Wednesday, November 26, 2008

Starbucks RED

Starbucks announced today that in honor of the World AIDS Day 20th anniversary, the company will donate a nickel for every beverage purchased on December 1st to the Global Fund. Starbucks CEO Howard Schultz explained, "Now more than ever, it is important to continue to be a responsible global company. We have a deep partnership with coffee growing regions in Africa and are proud to partner with our customers to contribute toward an AIDS-free Africa."

Howard is absolutely right that Starbucks is a responsible company and they have a vested interest in peace and health on the African continent. The company has a great record for sustainable business practices, with the most obvious example of providing health insurance to the vast majority of their 143,000 employees (you even get insurance if you work part time at Starbucks). But is this whole RED thing really going to make a difference or is it just a clever marketing lever used to juice up sales?

My calculations show that on December 1st Starbucks will likely donate a mere $300,000 to the Global Fund at the going rate of 5 cents a drink. This is a drop in the bucket compared to the nearly $15 billion that the Global Fund has deployed to combat AIDS and also only 0.07% of Starbucks' annual general and administrative costs.

When will marketers realize that lightweight partnerships with humanitarian and green causes dilute the honesty of a brand and sow customer distrust and confusion? Partner with good causes because it is the right thing to do, not because you can generate a bump in holiday sales.


SDR said...

True, but, this a a three year intiative, not one day! The estimated impact over a three year period is $29 million. Sounds better than nothing to me, and if this is so offensive to some, then don't participate! I'd also love for folks to please explain their reasons for not supporting this to the people who will be impacted by this initiative. While people argue over motive, people are dying. I don't think they give a damn about this trivial argument.

Anonymous said...

What right does Howard Schultz have to divert earnings to Africa other than to "juice sales"? As the CEO of a public company his responsibility is to enhance shareholder value not persue humanitarian causes, unless they legitimately enhance the brand.

In my opinion the Starbuck's model is not sustainable by any worthwhile standard. Overpaying hippies and college students to press "start" on a glorified Coffeemaster is no recipe for success. With Krispy Kreme and Curves as recent precedents, Starbucks overexpansion is boarderline criminial. Schultz and his hipsters need to lay off the java a bit and contemplate a world where people aren't willing to pay nearly an hour's wage (post-tax) on a cup of mud.

Don't get me started on aid to africa...