NATIONAL BRANDS: THE ETHNICITY FACTOR
As one scopes for iconic brands across continents, it is especially interesting to pay attention to those being built in developing countries (either homegrown or as mutated, adapted versions of Western brands). Here is an example why.
Much has been underreported – often the basic story – in Ethiopia’s proposition to license its coffee trademarks for its three herritage coffees (Harar, Sidamo and Yirgacheffe) to Starbucks and other coffee companies in a dispute that came to resolution in 2007. The story involved Ethiopia filing for trademark ownership for these three coffees in export markets like the U.S., EU, and Japan and then extending a free license to all importers, middlemen and retailers. Coincidentally, Douglas Holt, see above, provided strong opinions on Starbucks and Ethiopia at the time. Further background is here and here.
While the basic story has been reported sloppily, some subtler things have gone completely unnoticed – what Ethiopians are actually trying to do. From the start their initiative was one of global brand ownership and management. To increase their own leverage at home so they can capture more of the income their coffees earn in far away gourmet markets, like the U.S., EU and Japan, Ethiopians began managing the Ethiopian fine coffee brand as an umbrella brand, made up of all specific fine coffees as its ingredient brands. To formally own them and to be able to license (royalty-free) everybody along a complex supply chain (importers, roasters and retailers), Ethiopians had to establish formal TM ownership in all of those markets. Ethiopian Coffee Network does a good job of explaining these plans and goals.
Ever since the publicity following the Starbucks affair, Ethiopians have been working quietly on a program much larger than its Starbucks connection, although you would never know that by reading The Economist. Here is a fascinating example of an international brand made up of sub-identities, licensed across the world to companies large and small, with about five million people owning the brand by producing and delivering the intangible value buyers pay for. But how do you manage a brand like that? Collectively owned IP?
That became the crux of Ethiopia’s challenge, while others still debated whether Ethiopia should even be in the “business of trademarks.” They came up with an answer: no ministry supervision but a stakeholder committee. Heads of farmer cooperatives, exporters, and relevant government offices (such as quality control and export agencies) have all powers to manage the brand and coordinate marketing and licensing strategy across international markets. A massive undertaking for Africa’s biggest coffee producer.
All of this slowly starts shaping into a complete redefinition of terms of engagement of the two sides of the supply chain, producers and distributors. It is a beginning of a more equitable relationship where both sides can for the first time talk regularly (actual licensor-licensee consultations) and address mutual issues (i.e. retail pricing, appropriate wholesale share of that price, coordinated marketing, quality consistency, labeling, uniform presentation, joint ventures, among others). For the first time in centuries of exporting and trading coffee, Ethiopia has the ability and incentive to know what happens to its coffee beyond border, but also means to address long-term concerns of its buyers, this time actual partners. All of this seems perfectly normal to, say, Dell and Intel, or Kraft and Nestle (hint: KitKat).
Let’s also not leave out the minor detail that, in the process, about 5 million people producing the prized and valued products just might get out of extreme poverty (< $2/day) by not only having higher gains but also by this income becoming more stable and predictable. One tends to forget: poverty alleviation = income + income security.
Not too long after signing the licensing deal with Starbucks and others, Ethiopia got itself a branding agency – the London based Brandhouse – and started working on aligning the many pieces.
And here is the beginning of a pillar to the Ethiopian identity that goes beyond the political and cultural. A vital business brand built, a group identity managed and leveraged; success of all of that ties to stakeholders having vested interests in the success of their shared identity. In Ethiopia’s case this means that Christian Amhara and Muslim Oromo who both produce prized varieties of Ethiopian coffee realize in quite real and economic terms how their united action is good not only in terms of bargaining power with importers in the wholesale market at home but also the value they have in and get from retail. If you are called on, at some later unfortunate point, to start slashing this common identity in the name of a less inclusive one, it might not come as easy if one is so intimately aware of the value and assets built and premised on cooperation and the national brand.