DealBook: Seeking Answers From Green Mountain Coffee

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Prototype: Tech Accessories, Courtesy of the Mountain Pine Beetle

With his father and stepmother, Dave and Nadine Lipson, he owns 37,000 acres that include a cattle ranch, a resort and a 10-mile stretch of the Blackfoot River, other parts of which were featured in the 1992 film “A River Runs Through It.” The infestation had the potential to ruin their business, which banks on the area’s scenic beauty.

“Having a resort in Montana with no trees is a big problem,” Mr. Lipson says. So rather than watch the bugs turn the land into a tinderbox for wildfires, the Lipsons decided to take steps to stop the beetles in their tracks. In the process, they found a way to turn their ravaged wood into something useful: a material for making accessories for Apple products. Their story offers lessons in adapting when an environmental crisis hits and, more broadly, how to be resilient in the face of adversity.

The mountain pine beetles that descended on the Lipsons’ ranch have coexisted with pine trees for millenniums, but as temperatures have risen in recent years, the insect’s range, population and winter survival rate have grown. The beetles now inhabit trees from Southern California all the way up to the Northwest Territories of Canada and as far east as South Dakota.

“From an evolutionary perspective, it’s very similar to a pack of wild dogs attacking an elk,” Andrew M. Liebhold, an entomologist with the United States Forest Service, says of the beetles’ prowess. “When they gang up on the tree in large numbers, they’re able to overcome its resistance.”

The Lipsons’ challenge was to shut down the pack. “We had scouts that hiked through the forest, identifying trees that were infected,” Mr. Lipson says, adding that the needles turn a burnt-red color. The next step was to isolate those trees by thinning around them, then cut them down and haul them out. Within two years, their corner of the infestation was under control.

But now they had thousands of tons of lumber to dispose of. While other landowners burned the wood or sent it to mills to be mulched into sawdust, Mr. Lipson, a self-proclaimed serial entrepreneur, was eager to find a better use.

He learned that beetle-kill timber retains its structural integrity if harvested before the natural decay process begins. He reasoned that the wood could be used for flooring, framing and moldings in projects on the ranch, which has more than 50 buildings, so he sent 16 feet of raw timber to a mill for processing. What came back surprised him: a shimmery, blue-tinged wood. The mountain pine beetle, he found out, carries a fungus that produces a natural blue stain. “We thought it was pretty spectacular-looking,” he says.

That further motivated the Lipsons to make something out of the wood. Last June, they started Bad Beetle, which makes accessories for Apple computers, tablets and phones. They also hope that the company will raise awareness about the mountain pine beetle infestation.

The accessories “have the ability to reach people who are interested in eco-minded issues,” Mr. Lipson says. In January, Bad Beetle started offering iPhone backs and iPad stands on its Web site and has sold 730 so far. This summer, it will roll out cases for MacBook computers and iPads. Should Apple, which doesn’t require a licensing agreement for the products, become interested in selling Bad Beetle items in its stores or online, Mr. Lipson says he’s prepared: “We have a stockpile of blue-stain pine that will provide the raw material for Bad Beetle products indefinitely.”

Were his supply to somehow run out, replenishing it would be easy. Some 20 billion cubic feet of such beetle-kill timber is now standing in 12 Western states, by Forest Service estimates. Private land with gently sloping contours and good access to roads provides the easiest and most profitable harvesting and manufacturing opportunities.

Bad Beetle is not the only company using this type of wood. Judson Beaumont, a furniture designer who owns Straight Line Designs, based in Vancouver, British Columbia, creates cabinets, benches and children’s treehouses with beetle-infected two-by-fours. He estimates that in the past three years he has sold about 75 items at $1,000 to $4,000 each.

“It’s probably been my most successful run of furniture pieces,” he says.

John Stein, owner of Kirei, a company based in Solana Beach, Calif., says architects and interior designers have been enthusiastic about the beetle-kill wood panels it began selling six months ago. When they hear the back story, “it resonates,” he says. That’s especially true in the West, where many prospective buyers have firsthand experience with the beetle infestation.

The Forest Service’s Forest Products Laboratory based in Madison, Wis., has worked with insect-killed wood for 50 years, and is now using it as a component in plywood-like panels. The state of Colorado has exempted beetle-kill lumber, sawdust and furniture from sales tax, and estimates that the value of items made from trees felled by the mountain pine beetle and the spruce beetle will hit $22 million this year.

The byproducts of two environmental scourges in Southeast Asia have similarly been transformed into furniture at the hands of Bannavis Andrew Sribyatta, founder and design director of a Miami design firm, Project Import Export.

He obtains dried water hyacinths and liana vines — both considered destructive plants — from his home country, Thailand. He weaves them into chairs, chaise lounges and wall panels for individual and commercial clients, including a Nobu restaurant in Los Angeles. The story behind his creations often “seals the deal” for potential buyers, he says. “Our work doesn’t stop at the point where I tell the customers about the product,” he says. “They tell their friends. It’s a topic of conversation.”

The effort involved in transforming these raw materials typically results in higher prices. Bad Beetle’s iPhone backs, for instance, cost $69, whereas silicone ones by the fashion designer Marc Jacobs sell for up to $48 and resin hard cases by Kate Spade are $40.

GIVEN the industry’s youth, it’s not yet known how many consumers will pay a premium for such products, but according to Thomas Lyon, a professor at the Erb Institute for Global Sustainable Enterprise at the University of Michigan, the beetle-kill wood could be a tough sell.

Since it would otherwise go to waste, the timber that’s used can be considered sustainable. But the response to sustainably produced wood has been underwhelming so far, Professor Lyon says, adding that people tend to open their wallets enthusiastically only for items that affect their health or are showpieces. With wood products, those criteria rarely exist. “Typically they’re hiding behind your walls,” he says. “Nobody can see that you bought sustainable wood.”

Buyers, however, could consider high-end furniture or hand-held tech accessories as a kind of wooden bling that’s worthy of their dollars.

If businesses can “transform the color into a positive so that it becomes something cool, then it may sell for a premium,” Professor Lyon says. “But it won’t be because it was sustainable, is my guess.”

Mountain of Petroleum Coke From Oil Sands Rises in Detroit

Detroit’s ever-growing black mountain is the unloved, unwanted and long overlooked byproduct of Canada’s oil sands boom.

And no one knows quite what to do about it, except Koch Carbon, which owns it.

The company is controlled by Charles and David Koch, wealthy industrialists who back a number of conservative and libertarian causes including activist groups that challenge the science behind climate change. The company sells the high-sulfur, high-carbon waste, usually overseas, where it is burned as fuel.

The coke comes from a refinery alongside the river owned by Marathon Petroleum, which has been there since 1930. But it began refining exports from the Canadian oil sands — and producing the waste that is sold to Koch — only in November.

“What is really, really disturbing to me is how some companies treat the city of Detroit as a dumping ground,” said Rashida Tlaib, the Michigan state representative for that part of Detroit. “Nobody knew this was going to happen.” Almost 56 percent of Canada’s oil production is from the petroleum-soaked oil sands of northern Alberta, more than 2,000 miles north.

An initial refining process known as coking, which releases the oil from the tarlike bitumen in the oil sands, also leaves the petroleum coke, of which Canada has 79.8 million tons stockpiled. Some is dumped in open-pit oil sands mines and tailing ponds in Alberta. Much is just piled up there.

Detroit’s pile will not be the only one. Canada’s efforts to sell more products derived from oil sands to the United States, which include transporting it through the proposed Keystone XL pipeline, have pulled more coking south to American refineries, creating more waste product here.

Marathon Petroleum’s plant in Detroit processes 28,000 barrels a day of the oil sands bitumen.

Residents on both sides of the Detroit River are concerned that the coke mountain is both an environmental threat and an eyesore.

“Here’s a little bit of Alberta,” said Brian Masse, one of Windsor’s Parliament members. “For those that thought they were immune from the oil sands and the consequences of them, we’re now seeing up front and center that we’re not.”

Mr. Masse wants the International Joint Commission, the bilateral agency that governs the Great Lakes, to investigate the pile. Michigan’s state environmental regulatory agency has submitted a formal request to Detroit Bulk Storage, the company holding the material for Koch Carbon, to change its storage methods. Michigan politicians and environmental groups have also joined cause with Windsor residents. Paul Baltzer, a spokesman for Koch’s parent company, Koch Companies Public Sector, did not respond to questions about its storage or the ultimate destination of the petroleum coke.

Coke, which is mainly carbon, is an essential ingredient in steelmaking as well as producing the electrical anodes used to make aluminum.

While there is high demand from both those industries, the small grains and high sulfur content of this petroleum coke make it largely unusable for those purposes, said Kerry Satterthwaite, a petroleum coke analyst at Roskill Information Services, a commodities analysis company based in London.

“It is worse than a byproduct,” Ms. Satterthwaite said.“It’s a waste byproduct that is costly and inconvenient to store, but effectively costs nothing to produce.”

Murray Gray, the scientific director for the Center for Oil Sands Innovation at the University of Alberta, said that about two years ago, Alberta backed away from plans to use the petroleum coke as a fuel source, partly over concerns about greenhouse-gas emissions. Some of it is burned there, however, to power coking plants.

The Keystone XL pipeline will provide Gulf Coast refineries with a steady supply of diluted bitumen from the oil sands. The plants on the coast, like the coking refineries concentrated in California to deal with that state’s heavy crude oil, are positioned to ship the waste to China or Mexico, where it is burned as a fuel. California exports about 128,000 barrels of petroleum coke a day, mainly to China.

Tony McCallum, a spokesman for the Canadian Association of Petroleum Producers, played down the impact of Keystone XL. “Most of the Canadian oil earmarked for the U.S. Gulf Coast is to replace declining heavy oil imports from Mexico and Venezuela that produces the same amount of petcoke, so it doesn’t create a new issue,” he wrote in an e-mail.

Much of the new coking investment has gone into refineries in the Midwest to allow them to take advantage of the oil sands. BP, the British energy company, is building what it describes as the second-largest coke refinery in Whiting, Ind. When completed, the unit will be able to process about 102,000 barrels of bitumen or other heavy oils a day.

And what about the leftover coke? The Environmental Protection Agency will no longer allow any new licenses permitting the burning of petroleum coke in the United States. But D. Mark Routt, a staff energy consultant at KBC Advanced Technologies in Houston, said that overseas companies saw it as a cheap alternative to low-grade coal. In China, it is used to generate electricity, adding to that country’s air-quality problems. There is also strong demand from India and Latin America for American petroleum coke, where it mainly fuels cement-making kilns.

“I’m not making a value statement, but it comes down to emission controls,” Mr. Routt said. “Other people don’t seem to have a problem, which is why it is going to Mexico, which is why it is going to China.”

“One man’s junk is another man’s treasure,” he said. One of the world’s largest dealers of petroleum coke is the Oxbow Corporation, which sells about 11 million tons of fuel-grade coke a year. It is owned by William I. Koch, a brother of David and Charles.

Lorne Stockman, who recently published a study on petroleum coke for the environmental group Oil Change International, says, “It’s really the dirtiest residue from the dirtiest oil on earth,” he said.

Rhonda Anderson, an organizing representative of the Sierra Club in Detroit, said that the mountain’s rise took her group by surprise, but it had one benefit.

“Those piles kind of hit us upside to the head,” she said. “But it also triggered a kind of relationship between Canada and the United States that’s allowed us to work together.”

G.M. and Mountain Dew Drop Ads After Criticism

The General Motors ad was a promotion for the Chevrolet Trax, a small sport utility vehicle that is sold in countries including Canada, where the ad made its debut on television on March 4. The ad is set in the 1930s and features a modern remix of a song from that era that included references to Chinese people using phrases like “ching ching, chop-suey.”

Advertising Standards Canada questioned General Motors about the ad, prompting the company to change the ad by removing the lyrics from the song while keeping the melody.

Even so, as word of the offensive lyrics spread within the company, G.M. decided to withdraw the ad altogether from Canadian television and on Web sites in Europe, where the vehicle is also sold. The vehicle is not sold or advertised in the United States.

In a statement issued on Wednesday, G.M. apologized for the ad and said, “We are conducting a full review of our advertising approval process to ensure this does not happen again in the future.”

The ad was created by Commonwealth, Chevrolet’s global advertising agency since 2012 and a part of the McCann Worldgroup of the Interpublic Group of Companies.

The second ad withdrawn on Wednesday promoted Mountain Dew, part of the PepsiCo Americas Beverages division of PepsiCo. The ad featured a battered woman, bandaged and on crutches, trying to identify the person who had hurt her; the lineup includes African-American men with names like LBoy, Tiny and Beyonte — and a goat.

The woman, who is white, is stricken with fear as she looks at the men and the goat. A voice-over for the animal says in a menacing tone: “It’s me. You should’ve gave me some more.”

“I don’t think I can do this,” the woman says, visibly frightened. Toward the end, the goat threatens the woman to “Keep your mouth shut.” The woman begins to yell repeatedly, “I can’t do this,” followed by a sequence of shrill “noes” as she hops out of the room. The officer then takes a sip of the beverage.

The ad was created by Tyler Okonma, known as Tyler, the Creator, a hip-hop producer and rap artist. In a statement released Wednesday morning, Mountain Dew apologized for the ad and said it had been removed “from all Mountain Dew channels and Tyler is removing it from his channels as well.” News of the company’s decision was first reported by Adweek.

Mountain Dew has also come under pressure because of its relationship with another rapper, Lil’ Wayne. The company has an endorsement deal with Wayne, who has been criticized over vulgar lyrics that refer to Emmett Till, the African-American teenager whose 1955 murder helped foment the civil rights movement.

On Wednesday, the rapper issued an apology to Mr. Till’s family, adding, “I will not use or reference Emmett Till or the Till family in my music, especially in an inappropriate manner.”

Mountain Dew is the latest brand to deal with controversial hip-hop lyrics. In April, Reebok dropped the rapper Rick Ross after he performed lyrics on the Rocko song “U.O.E.N.O” that referred to drugging a woman and having sex with her.

In March, another auto company, Ford Motor, apologized for an online advertisement in India that featured three bound and gagged women in the rear of a vehicle driven by an actor in the role of Silvio Berlusconi, the former Italian prime minister.

Advertising: Green Mountain Coffee Begins Fair Trade Campaign - Advertising

In recognition of October being Fair Trade Month, the brand is seeking to educate coffee drinkers about fair-trade certification, which many people may vaguely associate with worthiness without quite understanding it.

“I think about fair trade sometimes like antioxidants,” said Jonathan Yohannan, executive vice president for corporate responsibility at Cone Communications, one of several agencies working on the campaign, referring to substances often praised for their health benefits. “You know it’s good for you, but you don’t really know what it means.”

Green Mountain Coffee will help explain what fair trade means with a campaign called “Great coffee, good vibes, pass it on.” Print and online ads will direct consumers to the brand’s Facebook page, which will feature videos with the musicians Grace Potter and Michael Franti visiting certified coffee farms in Colombia and Sumatra.

“The videos are all about showing an authentic experience with fair trade, with the celebrities seeing firsthand the impact that fair trade has,” said Derek Archambault, senior brand manager for Green Mountain Coffee.

The brand works with the nonprofit Fair Trade USA, which certifies that producers conform to labor and environmental standards, and links farmers directly to companies rather than enriching middlemen.

When companies buy fair-trade coffee, they pay a community-development premium in addition to the base price. For every pound of conventionally grown coffee, the premium is 20 cents; for organically grown coffee, it is 50 cents, with 20 cents going to community development and the remaining 30 cents to farmers.

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In 2011, when more than 138 million pounds of certified coffee was imported to the United States, fair-trade premiums totaled about $17 million. The money went to cooperatives of farmers, who voted to apply it to development projects like new schools, health care facilities and equipment to improve the productivity of farms and the quality of their coffee.

Green Mountain Coffee Roasters — the parent company, which also produces brands like Tully’s Coffee and, under a licensing agreement, Newman’s Own Organics — is the largest purchaser of fair-trade coffee in the world. It imported about 50.3 million pounds in 2011, or 24 percent of its raw coffee purchases, according to the company and Fair Trade USA.

Green Mountain Coffee Roasters also owns Keurig, which makes systems that brew single-serve pods called K-Cups. Green Mountain spent $22.9 million on advertising in 2011, compared with $100.5 million for Starbucks, $37.5 million for Folgers and $24.9 million for Maxwell House, according to the Kantar Media unit of WPP.

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One of the new online videos opens with Mr. Franti, the musician, who says, “I’m here in Sumatra teaming up with Green Mountain Coffee, where I’m going to learn about how fair trade makes a better cup of coffee and a better quality of life for farmers.”

In the video, a farmworker tells Mr. Franti that premiums from the fair-trade program enable him to send his children to school.

An on-site Green Mountain employee in the video adds that through such direct relationships with small farmers, the brand can help pinpoint the locations on a farm, like the side of a mountain with a certain amount of sun exposure, that yield the most drinkable coffee.

The videos with Mr. Franti and Ms. Potter — which are by Y&R New York, part of Young & Rubicam Group, owned by WPP — will be featured on Green Mountain’s Facebook page, which has more than 656,000 followers, and on YouTube.

Print ads for the campaign, also by Y&R, begin appearing Friday in publications like People, Rolling Stone and Entertainment Weekly. Digital ads will be introduced Monday on Web sites like YouTube, Hulu and Oprah.com.

Ms. Potter will perform live exclusively on the brand’s Facebook page on Oct. 9, and Mr. Franti on Oct. 24.

In 2011, Fair Trade USA helped farmers and farmworkers earn $22 million in premiums beyond the base price for their products.

While a wide range of products can receive fair-trade certification, including cocoa, nuts, wine and flowers, coffee is by far the most dominant. In 2011, the $17 million in coffee community-development premiums accounted for 77 percent of all premiums.

For Fair Trade Month, which the nonprofit organization is spearheading, other companies will also be promoting the cause. Whole Foods, for example, will hold sampling events with a range of certified products at more than 100 of its stores.

Mary Jo Cook, who calls herself the chief impact officer at Fair Trade USA, said she could recall no other marketing campaign devoted to fair-trade practices by a brand with the scope of the Green Mountain Coffee campaign.

“It’s a giant step in going out and engaging consumers so that they understand what fair trade is,” Ms. Cook said, adding that the campaign would have the effect of promoting fair-trade goods in categories besides coffee.

“We believe this will have a halo effect for fair trade as a movement, which is what we’re here to support,” she said.

Andrew Hetzel, founder of CafeMakers, which provides strategic planning and brand development for coffee businesses, said the coffee industry tended to focus more on social and environmental issues than other industries.

“You don’t see an Apple campaign for how well they treat workers in factories,” Mr. Hetzel said, referring to reports of poor working conditions at factories owned by some of the technology giant’s subcontractors. “But the coffee industry in particular seems to be especially sensitive to the environment and to workers.”