Lee Wallace, C.E.O. of Peace Coffee. Minneapolis, Minnesota-based Peace Coffee started in 1996 with the mission of providing organic, fair trade coffee to its customer across the US.
Minneapolis, Minnesota-based Peace Coffee started in 1996 with the mission of providing organic, fair trade coffee to its customer across the US. The B Corp-certified roaster exemplifies resilience and success in 2020, during the daunting challenges presented by the global pandemic. STiR’s managing editor talked with c.e.o. Lee Wallace about both long and short-term strategies for building the brand. Peace Coffee went from 17% of customers outside Minnesota in 2016 to 47% in 2020 as it expanded sales of bagged coffee through the Midwest, adding distribution in Kroger-owned stores. Peace added larger 20-ounce bags of whole beans to meet the needs of pandemic-era shoppers looking to stock up, stretch time between grocery visits, and drink more coffee in home offices.
Kim Westerman (KW): Peace Coffee has made its name as a provider of quality fair trade-certified coffees. Why fair trade as opposed to direct trade, which is a more popular trading model for small roasters?
Lee Wallace (LW): Fair trade and direct trade are not in opposition — in our opinion, both go hand in hand. Fulfilling our mission isn’t done by simply purchasing coffee that is certified as fair trade; rather, we build direct and long-term relationships with small farmer cooperatives and pay prices that are responsive to their needs. In addition, over time, the strength of our relationships is directly related to our ability to produce a delicious cup of coffee. As we build long-term relationships within our supply chain, we are able to taste coffee with our producer groups so we can agree on a common language and expectations for our product. When we say we’re “in it for good,” we truly mean it. Over 98% of our purchases in 2020 were from relationships that span five years or more. We believe that strong, transparent, and long-term relationships are at the center of sustainable and meaningful impact. Year after year, we seek to listen and respond to the needs within our supply chain so we can continue to be the best trading partner possible and provide a meaningful, delicious cup of coffee to our customers.
KW: Can you talk about the pivotal moment in the company’s history when Peace Coffee partnered with Guatemalan Nobel Laureate Rigoberta Menchú
LW: Peace Coffee was originally founded as “Headwaters Trading.” The initial thought was for the business to start importing coffee directly from small-scale farmers and then to eventually branch out to offer other products. It was our relationship with Rigoberta Menchú that set us on the path to becoming Peace Coffee and a full-fledged coffee company. The year was 1997 and the Guatemalan Peace accords had been signed the prior year. We imported coffee directly from the indigenous communities that Menchú was working in as they rebuilt and recovered from the war. At the time, these communities were very isolated and faced many barriers to participation in the international coffee market. We called the product Guatemalan Peace Coffee. Our customers loved it and started calling all our coffee varieties Peace Coffee. And we realized we should dig in and do good work in coffee communities around the globe.
KW: Organic was popular in the 1980s and 90s. Why is it still an important part of your mission? Is it sometimes difficult to source certified-organic coffees given the cost barriers in some producing origins?
LW: For us, the number one reason we focus on purchasing organic coffee is due to its positive impact on the environment in producer communities. In addition, coffee grown by small-scale farmers who use regenerative organic agricultural practices is climate-smart. Small-scale farmers work to form a natural balance in their plots to overcome disease and pests, rebuild their soil health, and protect the shade cover and biodiversity on their land. These practices make these farms carbon sinks, further reducing the impact of climate change on all of us.
Peace Coffee only purchases from small farmer cooperatives. More than half of the world’s coffee is grown by farmers who tend small plots of land, and it is estimated that there are over 12 million coffee farms in the world. By joining forces to form cooperatives, farmers are given a voice in how their coffee is sold and how they invest in their farms, their cooperatives, and their communities. Small farmer cooperatives offer powerful economies of scale for otherwise marginalized producers and provide vital agronomic support in building best organic practices. As a result, we have not had difficulty purchasing organic coffee from our partners. In 2020, we had double-digit sales growth, and the majority of the coffee we purchased was from long-term partners.
KW: Can you tell STiR readers what it was like working with the Institute for Agriculture and Trade Policy (IATP) and how becoming independently owned has changed things, both in terms of opportunities and challenges? What year did the shift occur?
LW: As the founder of Peace Coffee, IATP was a visionary steward of the business. The non-profit encouraged our growth and also allowed for conversations about how to build a coffee company that serves the best interest of its stakeholders: coffee farmers, employees, and community members. They incubated Peace Coffee until we were ready to be spun off and stand on our own. What’s very clear is that our years of ownership by the non-profit created a unique business that has been able to maintain focus on our mission and impact and also continues to experience strong growth, year over year.
In May of 2018, I completed the purchase of the business from IATP. Since then, we have been working to put the right infrastructure in place to fuel further growth and expansion. We still have a close relationship with IATP, and there have not been any challenges. The reality is that our new ownership structure allows us to take more risks and be a bit more creative as we think about growth.
KW: You have more blends than single-origin coffees on your menu. Is that a reflection of what customers want or more about maintaining consistent profiles over time? Or is it a marketing decision?
LW: Our lineup is built to offer a range of options from complex, bright, light roasts to rich, palate-pleasing dark roasts. Some of our customers delight in a consistent cup day after day, and others enjoy a journey approach. Offering a variety of both blends and single origins allows us to meet the expectations of our customers and to highlight the delicious coffee from our producer partners.
KW: When was the company certified as a B-Corporation, and why was this an important move?
LW: We were certified in the fall of 2017. B-Corp is a global movement of people using business as a force for good. For us, certification speaks to the root of our company, as we were founded on the idea that our products should bear the highest social and ethical standards while continuing to push ourselves to do better as a whole. Certification shows that, from how we source our coffee and build our employee benefits to how we deliver our beans by bicycle and offer transparency in our purchasing, every decision and practice is important to our business and impacts our world. Since our founding, we have proven that coffee is not just a commodity but a story that can connect people and places thousands of miles apart. People, planet, and profit need to be viewed as equally important in a truly sustainable business, and being a B-Corp company is one way that Peace Coffee showcases our commitment to sustainability.
KW: The industry is finally putting a spotlight on the C-crisis and the ways in which green buyers and roasters can effect change. Tell us how Peace is creating change at the producer end of the supply chain.
LW: Peace Coffee invests in building sustainable relationships and pays prices that respond to the needs of coffee farming communities because we believe this is the right way to do business.
Fair Trade has shown that by building alliances, farmers and roasters can disconnect from international market prices that don’t reflect the true cost of production. This serves as a powerful reminder that low, unsustainable prices do not need to be a reality for coffee farmers. In addition, it highlights that coffee buyers are the price-setters in this market and can choose to disconnect from low prices. This fact is often lost in conversations around the C-price.
We also realize that the C-price is not the only crisis our producers are facing, as climate change is just as much of a threat. It is estimated that by 2050, 50% of coffee growing areas will no longer be suitable for growing coffee. In order to mitigate climate change, small-scale organic coffee farmers need greater access to technical and financial resources that allow them to transform their fields into soil-based carbon-sequestering ecosystems. Through the Carbon, Climate, and Coffee Initiative, Peace Coffee invests in carbon-sequestering agricultural practices and other innovative environmental projects that contribute to sustainable development in producer communities and strengthen our connections across the value chain.
If coffee roasters don’t focus on sustainability and work to combat low prices and climate change, they won’t be in business in 30 years. It is not only right to work to solve these issues, it also makes good business sense.
KW: Is there an educational component to what you do?
LW: To us, coffee education is still that magical moment when we can bring a Peruvian coffee farmer’s field from an abstract concept into a transformative perspective shift. Our staff members approach the common question, “What makes your coffee so good?” with zeal and typically ask back, “How much time do you have?” because we know that even tiny tidbits of knowledge about coffee growing, organic practices, cooperatives, etc., have the power to increase awareness about our industry’s amazing work.
Prior to the pandemic, we offered a full array of educational opportunities to staff and customers, including public roastery tours and cuppings, coffee classes on home brewing, and a full set of training labs to teach customers who serve or sell our coffee — on everything from origins and processing methods to proper espresso extraction ranges and latte art. Our staff were encouraged to attend these classes, and we also kept coffee knowledge fresh by holding staff cuppings, staff trip report presentations, and relevant video screenings. Every year, we would also send six or eight folks to the annual SCA Expo and Symposium to offer opportunities for growth and involvement in the industry. Since last March, we’ve been making video tutorials and hosting Zoom trainings and classes for customers and our staff, when needed, but we look forward to getting back to in-person education and tours when it is safe to do so.
For more, visit www.peacecoffee.com.