A research initiative from the W. P. Carey School of Business at Arizona State University explores the marketing of sustainable coffee using labels such as organic and fair trade. Using hypothetical auctions, researchers explored the willingness among consumers to pay a premium for sustainably grown coffee when they are provided with information about the positive socio-economic and environmental implications of their purchase.
When we cradle our morning lattes, cappuccinos, or espressos, it’s easy to overlook each bean’s journey to reach our cup. But imagine, if through the art of marketing, we could be transported to the very fields where it began.
The road from coffee plantations to our daily brew is one paved with challenges, particularly for the farmers. They often face economic hardships due to volatile prices, which can dip below production costs. This financial strain, combined with the environmental degradation often linked to non-sustainable practices, jeopardizes their livelihoods and the well-being of their communities. As global coffee consumption rises, the urgency to promote a more sustainable coffee supply chain increases.
Sustainable coffee farming presents many benefits. Yet, consumer behavior toward sustainable options remains multifaceted. Some are ready to pay a premium for sustainable coffee due to their principles. However, for others, the price of organic or fair trade products poses a barrier.
The W. P. Carey School of Business at Arizona State University researched how marketing can be used to encourage consumers to purchase sustainable coffee.
Advised by Associate Professor Carola Grebitus, Ph.D. student Katherine Fuller researched how to market the value of sustainability. Through simulated auctions, they assessed consumer’s valuation of products, providing participants with insightful glimpses into the real-world impact of sustainable labels.
Labels like organic, fair trade, and sustainably grown are ubiquitous, but their meaning often remains incomprehensible to consumers. By informing the research participants about the tangible implications of these labels, like minimum prices set for farmers, the researchers increased their willingness to pay more for organic or fairtrade coffee.
They created a narrative where the stories of the farmers, the environmental benefits, and the community impacts are highlighted. This offered consumers not just a product, but a story.
“I have found in my research that people really want to help. They want to support the farmers. They want to support their local community.” Carola says. (00:01)
The results of the hypothetical auctions provided valuable insights into consumer behavior. When consumers were given insights into the genuine implications of sustainability labels, their appreciation for the labels grew. This appreciation directly translates into a willingness to pay a higher price for sustainably grown coffee.
The study on consumer preferences and the willingness to pay a premium price for sustainable coffee accentuates marketing’s potential to impact social change. Marketing is more than persuasion to buy; it’s about molding perceptions, values, and behaviors. It is an important vehicle for shaping choices, driving positive change, and ensuring fair compensation.
“When I look at this research, I think what we can really learn from it is that providing consumers with information, clearly labeling production methods, can really lead to increased willingness to pay, which in turn can really help the producers” Carola says. (01:59)
Addressing sustainability in the coffee industry encompasses navigating through a myriad of environmental, social, and economic challenges that touch producers, traders, retailers, and consumers alike. Consider this: in the majority of food service coffee sales, the farmer sees less than 1% of the money you spend on a cup. (00:30)
So while a day celebrating coffee may sound like mere marketing fluff, it actually carries a meaningful impact. International Coffee Day, held yearly on October 1st, isn’t just about showing love for lattes. It is also about the right to a safe and healthy working environment in the coffee supply chain.
The implications of this study aren’t confined to coffee. As the world confronts climate change, resource scarcity, and social disparities, it becomes imperative for businesses to act conscientiously and for consumers to choose wisely.
There are plenty of opportunities for companies to showcase where they stand on societal issues with a certification. Those who go through certification reap benefits, from fostering customer loyalty to enhancing brand perception. By linking sustainability and business, companies can move toward a more promising future, financially and environmentally.
However, these changes are, of course, led by consumer values and willingness to purchase these products.
Are you looking for a master’s program that matches your values regarding sustainability? Read our article about the universities leading in building sustainable cities.
