How and why Paulig Group supports their local coffee farmers

Paulig Group is a family-owned Finnish-based food and beverage company providing coffee, world foods, spices and plant-based options. The company has more than 2,000 employees in 13 different countries, with sales amounting to 920 million EUR in 2020.

Paulig Group is most well known for their coffee, especially in Finland. Coffee farming is, however, facing many great challenges, such as climate change and an insufficient income level for coffee farmers.

So, what can a company like Paulig do about that? They buy about 50 million kilograms of green coffee annually, which is equivalent to only 0.7% of the total world production. This nonetheless corresponds to the annual production of more than 75,000 average-sized coffee farms. Most of these coffee farms are run by families and ensuring a future for coffee starts with the realization that coffee farmers must be able to make a fair living from their work to be able to support themselves and their families.

Here, a win-win solution is sourcing certified coffee, or coffee from partnership programs where the coffee is verified sustainable by a third party. As to Paulig’s experiences, this is actually the best way to ensure a sustainable and profitable coffee farming and support farmers.

Today, Paulig is an industry forerunner in terms of sustainable sourcing. In depth coffee knowledge, long-term relationships and continuous development have been key parameters here. Paulig’s coffee sourcing experts have in fact spent a lot of time in coffee farming countries learning about the conditions in the farming communities: “We launched our first sustainably certified coffee product range in 2006. During that time, we started to consider the meaning of sustainability more broadly in our operations. In my job, I have visited many coffee farms and worked during Brazil in 2007-2008. I learned that sustainability in practice is about dialogue, cooperation and respect; all parties in the value chain must be doing well and receive sufficient financial compensation for their work so that the environment also does well”, Katariina Aho, Director of Sourcing and Hedging at Paulig Group told Anita Laxén, who helped me document this case for the book.

For Paulig Group, these partnerships have been essential in driving progress towards more sustainable supply chains. The company has established several coffee partnership programs in cooperation with International Coffee Partners (ICP) – a leading promotor of impact-oriented support to coffee farmer families and youth in producing regions – as well as Coffee & Climate, Fairtrade and coffee export companies. To date, these initiatives have helped more than 100,000 coffee farmers improve their crops by implementing new farming methods while protecting natural resources.

Some of the key learnings from Paulig Group in working on upgrading their industry and business ecosystem are:

• Think long-term; change is not created overnight.
• Commitment from owners, the board, and leaders is a prerequisite to success.
• An engaged, committed and skilled team is key in making change happen.
• Build an ethical culture through values, ethical principles and code of conduct.
• Don’t try to solve everything alone—build strong relationships with partners and through partnership programmes.
• Sustainable development increases pride and engagement among employees.
• Communicate, communicate, communicate.

Going forward, another huge topic for the future of coffee is climate change. Unexpected weather conditions have become more common and had an effect on both the quality and the quantity of the coffee crops. Extreme weather phenomena, drought and heat brought on by climate change have also introduced many factors of uncertainty to the sources of livelihoods of coffee farmers. If nothing is done, the question really is: Will there be any coffee in 2080? This brings the whole coffee industry’s challenge up another level and makes the challenge even more pertinent.

This case comes from the book Better Business Better Future by Elisabet Lagerstedt, 2022.

Elisabet Lagerstedt

Elisabet Lagerstedt is the founder and director of Future Navigators. As a trusted advisor, consultant, and Executive Coach, she helps business leaders navigate beyond business as usual to build Better Business and co-create a better future - through insight, strategy, innovation, and transformation. Elisabet is also the author of Better Business, Better Future (2022) and Navigera in i Framtiden (2018).