Students take break from classroom to enter coffee business
The 20-year-old friends have taken personal leaves of absence from their studies at CC to concentrate on starting their own fair-trade coffee importing business in Colorado Springs, BuyWell International.
They have pledges totaling $1.1 million thus far and are optimistic they will have the rest of the $3.45 million they need from investors by the end of the month to pay for the warehouse, roaster and additional equipment.
BuyWell International (www.buywell.org) has identified three possible warehouse locations but will not commit until all the capital is secured.
"We had a good meeting with potential investors here at CC recently," Arnsteen said. "The goal is to get this done quickly and stay on track to start sales by February."
In the midst of Fair Trade Month, Arnsteen and Cureau are committed to making their fair trade concept a success.
The first order from growers in Mexico and Guatemala will be for 10 shipping containers of green coffee, about 375,000 pounds, Arnsteen says.
Plans call for 24 employees eventually. Since incorporating in August, Arnsteen and Cureau have brought on veteran businessman Bob Perrine as chief financial officer and Tim Paich as marketing director, both of Denver. They all are working without pay until the business begins operation.
The idea for the business came to Arnsteen while he was working at a coffee shop. As part of his duties, Arnsteen did some of the buying, and he discovered fair-trade organic beans were being sold at a premium price, about $2 to $3 per pound above market.
"We did some research and found this disconnect -- that the growers on cooperatives were getting pennies on the dollar per pound," Arnsteen said. "We began to wonder if we could come up with a system to eliminate middleman profit markups. We would pay the growers more and bring the beans directly from the cooperative to our roasting facility while undercutting all the brands out there, even those not fair trade and organic.
"Our purpose is to establish a direct and fair relationship between buyer and producer, a relationship which inevitably benefits both."
The first step for Arnsteen, a history major, and Cureau, who is majoring in international political economy, was a five-week trip in a Dodge minivan. They traveled to the southern Mexico regions of Oaxaca and Chapas and then into Guatemala for face-to-face meetings with growers and local shippers.
They made contact with 15 cooperatives, seeing how the beans were grown and harvested, discussing price and process.
"It helped get us to the point where we knew every aspect of cost," Arnsteen said, "from purchasing the green coffee beans to roasting utility costs. We wanted to be sure we knew exactly what was required to bring a very high quality product at a low cost."
It did something else, too, Cureau said: "It helped us stay focused on why we are working on this 24 hours a day. The producers there, which really means the families, are wonderful to work with. We saw some pretty tragic stuff there but lot of smiles, too. A lot more smiles than you see here. We want to make this connection where families there are producing coffee for families here."
BuyWell International will target two customer segments, with about 40 percent projected to go to shops specializing in coffee and the remainder to bulk clients -- food service for universities, offices, hospitals and large restaurant chains.
"Universities will be a strong target," Arnsteen said, "because they are already under pressure to offer fair-trade and organic products. They haven't been able to do it as much as they would like, up to now, because of the prohibitive costs."
FAIR TRADE COFFEE FACTS
-- Fair trade is an alternative approach to conventional international trade. It's designed to help excluded and disadvantaged producers get fair prices for their goods and services.
-- A typical coffee bean changes hands as many as 150 times before making it into a cup. With every transaction, a portion of every dollar spent on coffee is claimed by growers, traders, shippers, roasters and retailers -- and all the parties involved with each of them.
-- Small-scale growers produce half of the world's coffee beans. In Mexico and Guatemala, about 90 percent of coffee farms are 12.5 acres or smaller, the majority of them owned by indigenous people who plant, maintain and harvest the beans.
-- Coffee growers receive 10 cents to 12 cents of every dollar spent on retail coffee in the United States. Growers often sell their coffee for less than the cost of production. With coffee prices at historic lows, 25 million farm families around the world live in poverty.
SOURCES: NATIONAL PUBLIC RADIO AND FAIR TRADE FOUNDATION