For Wal-Mart, Fair Trade May Be More Than a Hill of Beans
Monday, June 12, 2006
POCO FUNDO, Brazil -- Rosevaldo Jose Pereira has never been to Wal-Mart. The name doesn't mean anything to the lifelong coffee farmer in this remote village in southeastern Brazil.
But Wal-Mart Stores Inc. knows who he is. And the world's largest retailer is changing his life.
Wal-Mart is in the midst of overhauling its tightfisted image to win over shoppers searching for more than low prices. That effort has taken the company that built an empire on the principle of high volume and low costs into previously uncharted territory, into the realm of trendy apparel and organic food.
Now, with the help of Pereira, it is embarking on one of its most radical undertakings to date: fair trade.
Pereira, 40, is part of a small cooperative of growers living here in the heart of coffee country, where the rolling mountains are lush with trees. The late afternoon sun is strong. Pereira wipes the sweat from his brow with his forearm as he works his six acres. Dirt is jammed deep underneath his fingernails. He has been picking coffee cherries since 5 a.m., stripping them off the branches with his bare hands. They will be dried, and eventually only the pit will be left -- the coffee bean.
Pereira gets a premium for his harvest. His co-op is one of only seven in the country that is fair-trade certified, charging above-market price for beans because it meets certain social and environmental standards.
Wal-Mart is considering bringing Pereira's beans into its namesake stores. It would be a novel arrangement for a company infamous for squeezing pennies out of its suppliers -- and a test of how deep its makeover will really go.
For Pereira, the deal could mean more money, new computers for the co-op or a bigger school for the village. Already some children talk about college and life away from the farm. But it would also inextricably bind the co-op's fortunes to the company from Bentonville, Ark. -- putting all its beans, so to speak, in one basket.
Wal-Mart executives are planning to visit Poco Fundo at the end of the month before making a decision. It's part of the new corporate philosophy outlined by chief executive H. Lee Scott Jr.: "Doing well by doing good."
It is a work in progress.
Wal-Mart Meets the Co-Op
Wal-Mart discovered Pereira and his co-op five years ago when Mark Hoffman, a buyer for its Sam's Club membership warehouse stores, visited Brazil on a scouting trip. There was nothing particularly philanthropic about his visit.
Hoffman worked for the company's global sourcing team, a now-defunct group that traveled the world finding ways to buy products for less money. The Brazil list included beef jerky, cashews and, of course, coffee.