Snoop Dogg is trading in his mic for a mug. Plus, Starbucks’ tax bill in the UK is lower than ever, and a new study shows coffee production is at an even graver risk as the planet heats.
‘Starbucks to Open 100 New UK Coffee Shops as Tax Bill on British Sales Falls’ – via the Guardian
Starbucks paid £4.6 million in United Kingdom corporation tax in 2022, down from £5.4 million in 2021. Just last year, the brand was rumored to be leaving the UK—now, it plans to open 100 new stores.
This year, Starbucks’ revenues surged to £449 million, and gross profits hit £129 million. Normally, you’d expect higher revenues = higher tax bill, but their tax bill was lower in part due to increased royalty payments and lowered product and staff costs.
Royalty payments are fees associated with a brand’s intellectual property, such as trademarks and store design concepts, that subsidiaries must pay to use—the Starbucks logo, say, or particular menu items. This is a common tactic among multinationals, who often transfer their intellectual property to tax haven countries to pay lower tax rates on the royalty payments received.
In July 2022, news reports speculated that Starbucks was looking to exit the UK after hiring advisers from the investment bank Houlihan Lokey to “explore possible options for the business,” according to BBC News. The company denied these rumors, saying it was “not in a formal sale process for the UK business.” However, the Financial Times reports that Starbucks shelved the plans due to worries from existing licensees, who run about 70% of the company’s UK stores, that “it would decrease investment in the business and harm the brand.”
Starbucks has a long history of paying little corporation tax in the UK. In 2012, Reuters reported that the company had claimed a loss in 13 of the 14 years since it opened its first store in the country and thus paid just £8.6 million in taxes on more than £3 billion in sales.
‘Snoop Dogg Launches INDOxyz Indonesian Specialty Coffee Line’ – via Daily Coffee News
Snoop Dogg has entered the niche-but-growing “celebrity coffee company” segment by launching a new brand of Indonesian coffee products called INDOxyz.
The rapper has partnered with Indonesian coffee entrepreneur Michael Riady for the venture, which includes whole bean, pre-ground, and ready-to-drink cold brew products. Riady comes from a coffee-producing family and brings coffee sourcing and roasting expertise from his work at Tentera Surf & Coffee Roasters. Tentera is the parent company of INDOxyz, and Riady will handle the roasting in Los Angeles while he and Snoop Dogg collaborate on roast profiles designed to highlight Indonesian coffee.
“It simply tastes the best. And I’ve been around the world a few times, ya digg?” Snoop Dogg told Daily Coffee News. “I’ve been here every step of the way. I see Indo being a global brand and I needed to make sure it looks, feels and represents me the way it is supposed to.”
This collaboration adds to the now-lengthy list of major celebrities launching specialty coffee companies. Tom Hanks is the most recent with his Hanx Coffee brand, but the list also includes Hugh Jackman’s Laughing Man Coffee and Green Day’s Oakland Coffee Works, among many, many others.
Snoop Dogg, for his part, has big plans for INDOxyz. “All I can say is we have a lot coming in the next few years,” he told Daily Coffee News. “Indo is going to change coffee. Promise you that.”
‘One of a Kind Guatemala Coffee Auction Returning in August’ – via Daily Coffee News
‘Costa Coffee Voted ‘The Nation’s Favourite’ for 13th Consecutive Year’ – via World Coffee Portal
‘Espresso Gets Its Own Art Exhibit In Copenhagen’ – via Sprudge
‘Coffee Cups Used to Resurface Sydney Roads’ – via BeanScene
‘Probat Unveils its First Hydrogen-Powered Shop Roaster’ – via Global Coffee Report
‘The Nucleus Link Portable Sample Roaster is Coming to the US’ – via Daily Coffee News
The Week in Coffee Unionizing
- Outgoing Starbucks CEO Howard Schultz has agreed to testify at a US Senate hearing about the company’s dealings with its unionizing workforce. After pressure from Senator Bernie Sanders, Schultz will appear at the March 29 hearing to “foster a better understanding of our partner-first culture and priorities,” according to Starbucks. Schultz agreed to testify one day before Sanders’ Health, Education, Labor, and Pension Committee planned to subpoena him.
- German asset management and financial services giant Allianz has vowed to support an investor resolution calling for Starbucks to rethink its approach to unions in the face of ongoing criticism over the company’s alleged union-busting. The shareholder resolution, to be introduced at Starbucks’ upcoming annual general meeting, raises concerns that the company’s approach could create “reputational, legal and operational risks for the company that may impact long-term value.” It urges “an independent, third-party assessment of the company’s adherence to its stated commitments to workers’ rights to freedom of association and collective bargaining.”
Coffee and the Climate Crisis
In the last forty years, climate conditions that reduce coffee yields have become more frequent, according to new research. As global warming pushes temperatures higher, “ongoing systemic shocks” will affect both arabica and robusta coffee production.
The study, published in PLOS Climate, looked at the impact of factors such as temperature, rainfall, and humidity in the top 12 coffee-growing countries from 1980 to 2020. Researchers found that the frequency of “climate hazards”—heat waves, droughts, etc.—and compound events—when those hazards combine—increased in every region over the four decades.
“Since 1980,” the authors write, “global coffee production has become increasingly at risk of synchronized crop failures, which can be driven by climate hazards that affect multiple key coffee-producing areas simultaneously.”
“As with other crops, a systemic risk to the global coffee trade is posed by synchronized crop failures. With climate change projections showing a continued rise in temperatures in the tropics is likely, we posit that coffee production can expect ongoing systemic shocks in response to spatially compounding climate hazards.”
Researchers also analyzed the impacts of various climate drivers, such as the El Niño-Southern Oscillation (Enso), on coffee production. El Niño is the world’s most significant year-to-year climate fluctuation, and although it affects the whole planet, it appears to have a lesser impact on southern Brazil. “Major arabica regions in the far southeast of Brazil and southwest Ethiopia are amongst the least susceptible regions to climate hazards,” the authors write.
Lead author, Dr. Doug Richardson, told the Guardian: “What we hope is that during El Niño events, suppliers from southern Brazil might be able to offset reductions [in crop] elsewhere.”
The Week in Corporate Coffeewashing
Nescafé is launching an instant coffee refill pouch, “said to contain an average of 60% less plastic than the lid of a 200g glass coffee jar.” Nescafé instant coffee typically comes in a glass jar with a large plastic lid—the pouches are a refill option, arguably so people can reuse the jars.
The pouch is 97% lighter than the glass jar, is recyclable, and will reduce packaging overall. Nescafé hopes it will “contribute to … [our] sustainability commitments, specifically the reduction of its virgin plastic usage by one-third by 2025,” according to the article in Packaging Europe.
We have a few questions: First, wouldn’t it be easier to redesign the jar lid to contain less plastic? Also, just because the brand claims the pouches are more “sustainable,” are they actually in practice?
Yes, the plastic pouches are lighter, which will cut down on carbon emissions from transportation, but the soft plastic they’re made from is very hard to recycle—and that’s if it ever makes it to a recycling plant. As we’ve touched on before, plastic often ends up in landfills or incinerated, with a global recycling rate of just nine percent. That’s not to mention the long and controversial history of plastic recycling claims from big companies.
Incidentally, Packaging Europe, the magazine describing Nescafé’s new eco-packaging, is partnered with the Active and Intelligent Packaging Industry Association. Nestlé is listed as one of its members.