Dive Brief:

• Walmart plans to source all of its private label coffee sustainably by the end of 2020, according to a company release.
• The goal comes as part of Walmart’s decision to join Conservation International’s Sustainable Coffee Challenge. As the first North American retailer to participate in the challenge, Walmart joins various companies, research institutions, governmental and non-governmental organizations working to make coffee production more sustainable. 
• “We know our customers are looking for sustainable options, and when they enjoy the aroma of our private brand coffee, we want to be able to meet their expectations,” Serpa wrote in a blog post on Walmart’s website.

Dive Insight:

Sourcing sustainably produced coffee is one of those practices that’s proven to be good for the environment and for business.

Research shows that coffee drinkers have gravitated towards higher-quality, higher-priced blends in recent years. From conventional grocers to specialty ones, it’s common to find bags of whole bean and ground coffee with price points reaching into the low and mid-teens. Better sourcing and third-party certifications have played a big role in coffee’s upmarket swing, with 48% of all coffee now attached to a sustainability standard of some sort.

According to research firm Statista, global sales of coffee certified by Fairtrade International grew from $5.67 billion to in 2012 to $9.3 billion in 2016.

Coffee is a huge business for Walmart and its Sam’s Club format. For years, the retailers have been sending buyers to far-flung locations to meet with farmers and stakeholders in an effort to improve sourcing. Walmart’s Sam’s Choice line of single-origin coffees include varieties from Kenya, Sumatra, Colombia and Brazil, and are a key part of the company-wide expansion in private label.

Indeed, the retailer known for selling national brands sees store brands as a major growth opportunity, with CEO Doug McMillon remarking recently that, “Having a private brand from a margin mix point of view has always been important, but it is even more important now.” Jet.com recently came out with its Uniquely J line, which includes several organic, fair trade coffee options, while Walmart just introduced its Sam’s Choice Italia grocery line

According to the International Coffee Organization, the U.S. consumes more coffee than any nation in the world, and is expected to increase consumption by 2% a year between now and 2020. But coffee production isn’t just about dollar sales and volume these days. According to Conservation International, global area suitable for coffee production will shrink by half by 2050 due to climate change.

Considering its huge impact on supply chains, Walmart’s decision should have a ripple effect across the food industry.