At Meinhardt, in a section labeled “Locally Produced,” only 49th Parallel was on display, even though Doi Chaang, Ethical Bean, Salt Spring, Piccolo Brothers, and Commercial Drive were also local. Of course, no coffee trees grow anywhere in North America other than the Hawaiian Islands, so the “local” character stemmed from where the imported beans were roasted. It was a constant battle to get store managers and consumers to understand that Doi Chaang was a local, family-owned business, despite its exotic-sounding name. Darch Junior commented wryly that some consumers thought that Salt Spring Coffee was actually grown on Salt Spring Island, just to the west of Vancouver.
The other challenge was to convey the Doi Chaang story so that people understood the company’s unique character. The company was half-owned by Akha farmers in a mountaintop village in northern Thailand, and they were paid better than Fair Trade prices for their beans. The Akha had been marginalized and oppressed, and now they were self-reliant and thriving, and without the Vancouver company’s sales and publicity efforts, it is doubtful that the Thai operation would have been the incredible success that it was. But that story was not breaking through to most people who needed to hear it, despite the earlier media exposure.
Doi Chaang beans brewed a terrific cup of coffee, but so did many other beans from many other companies. Doi Chaang was certified Fair Trade and organic, but so were many other coffees. On its website, for instance, Ethical Bean describes itself as “one of Canada’s leading suppliers of 100% Fairtrade Certified Organic coffee. The Vancouver, BC, based company prides itself on being both just, and better, in everything that they do. Whether through programs that respect the earth and its farmers or by leaving a minimal environmental footprint, Ethical Bean is constantly seeking new ways to do the right thing.” Ethical Bean offered blends called Rocket Fuel, Bold, Lush, and Mellow, with beans from places such as Sumatra, Bolivia, Ethiopia, Nicaragua, and Guatemala.
And Ethical Bean wasn’t even the biggest competitor. That was Kicking Horse Coffee. Like Doi Chaang, Kicking Horse sold its blends in one-pound bags at comparable prices, with funky, aggressive names such as Kick Ass, Grizzly Claw, Kootenay Crossing, and Cliff Hanger Espresso. Founded in 1996 by Elana Rosenfeld and Leo Johnson in their garage in tiny Invermere, British Columbia, west of Calgary, Kicking Horse developed a loyal following across Canada. It was purchased in 2012 for multiple millions by New Jersey–based Branch Brook Holdings, with Elana Rosenfeld remaining as CEO. “We’re the underdog in the coffee world,” Rosenfeld claimed after the sale, but Doi Chaang had a more legitimate claim to that title.
The Whole Foods Flap
IN JULY 2012, Doi Chaang Coffee had been kicked out of seven Whole Foods stores in British Columbia in an exasperating illustration of the crazy politics of the specialty coffee business. Given the fact that Whole Foods promoted itself as a socially responsible supplier of organic, sustainable products, and that its Canadian stores also sold Ethical Bean and Kicking Horse, Doi Chaang would seem to be a natural choice for the chain’s shelves. But when a Canadian distributor asked why Doi Chaang had mysteriously disappeared from the shelves of local Whole Foods, Bonnie Meyer, the Whole Foods coffee coordinator for the Pacific Northwest, e-mailed from her office in Bellevue, Washington: “Most of the stores are dropping them, since they made the decision to go into Quick Marts (not sure if this is the name, but the gas station guys). They have been doing massive advertising around this and we just don’t feel this is our type of product any longer.”
Meyer was referring to a promotion the convenience store chain 7-Eleven was running across Canada. In an effort to go a bit more upscale and appeal to socially conscious consumers, 7-Eleven managers, who bought their coffee from Canterbury, had been attracted by the “Beyond Fair Trade” slogan. Consequently, for three months they brewed Doi Chaang coffee in their Canadian stores, while providing valuable free advertising to the struggling young coffee company.
In response to Meyer’s e-mail, which the distributor forwarded, Darch Junior exploded in an internal company e-mail: “This is hypocrisy! A grocery chain that is supposed to support small farmers and organic and sustainable farming would drop a product that moved mainstream.” Instead of condemning the benefits of promoting a sustainable product, Whole Foods should be congratulating Doi Chaang. “I am appalled. It’s just plain snobbery!”
Darch Senior wrote a carefully considered official response, pointing out that Doi Chaang was not being sold in gas stations, that it was a small, local, family-run business with an “equal direct partnership” with the Akha hill tribe, and that 7-Eleven had approached them and had paid for a short-term promotion that was soon coming to an end. “We remain a small barely for-profit business committed to the growers of Doi Chang village and to our Beyond Fair Trade structure,” he wrote. “The core values of Doi Chaang Coffee Company are very much in line with Whole Foods Market and the suppliers it partners with. We too strive for wealth through profits and growth yet ensure our business practices better our communities and environment.” He concluded by saying that he hoped Whole Foods would reconsider its decision. “If not, then hopefully in the future we may have the opportunity to re-establish our business relationship.”
No one from Whole Foods responded.
A Canterbury Tale
THE DOI CHAANG beans were still being roasted by the Canterbury Coffee Corporation in the city of Richmond, just south of Vancouver. Housed in a large metal building in an industrial park, Canterbury was founded in 1977 by CEO Murray Dunlop. After earning his MBA, he had taught briefly in a business school. “But all my life I wanted to have my own business,” he said, and as he searched for options, coffee was appealing because it didn’t require a whole lot of capital. His initial strategy was to supply coffee and brewers to offices and institutions, getting his beans from various roasters in Canada and California, but the quality was variable. “I had a lot of complaints, so I decided to do my own thing.”
In 1981, when he started to do his own roasting, the specialty coffee movement was just beginning, and he realized he could fill a niche, providing small lots of fine coffees. From initial gross sales of $100,000 a year, he grew the business to $60 million a year in sales, offering not only coffee and its accessories, but tea, chocolate, smoothie concentrate, energy drinks and bars, mineral water, and flavored syrups.
Dunlop was impressed with Doi Chaang coffee and its unique relationship with the Akha farmers, but he complained about the high cost of the green beans, which limited profits. “Most roasters don’t take instructions from their green bean suppliers. Of all the products we do, we probably make the least amount from Doi Chaang.” Dunlop had been astonished when he visited the village of Doi Chang during the April 2013 celebration. “I was absolutely flabbergasted by the rapid expansion of facilities and the wealth transfer to the farmers. In 2001, there were only fourteen cars in the village, but now there were close to 300 vehicles, including SUVs. You would never see that on farms in Central America, where there are just beat-up pickup trucks.”
Dunlop observed in June 2013 that in the past eighteen months, green coffee prices on the C-market had declined from close to $3 a pound to $1.28, but that John Darch’s company had continued to pay the same high rate for Doi Chaang beans. “The world does not start and end in Doi Chang,” he said. Other organic Fair Trade beans didn’t cost as much, and already he was seeing a 15 percent decline in Doi Chaang sales because of noncompetitive retail prices.
He was pleased that “Doi Chaang is getting a reputation in British Columbia, and we’re trying to help them. We hope they will be a good long-time customer.” But it was clear that at Canterbury, Eric Lightheart was Doi Chaang’s real champion. “Eric is passionate about it,” Dunlop said. “He likes the concept of helping regional people.”
Since his first visit to Doi Chang village in 2010, Lightheart had returned several times, and he had also spent time with Wicha in Vancouver. “I fell in love with the whole scene,” he said, and he was able t
o sell Doi Chaang to food service accounts such as the University of Victoria and the Blue Parrot Coffeehouse on Granville Island by telling the Akha story. Canterbury was also able to get the coffee into chains such as Save-On-Foods (for a while) and Urban Fare. Lightheart likened the Doi Chaang brew to Hawaiian Kona coffee: “very smooth and balanced, with low acidity, winy notes, just a great cup of coffee.”
He admitted, however, that with the C-market coffee price down, Doi Chaang had a “much bigger hill to climb” because Darch continued to pay the same high price for the green beans. “I keep saying that gold goes up and down, and so does the coffee price. You have to adjust to reality.”
In the last few years, the single-serve revolution had surprised many in the specialty coffee industry. Aside from all the other bagged coffee competition, store shelves were now displaying boxes of capsules that fit into Keurig machines, owned by Green Mountain Coffee Roasters (later renamed Keurig Green Mountain) in Vermont. K-Cups and other compatible products were becoming popular in homes and offices as a quick, simple way to brew a good cup of coffee, despite greater expense and throwaway, non-recyclable plastic cups. Canterbury had just purchased an Aroma Cup machine, which would produce innovative Keurig-compatible capsules with soft mesh bottoms. Unlike the K-Cups, they were 90 percent compostable and held a bit more coffee as well.
In June 2013, John Gray, Canterbury’s chief coffee cupper and blender, was busy creating and testing a prototype Aroma Cup capsule, carefully spooning in ground coffee and using a soldering iron to attach the film. He had worked for Canterbury since 1983 and was mostly self-taught. He remembered attending the first Specialty Coffee Association of America Exposition in New Orleans in 1989, with only 200 people. In 2012, Gray passed a grueling SCAA cupping course to become an elite Q-grader.
Although he rated Doi Chaang beans highly, he believed they were too clean, too well-processed. It would be better to use the semi-washed process, leaving a little of the mucilage on the beans to dry, which adds complexity. Consequently, Wicha and Adel had agreed to provide semi-washed beans from the next harvest.
Father and Son
JOHN GRAY WAS also busy creating Doi Chaang blends that would be introduced before the end of 2013. The decision to depart from offering the single-origin beans from the village in Thailand had been difficult, just one of the contentious subjects that Darch Junior complained about when discussing the travails of working with his father. As with many sons who work with powerful, successful fathers, Darch Junior frequently chafed at what he viewed as his father’s too conservative, less than flexible approach. “We are opposites,” he said. “Dad is old school, with a top-down management style… I’m a team player, looking for more input. Dad just decides, This is the way it will be done.” He paused. “He’ll say that’s not true. We fight a lot about that.”
Darch Senior was not generally regarded as a dictator. Rather, he came across as courteous, thoughtful, caring, and receptive to hearing other people’s ideas—and his commitment to working with the Akha, rather than having them work for him, corroborates this. But it may have been true that he was used to having things go his own way.
“Dad’s business is the Akha people,” Darch Junior said. “He doesn’t care about anything but their welfare, and he wants to give back to Thailand all he has gotten out of it. I have to be the pragmatic side of the partnership and make sure we work as a company. The Akha practice sustainable agriculture. We have to be sustainable as a business, too.” He observed that the Canadian specialty coffee market was near saturation point. “We can’t create a bigger pie than what is there, so we have to be competitive.” The Akha story was not enough. “People are interested in what they get out of a product more than what they are doing for someone else. We need to convey that we are among the best coffees in the world, and on top of that, we are half-owned by the Akha farmers. Our coffee is better, but people don’t know it.”
Earlier in 2013, the Darches had hired Fluid Creative, a professional Vancouver marketing company. Darch Junior felt vindicated by their advice. There should be a taste profile on the bags. The black bags are dull and should be livelier. The face of Piko as a logo looks unfriendly. Change the name from Doi Chaang to its English equivalent, Elephant Mountain. Offer blends, not just single origin. Sell 340 gram bags, not one pound.
Darch Senior ultimately agreed to add blends in smaller, variously colored bags. Perhaps they could be called Elephant Mountain, but Doi Chaang and Piko’s face as the logo were already established for the single origin and should remain the same. This decision was reinforced when Darch Junior met with Costco managers, who insisted that the name and large black bags remain unchanged. As the company’s largest customer, Costco could not be ignored. Ultimately, the Darches decided that the Doi Chaang brand was too well established to change to Elephant Mountain in Canada, but they registered the English name in the United States, where they hoped to expand someday.
There were two US possibilities. Darch Senior owned a second home on the island of Lanai in Hawaii, where John Walton, a fourth-generation Pepsi distributor in Washington State, was a sometime neighbor. Darch talked to Walton about carrying Doi Chaang/Elephant Mountain beans on Pepsi delivery trucks. Washington State, just across the border from Vancouver, seemed a logical US entry point. But the Walton Beverage managers weren’t so sure, and the deal stalled. Besides, as Darch Junior pointed out, just getting the coffee on US shelves wasn’t sufficient. How would they advertise and sell them?
Another possibility arose when Todd Carmichael, the wildly adventurous CEO of La Colombe Torrefaction Coffee in Philadelphia, Pennsylvania, got in touch. Carmichael, who set a world record in a 2008 solo trek to the South Pole, starred in a Travel Channel show called Dangerous Grounds, which documented his trips to seek out great coffee on exotic mountainsides. In May 2013 he ventured to Doi Chang village for an episode called “Thailand’s Hidden Coffee,” in which he bought 5,000 pounds of Doi Chaang peaberries for special distribution in cafés in West Elm stores across the country. In the show, Wicha was unfortunately reduced to a cameo appearance, while Darch Senior did the talking. To add drama, Carmichael was shown hauling himself out of the steep coffee fields on a rope (“Just call me Spiderman,” he said) to reach the village. In reality, the rope was tied to a truck bumper. Although the show provided good publicity and a one-time sale, it did not create a permanent US presence.
Darch Senior came across very well on the TV show, as he did whenever he represented Doi Chaang. “Dad is a great salesman,” his son admitted. “He’s good one-on-one.” As a mining venture capitalist, he was best at convincing investors to fork over their millions. But it was quite a different matter to convince millions of consumers to spend their dollars on Doi Chaang coffee.
Roasting was another source of conflict between father and son. Darch Senior was happy with the arrangement with Canterbury, but Darch Junior agitated for establishing their own roasting facility, now that gross sales were approaching $3 million annually. The toll roaster’s fees were eating up too much of the potential profits. Wicha, who had achieved near-complete vertical integration in Thailand, also thought the Darches should have their own roaster. “No problem!” Wicha would say. “I send Akha to roast, bag, and deliver to stores for you. They sleep on the floor.” Darch Senior politely explained that Vancouver was a different world, and that this would be viewed as illegal labor and exploitation, but Wicha didn’t really get it. The Akha were eager workers who took charge of all aspects of the coffee business—they could do the Canadian work, and the business would be profitable, he insisted. In the end, they agreed to disagree, and Wicha did not pursue his suggestion.
Darch Senior had one other reason to stick with the large toll roaster. Canterbury had just purchased the big old Kraft roasting plant in Toronto and planned to expand eastward into Ontario. Canterbury was a very big fish in the relatively small pond of western Canada. Now Murray Dunlop hoped to make his mark in the Canadian heartland, and Doi Ch
aang could come along for the ride.
The Terminal City Club Office
THE DOI CHAANG offices were on the third floor of the elegant Terminal City Club building, on Vancouver’s West Hastings Street, where Darch Senior had overseen his mining ventures. It housed many financial and mining-related firms, but it seemed an odd place for a coffee company. Because the small staff didn’t need to roast, package, or distribute the coffee physically, however, it functioned perfectly well. Executive assistant/receptionist Jacquelyn Kingston not only helped keep the coffee company in order but also served as John Darch Senior’s Western Investments secretary. Darch Senior had the only separate office, with a door, which he shared with his daughter, Katharine. They multitasked on Thai potash projects as well as Doi Chaang coffee.
In the main room, John Darch Junior, Anand Pawa, Tanya Jacoboni, Danika Speight, Sanja Grcic, and Katharine Sawchuk occupied cubicles, where they could yell across partitions to one another, and they often sat around a table or on the couch in the common space for meetings or casual lunch conversation. Darch Junior, forty-six, established a relaxed, playful but hardworking tone, fitting in well with the twentysomethings who worked for him.
Beyond Fair Trade Page 17