On the surface, it makes sense to promote Fair Trade products as a way of trying to get more money back to subsistence farmers to help improve their lives and living conditions. And although there has been some success in getting people to consume Fair Trade products, particularly with strong marketing campaigns, the trick is getting people to continue consuming those products on an ongoing basis. However, that can be done only if the quality of the Fair Trade products is equal to or surpasses that of similar products that don’t have a Fair Trade insignia. Unfortunately, that is often not the case.

I discussed this situation with one of my customers, a boutique coffee roaster in Belfast who focuses on cupping and roasting the best coffees he can find. He travels to origins to source beans, is an SCAA Cup of Excellence judge and is well respected by his peers.

As we talked about Fair Trade, he became animated. Many of his customers demand Fair Trade-certified coffees, and he is happy to comply. However, he is frustrated by the fact that he can find and source better-tasting coffees that are not certified Fair Trade due to the way Fair Trade works. If a coffee isn’t from a co-op, it can’t be certified Fair Trade, even if the producing farm meets all of the other criteria necessary for approval. These better coffees command a higher price than their Fair Trade counterparts, so more money actually goes back to the farms, and more money can go directly to the growers.

The paradox remains that Fair Trade is only an economic stamp of approval, with a minimum-price guarantee. It says nothing about the quality of the coffee, which can be inconsistent due to the nature of a co-op. And, according to this roaster, although Fair Trade sets a minimum price for coffee, it is very difficult to get a higher price than the minimum because of the inherent quality issues. So although he is willing to buy the Fair Trade coffee for those accounts that demand it, he is happy buying non-Fair Trade-certified coffee for a higher price that makes a better cup. He feels that he is making an even bigger difference in the lives of coffee growers who strive to produce the best beans and who receive an even higher price for their work without the third-party endorsement of Fair Trade.

These expositions are generally arranged with exhibitors from a specific country sharing booth space in a pavilion with other companies from the same region. Walking into the hall is a culinary tour of the globe. We always exhibit in the U.S. pavilion, but other pavilions include England, France, Greece, Egypt, South Korea, Spain, Italy, Morocco, Thailand, Brazil, etc. Most countries have a presence in some way to encourage export and trade. Often, one finds certain products associated with a particular country in each pavilion, so there is a preponderance of those items among all of the exhibiting companies. In the Italy pavilion, one walks past dozens of samples of red wine, pasta and coffee. In Greece, there is an abundance of olive oil, although it is always surprising to see the number of countries for which olive oil is such a significant export. The majority of the exhibitors from Sri Lanka feature tea. So far, I’ve seen kimchee offered only in the South Korean pavilion.

This year, the attendance seems down, with fewer people on the show floor and less energy than in years past. The catchphrase among exhibitors in the U.S. pavilion about sales is: “Flat is the new up.” However, although there seem to be fewer attendees, the conversations that we’ve been having are promising. In the last few days, we spoke with people from Lebanon, Israel, Saudi Arabia, Kuwait, Malaysia and Portugal, among others, all of whom expressed interest in private-label products. The show continues for several more days. I hope that these conversations result in new business. If so, then flat won’t be the new up.

Howard Schultz proclaimed that the Via process of making Starbucks instant coffee took years to perfect. Amid all of the hoopla, people taste Via now. It is expensive for instant coffee. Packed in individual serving sachets, each one costs approximately $1. The Via I tried tasted better than traditional instant coffee, but as a coffee drinker, I wouldn’t trade it for a cup of freshly brewed. Even if that is Starbuck’s Pike Place Roast.

What remains to be seen is whether Starbucks consumers will trade taste for convenience and buy Via or whether they will simply forgo their coffee fix when it isn’t convenient. I’m frankly skeptical, but it is still too early to tell. For Starbucks’ sake, and for the future of instant coffee, I hope I’m wrong.

Tony Hsieh, CEO of Zappos, delivered the keynote address at this year’s Inc 500/5000 conference. Zappos is an online retailer that sells shoes and clothing, and was just purchased by Amazon for $928 million dollars. However, Zappos is famed for its customer service and willingness to deliver an exceptional experience to its customers. Much like Nordstrom’s was revered as having employees do literally anything to ensure that a customer was satisfied within its stores, Zappos has expanded that concept to millions of online customers that it never meets.  The basis of their service promise is the telephone. Hsieh spoke of the longest call they had ever received, occurring just recently when a woman was on the phone with the customer service rep for almost six hours. Certainly a long time to talk to someone to order shoes!

Underscoring that commitment to customer service, however, are some tenets and ideas that the Zappos team use when hiring. First, every employee must pass two reviews, the first for competence and the second to ensure that they are a good culture fit for the company. As Hsieh noted, the smartest, most capable people will not be offered a job if the recruiting team doesn’t believe they will mesh with the company and its values. Those values include:

• people dedicated to customer service
• both passionate and determined
• willing to learn and grow
• open-minded and creative
• both fun and a little weird

Famously, after initial training of employees, new hires are offered $2000 to quit. To date, not a single person has accepted the offer.

We are in the middle of recruiting for a key position within our company, and have received a number of résumés. Some of the candidates have very strong technical backgrounds and we will interview some of them as a team. However, I am always concerned about maintaining our company culture. I have hired people in the past that had technical ability, but didn’t fit our company culture and I always had to let those people go. As these next interviews begin, I will use some of Zappos’ questions — two favorites are “How weird are you?” and “How lucky are you?” to try and make sure my next hire has not only the technical skills to do the job, but also fits within our unique, offbeat, company culture.

Some of their comments resonated, including:

• Things are always impossible until proven possible.

• Innovation is risky.

• Companies must have a willingness to fail and to take risks. And they must have systems in place to allow them to fail and keep moving forward. We have learned that each time we launch a new product, we must do so on a small test scale before it goes into full production. I still remember the revolutionary product we created several years ago and went into full-scale production with before it had been adequately tested. We ultimately had to pull it from the market, a decision that cost us a lot of money, but that didn’t stop us from trying to come up with other new products.

• Business models can be a place to innovate. Wal-Mart tracks everything it does, which is the basis for its success. GE Jet Engines no longer sells engines. Instead, it sells time.

• Partner with contract manufacturers. Our business model is based on this concept, as we have successful partnerships with nine co-packers across the United States.

• You can’t engage with customers until you reach a certain point in the process, and you can’t ask customers what innovative product they want because they simply don’t know.  I am always frustrated by the lack of innovation in the specialty-coffee industry. Can someone please come up with a new beverage for the holidays besides a mint mocha?!

• Create a culture of innovation within the company, and get everyone involved.

• Keep teams small to innovate and create an internal competition for new products. When we work on new products, we have people from other parts of the company taste and evaluate them to get feedback from different perspectives.

• Without a champion, ideas are worthless. And ideas aren’t necessarily valuable, so keeping them secret isn’t worth it. Ideas need to be discussed and analyzed for value.

• Keep innovating, and listen to your gut. You will always get things wrong, but often you can find success in failure. Some of our best products are the results of ignoring feedback and tweaking products that originally didn’t work but succeeded after they were changed.

It was refreshing hearing these experts put into words some of what I was already doing and to hear about more things I should do. Innovation is an integral part of our company and culture, and listening to this panel was the impetus I needed to continue developing new products and ideas.

For years, the coffee industry has been trying to replicate the successful model of the wine industry, since there are so many similarities. At the most basic level, both are agricultural crops transformed into beverages, consumed daily and enjoyed by millions worldwide. Different regions of the world yield different-tasting grapes and beans; harvesting and processing are done by hand; and the final taste changes with each batch and is more craft than science. Both the wine and coffee industries encourage education on behalf of consumers to further help them understand the differences among styles and regions. For winemakers, the educational component has been a huge success, with many wine drinkers understanding the differences among wines grown and produced in various parts of the world and made from different grapes. Yet winemakers command a much higher price per glass and bottle than coffee roasters ever could. It would be unthinkable to walk into a café and order a cup of specialty coffee and pay $10 or more for the drink, although the amount of time, effort and labor involved in creating both beverages is comparable.

So how does the coffee roaster instill a sense of more value into the beverage he or she is providing to the consumer? That is the conundrum facing coffee retailers as they seek to boost their sales in the face of increasingly undifferentiated competition. Creative retailers are tackling the issue head on by offering rare coffees prepared with different machines and served by the cup at higher prices. The trend toward super-premium coffee has begun and is slowly gaining acceptance. I hope that consumers embrace these unique drinks and that soon people are talking about their coffee in the same way they talk about their wine.

At this year’s Coffee Fest in Las Vegas, I was just short of my $1,000 goal. I mentioned my challenge to one of my friends who works for Coffee Fest, and I told her the amount that I needed to put me over the top. She reached into her wallet and gave me the money. I was so excited that we had managed to pull this off. This was the beginning, and I’m proud that we succeeded in raising enough for the two cows. I will set up another goal soon and will post it here and hope that people participate. Next time, I hope we can donate even more.

I just finished my third new business presentation in as many days. Each company is a large, publicly traded, well-known household name. All are considered leaders in food service and are responsible for serving millions of beverages and meals annually. And each meeting had nothing to do with saving money or cutting costs. Instead, the conversations focused on sustainability, Fair Trade and social responsibility.

The buyers at these companies are acutely aware of the importance of their supply chain in ensuring that their stores have an uninterrupted supply of products. None of them wants to face the thought of running out of a popular menu item. And all place a huge burden of responsibility on their vendors to make sure that doesn’t happen. At the same time, they all understand that focusing solely on price is a destructive business tactic. They prefer to focus on longer-term investments by paying higher prices and knowing that a third party certifies where the crops come from. The certifications we discussed include organic, Fair Trade, UTZ and Rainforest Alliance. These buyers know that paying more money for products that are independently certified means the crop is generally better treated than its non-certified counterpart. Fair Trade products mean that farmers receive a premium price; Certified Organic means that the coffee or cocoa was grown without using artificial pesticides; UTZ certifies that all of the growing and processing is subject to strict regulations; and Rainforest Alliance means that the crops were grown to ensure that valuable rain-forest lands are not endangered. Each of these certifications costs the buyer more money, and each company was willing to accept that price premium knowing it would lead to a more sustainable supply.

The discussions I had were focused on how we could help these companies deliver products with these attributes. Now, the fun part — the Research and Development component — begins. The lab is now creating single-origin cocoa mixes, Fair Trade chocolate syrups and organic flavored syrups. And while it is always fun to develop new items, it is especially gratifying doing so and knowing that both farmers and consumers will ultimately benefit from what we make.  

I like to think that Mont Blanc Gourmet is a terrific partner and supplier to our customers. And most of them would agree. Unfortunately, now and then things happen and we just can’t live up to the standards we both expect. We have just finished one such situation, one of the most frustrating projects we have ever undertaken. 

Mont Blanc Gourmet was asked by one of our customers to develop two new fruit-based flavors to be used in their summer drinks. Samples of both flavors, Mango and Berry Pomegranate, were sent to our customer and we finally received approval to produce them both. The product was going to be packed in a different bottle than we usually use for our sauces, so we got samples and had those approved by the plant and the customer. Our customer wanted to be kept apprised of our progress, so we scheduled a weekly conference call between Mont Blanc Gourmet and their team. In addition, email updates were sent whenever anything of significance developed. Things were proceeding normally and we ordered ingredients and scheduled a test run. 

Who knew that mango puree would be so difficult to find! We contacted the supplier, only to discover that the samples we had been using were from a crop in Asia that they did not have enough of for our needs. They sent samples of another mango puree, but it didn’t taste the same. The third puree worked in our blend, so we made samples, sent them to the customer, received approval, and finally placed an order for a mango puree from India that everyone preferred.  

We ordered the bottles from the manufacturer and arranged for delivery to the plant. Because this is a fruit product, we were going to hot fill the bottles and then cool them down quickly to make sure the fruit didn’t overcook. And in order to eliminate paneling, we purchased a heavier weight bottle. Paneling happens when a hot product is filled in a plastic container and then sealed. The sides of the jar suck in because the high temperature creates a vacuum inside the bottle. It doesn’t look attractive, but fortunately doesn’t affect the product. However, with a customized heavier bottle, we felt we could eliminate that problem and deliver a better-looking package. We sent a sample of the bottle to our customer so they could see the heavier bottle and approve it, and then ordered bottles from the supplier.

The day of the test run, we had both our director of Quality Assurance (QA) and Research & Development (R&D) at the plant overseeing production. Whenever we make a new product for the first time it is important that we have people from our company watching the process. The product was blended and then hot filled in the bottles, and the first problem manifested itself. The plant was unable to properly tighten the caps on the bottles causing the bottles to leak. Fortunately this was only a test run, but the results were discouraging. Upon inspection, it was discovered that the bottle manufacturer had not made the bottles correctly, and had shipped thousands of defective bottles to the plant. We had to order more bottles, and expedite their delivery in order to fill the order to meet our customer’s launch date. Another long conference call with our customer ensued where we discussed the problems and laid out our plans for the next run including how we were going to attempt to solve them. 

New bottles were ordered and shipped to the plant, production was scheduled, and again our director of QA was present. This time the bottles could close properly, and the finished cases were placed in the cooler to reduce temperature. Random inspections showed that there was no paneling of the bottles, and QA testing showed that the product tasted great. The product was immediately shipped to the customer for their launch, and we breathed a sigh of relief that the production had gone so well. And then the phone rang. Terrible news. The bottles were leaking again. 

We tested samples from the run, trying to determine the cause of the leak. The bottles were okay, and the caps were on tight. The focus was soon on the induction seal, the silver tamper proof lid under the cap that seals the mouth of the bottle. It was the cause of the leak, but during production and coming off of the production line there had been no signs of leaking. In fact, bottles had been picked up and squeezed after they were filled and nothing came out. This was puzzling. The bottles were good. The caps were good. The bottles were sealed as they came off the line. It didn’t make any sense. How could bottles that were perfectly sealed when coming off of the production line be leaking days later? Then we considered the refrigeration. Once the bottles were filled, they were placed in the cooler to lower the temperature of the fruit inside. And the change in temperature seemed to be affecting the seals. We tested the hypothesis at the production plant by doing another test and sure enough found a higher failure rate among the product that was cooled as opposed to the product that was left at ambient temperature. Having figured out the problem, it was time to make more. The good news was that the new drink was selling very well. The bad news was that they were running out of fruit puree. We scrambled again to schedule yet another production. And this time I was on a flight with members of my team to visit our customer and give them the bad news in person. We spent several hours explaining everything, and again laid out next steps. We knew they were getting frustrated, but we were trying everything we could to fix the unexpected issues that kept popping up. We were running out of chances, but we tried again. And finally, it went smoothly. We had one bottle leak out of a total of 3,000 bottles. High fives went all around in our office, and this time the conference call was easy. Everyone was pleased.

It has been a long six months since we began this project, with unexpected problems arising at every turn. Vendors didn’t have the right kind of fruit. The bottle supplier shipped defective bottles. The cooling process caused the bottles to leak. It has been an arduous process of elimination, resulting in massive frustration for us, our manufacturer and worst of all, our customer. I’m glad it finally turned out for the best, and everyone is pleased with the finished product, but it certainly wasn’t easy. Just goes to show that sometimes, despite everyone’s best efforts, things don’t always turn out the way they are supposed to.

It’s never easy losing business, particularly when you believe that you have performed well for your customer. And it’s even worse when a long-term relationship is sacrificed solely for price. We have a unique business model that allows us to be flexible, adaptable, responsive and able to accommodate our customers in myriad ways. In some cases, our customer relationships span a decade or more. Those customers understand exactly what we can do for them and utilize our range of capabilities to their advantage and our mutual success. While we strive to deliver great service and innovative, high-quality, consistent products, we will never be a low-cost provider. We will always be competitively priced, but companies can always find another, cheaper supplier if they choose. And if companies aren’t willing to pay for the value we provide, then we don’t want to work with them either. We stress that our commitment to our customers and their products more than offsets any perceived price differences because we are focused on their success and make sure that we deliver what we promise — and more. 

We recently bid on some new business with an existing customer. Although we have a long-standing relationship with them, we didn’t think we would win the bid because we believed that they were looking to purchase based only on the lowest price. And we know that we aren’t the lowest-cost provider. The product we were bidding on was one they had already had produced for them by another supplier, and this supplier already had issues producing effectively and in a timely fashion. So we submitted our bid and hoped for the best. Several weeks later, we received notification that we had not been awarded the business and that the customer had given it to their original supplier. We were disappointed, but knew we couldn’t deliver what we promised for less than our bid. 

Several months later, we received a frantic call from the customer. They had a national launch scheduled with this product, and the low-cost supplier had again failed them. We were asked to scramble and try to produce test product for them and meet a very short production timeline. I assembled our team, and over several conference calls we worked with our customer to determine if we could make the product as quickly as was necessary. We scheduled a test run at the production plant and made some product in our lab for them to validate in a few stores. We committed to making the product and were prepared to meet their deadline. Ultimately, the customer decided to delay the national launch of the product and plans to reintroduce it later this year. This time we have been identified as the vendor, and we will give them our version of the product that we know will work and meet their expectations. The cost to our customer for choosing the low-cost supplier again was huge in terms of missed opportunities, lost revenues, and time, energy and money expended on a national launch campaign that has yet to follow through. During our discussions with them about meeting their new deadlines, they admitted that if they had awarded us the business, they would not have been in this situation. They learned that sometimes the cheapest solution can be the most expensive. Now, our customer understands that there is so much more value in a buying decision than just price. For once, I’m glad I lost some business.