai, Mae Suai, Bangkok, and elsewhere—Wicha and the Akha were counting on the Canadians to buy most of their premium beans for high prices.

  2010: The Crucial Year

  FINALLY, IN 2010, Darch Senior and Junior concluded that they could not continue with the Calgary operation. Their primary potential market was in Vancouver. It made little sense to pay for the beans to be shipped from the coast inland to Calgary, where McDonald’s team roasted and packaged them, then shipped most of them back to Vancouver. Eric Lightheart was eager to have their business at Canterbury. Thus, the Darches made an orderly transfer of their business to Canterbury in July 2010. It was a two-part deal. Canterbury would serve as a toll roaster for accounts that Doi Chaang Coffee found on its own. Using the specified roast profile for the beans, the huge roaster would charge a toll fee to roast, package, distribute, and invoice customers for Doi Chaang Coffee. It was a fairly expensive option in some respects, but it saved the salary of several people, plus the cost of a roasting facility and delivery truck. Darch Junior, who had been advocating such a change, was able to implement a switch from the half-pound bags to one-pound offerings, which put them in the same size as their top competitor, Kicking Horse Coffee. A new broker, Cyba Stevens, helped get Doi Chaang beans into IGA grocery stores as well as London Drugs.

  The second part of the deal had Doi Chaang Coffee give Canterbury the exclusive right to handle its food service coffee. Canterbury would purchase the green beans at a small mark-up and then pay Doi Chaang a 5 percent royalty on all sales to its institutional customers. Not all of these 6,000 customers would order Doi Chaang, but gaining access to such Canterbury clients would instantly and dramatically expand the market for the Thai beans. Canterbury provided all of the coffee brewing equipment and service to these customers as well—something that tiny Doi Chaang could never do. In return, the deal gave Canterbury a distinctive brand and story to offer that no one else had.

  In the competitive world of specialty coffee, Lightheart argued that this special deal with Doi Chaang would be advantageous to Canterbury. He encountered some resistance, though. “Explain again why we want to promote someone else’s coffee?” founder Murray Dunlop asked. In the end, he grudgingly
agreed to the deal, though he groused that Canterbury made less profit on Doi Chaang beans than any others they handled.

  The move to Canterbury eventually saw Doi Chaang beans move into Safeway and more Costco stores, as well as over 200 coffeeshops, restaurants, and hotels. Getting onto more Costco shelves proved to be challenging. At Darch’s expense, Doi Chaang and Canterbury had to put on a “Costco road show” in eight stores in Alberta and BC. That meant bringing two skids of coffee (pallets holding over 400 two-pound bags) to each store, paying for a presenter to offer free samples of brewed coffee all day, and hoping that enough customers would buy the coffee. If accepted in the store, sales of Doi Chaang had to reach at least a skid-and-a-half per week in order to stay there. Costco eventually accepted the beans in fifteen locations.

  Eric Lightheart visited the village of Doi Chang that fall. He was impressed with the whole setup, including the latte art in the shape of a dragon atop his cappuccino, and he was particularly taken with Wicha, whom he described as “a lovely guy, humble, outgoing, passionate, and dying for more coffee knowledge, asking lots of questions.”

  Back in Canada, Lightheart was delighted with the sales to institutions. “I told the story of the Akha and their coffee,” he said. “Everyone wants to hear a good story that rings true. They are leery of American big business hype, but this was completely real. I had seen it for myself, and I told customers.” Other than Kona and Jamaica Blue Mountain beans, he sold more Doi Chaang Coffee than any other brand.