Ethical issue in Costa Coffee - Research Paper Example

Costa Coffee, one such profitable venture by Whitbread (PRATLEY, 2011).To understand the ethical issue affecting Costa Coffee, it is first imperative to look into detail into the ethical issues that affect the coffee industry in general. The coffee retailing industry is haunted by what is known as the coffee paradox. Coffee production for the larger part takes place in developing countries. According to statistics, 90 percent of the world’s coffee production takes place in developing countries, the leading coffee producers being Vietnam, Brazil and Columbia (BUSINESS INSIDER).

However, the world’s greatest coffee consumption takes place in industrialized and developed countries like the United States of America and the United Kingdom. This gives rise to a situation what Benoit Daviron and Stefano Ponte call the coffee paradox. The coffee paradox refers to the existence of a coffee crisis in the countries that produce it, and a coffee boom in the countries that consume it (DAVIRON, 2005). Low wages, poor living standards and poor infrastructure is a regular feature of countries that supply the world with a commodity with a high demand.

The producers get low prices, while the same coffee is sold at a substantially higher price. To offset the negative impact of the coffee crisis, coffee retailing firms consider it a part of their business ethics to employ measures that ensures prosperity for the producers of coffee in the developing countries as well. According to Geoff Riley, it is fair-trade that has helped in reducing the widening gap between the producer and consumer prices in the coffee industry (RILEY). Coffee production in the international market is increasingly pressurized by social activists to abide by fair-trade regulations.

Fair-trade refers to the social movement whereby producers in developing countries are encouraged to trade their produce at terms that favor their own economy. Another feature of fair-trade is encouraging sustainability in order to conserve resources for the generations to come. In the field of coffee productions, fair-trade coffee refers to coffee selling companies that comply with the standards of sustainable coffee production and distribution. Companies certified as fair-trade coffee retailers may charge a slightly higher price than those coffee retailers who do not comply with fair-trade regulations.

According to the ethical consumer’s guide, Costa Coffee has been rated at 9.5 on a scale of 20, while Starbucks, its direct competitor has been rated at 6.5. The ratings give an insight of the top (SHOPPING GUIDE TO COFFEE SHOPS). (2)Produce a report about how that company could improve the ethics of its operations while meeting its objectives and making sure there are good employer/employee relations Costa Coffee does not abide by the fair-trade standards, however, the company can look into alternative ways of fulfilling its objectives as well as improving the ethics of their business operation.

The issue of Costa Coffee’s commitment to its business ethics however is not as simple as whether the company chooses to abide by the laws of fair-trade coffee. While consumers all over the world recognize the fair-trade logo as synonymous to ethical business operation, Costa Coffee has adopted a different, yet less known approach to responsible and sustainable coffee distribution (WELCH, 2011). Costa coffee reportedly joined the Rainforest Alliance in 2008, an ethical trading body