Café Direct seeks to push the frontiers of the Fairtrade movement

Café Direct is a classic example of a progressive company that became a victim of the success of the movement it helped create.

The coffee and tea business fostered the development of the Fairtrade movement but was almost brought to its knees as the major supermarkets and multinationals jumped onto the bandwagon and undercut its prices.

Ironically, the clarion call to Fairtrade was in danger of becoming a millstone around the company's neck because it was unable to demonstrate to busy shoppers that it was doing far more to support smallholder farmers than the big corporates, who largely buy Fairtrade products via traders on the open market. No wonder incoming chief executive John Steel re-branded Café Direct to focus on its artisanal qualities.

The company, which was the first coffee brand to carry the Fairtrade label, had been in slow decline for a number of years but reached a crisis point as Steel joined just nine months ago, having lost a fifth of its revenue in 2010 and a further 10% the year after.

What Steel found was a company that had lost the confidence in its ability to make a scaleable difference in the world.

"I found incredibly capable, passionate people, who really care about what they're doing and a business that had catalysed and led, but was now saying well what do we do now? How do we really make a difference to people's lives over and above the turnover of a relatively small enterprise?" Steel says.

"People are not here to be part of just a hot beverages business, they're here to be part of a business that can inspire and make a difference. But there was a lot of self-doubt and people were feeling a little bit beaten up and asking almost do we still believe in this. We needed to turn this around because you've got to have confidence if you're going to be making a difference."

Café Direct has now halted its sales decline and is seeing growth once again in coffee, although its tea sales suffered a blip after Tesco temporarily stopped stocking it.

Steel recognises the importance that major companies like Nestlé and Kraft have made in mainstreaming the idea that farmers should be protected from the volatility of global commodity prices and that a premium should go to developing the communities in which the growers live.

So with Fairtrade sales surpassing £1.5bn last year, does it matter any more if Café Direct continues to exist?

Steel insists that what has been achieved so far is merely the start of the journey towards justice for those at the bottom of the pyramid and Café Direct now has a responsibility to take the movement to the next stage of its development.

"I think it hugely matters that Café Direct and its business model is here," he insists. "We need to work out how to have significant impact again, and again and again because I don't think we can sit here and believe the world is balanced and that business is behaving in the right way or consumers are behaving in the right way. It's a tough and complicated job.

"What makes us different is we have growers on our board, we have growers as shareholders and buy directly from them rather than on the open market. It's not just about the price but we have a close relationship with the growers and help them to develop their understanding and their way of thinking and behaving which a lot of people don't do."

In order to deepen its impact, Café Direct has created a separate foundation to funnel profits to growers so that it can then attract outside funding to supplement its own efforts. It has already secured a large grant from Comic Relief and Steel is hoping that it can encourage other companies engaged in Fairtrade to follow its example.

It also hopes to add value to growers' products at source. There is nothing that upsets farmers in developing countries more than to see just how small a percentage of the overall price of a finished product they receive.

Areas that Café Direct are looking at include roasting and processing coffee beans within local co-operatives, although Steel recognised this is "a very complex and big piece of work." The growers of its Sao Tome hot chocolate now ferment their cocoa which has increased the price they receive by 500%.

Café Direct is not the only small company to be doing far more than the minimum requirements of certification and there has been a robust debate about whether to push for a 'Fairtrade plus' label to differentiate these businesses in the marketplace.

Steel says that on the surface this is an attractive idea but ultimately rejects it because he believes the proliferation of labels will serve only to sow confusion among consumers.

But he also recognises that if there is no way that consumers can assess what companies are really doing, it will continue to be difficult to get across to shoppers the real reason why it's worth supporting his company's endeavours. The most important first step, he argues, is greater transparency.

"In my first several months I listened to the purists complain about the mainstreamers," he says. "But what I realised is that we are all on a journey and it's a question of how you help keep improving standards.

"So I think we need simple improvements such as ensuring the Fairtrade website highlights companies' sourcing policies, how they perform and what their targets are. I think you should be completely transparent about where you are on the journey and what you're going to do about it because otherwise that label becomes meaningless in time. That's the danger."

Pushing for greater transparency is all very well but Steel acknowledges that he has still not cracked the key issue of how to deeply connect consumers to the growers' communities without sounding worthy and preaching.

His answer is to move away from Fairtrade as an act of charity, and instead concentrate on the shared passion for producing great tasting coffee and tea.

"We need to help shoppers see things in their lives that resonate with the lives of people in Uganda or Costa Rica or Colombia," he says. "Saying look at those people, they're poor and they need help, doesn't really work.

"We are concentrating on showing how the passion and commitment of this business and our grower partners makes a difference to the way things taste. So ultimately you're not dealing with a big faceless organisation that buys remotely, you're dealing with people who are deeply involved in the whole process.

"There's a pushback against globalisation and going back to a sense of community and responsibility. So we're saying we are an ethical community, we are working with people we know and they know us."

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