DREAMS OF ALIGNMENT
Ethiopia sets to prove F. Scott Fitzgerald wrong, again
They got drunk on their own success, some would say, but that sentiment misses the point. Ethiopia’s fine coffee brand ownership and management labors have always been about the right to choose its own path whether that meant f*%#ing up or hitting it out of the ballpark. The brawl with Starbucks was predictably intoxicating and predictably both helping and hurting the initiative’s real goals.
All of those goals––trademark ownership of fine coffee brands in all export markets, creation of an umbrella brand, and the ultimate de-linking from New York ‘C’ and tying of wholesale pricing to the movements of the final retail price––all of that depended on one gargantuan task: convincing key distributors and sellers of Ethiopian beans across the globe to sign license agreements and join a network of licensed distributors; in other words, to effectively change the terms of engagement in a business going for at least three centuries. (There is much to argue that Harar, Sidamo and Yirgacheffe are among the modernity’s birthpang brands, which of course gives this fast-developing story a strong tinge of meta.)
That tale another time.
That in the course of all this work Starbucks (as well as some European and Japanese companies) turned out to already own some of the sought trademarks was at first helpful as it raised the initiative’s profile. Lawfare would have left Ethiopia run over on the roadside with hardly anybody noticing, so it took to convincing a reluctant Oxfam (again, development folks usually don’t know what to do when poor producers want to play First World games on First World turf) to front for it. The Mermaid was eventually cornered. But considering that Sbux buys about 2% of Ethiopia’s annual output, the real work was still barely scratched.
What a difference
a day [two years] made. In all of this hoopla, Specialty Coffee Association of America (SCAA) traveled from opposition into neutrality and then into full (well, it comes and goes) embrace of Ethiopia and, at the tail end of Sbux finally agreeing to a licensed use of Ethiopia’s IP, it let it put on a colorful show as Africa’s first “2008 Portrait Country” in what is considered to be the world’s biggest coffee tradeshow, SCAA’s annual 10,000+ strong conference and exhibition.
Key in all of this were the early licensees, small Fair Trade importers and boutique roasters who backed the Ethiopian effort thru Sbux PR/lawfare and politicked within SCAA to turn it around as the power of these gourmet players within trade bodies has grown with the sophistication and segmentation of the specialty coffee market.
Now it was time for Ethiopians to do scale and face prospects of dealing with a network of licensees that included small gourmet-istas as well the Big Coffee, such as Proctor & Gamble and Kraft, lefty-ish giants such as Whole Foods, and old-school, old-colonial, invisible Swiss and German family companies, middle-men (who buy and resell probably all of the coffee you have tasted since you’ve been drinking it), and everybody in between.
Even if all this had been something undertaken by a Western corporation and not by one of the world’s poorest countries, it would take all they got. Ethiopians got busy producing promo videos, raising money, signing agreements, keeping the complex home turf of cooperatives and exporter groups as united as possible, and fine-tuning the umbrella brand and introducing brand guidelines (adherence to which is the sole ask of the royalty-free license agreement), all unveiled at their SCAA red carpet moment. They got themselves a brand agency, the London-based Brandhouse.
Changing the negotiating position of Ethiopian coffee farmers has held long-term benefits. Rather than all of the value being captured by 5–6 German companies, the Ethiopian coffee farmers changed the power balance.
Income improved for Ethiopian fine coffee farmers by $US 200M since June, 2007. When we add to this, a rural multiplier effect found by the World Bank to be approximately 2.0–2.5, the income return looks like this between 2008–2011.
The extra income has improved livelihoods and prospects for around 1 million Ethiopian fine coffee farmers and small traders. Also, since export prices are now based on retail values for distinctive fine coffees, not the world export/import market for commodity coffee, much greater stability in prices will be achieved in the medium term, providing farming families with the ability to plan their future.
What’s ahead? Joint promotions, indeed, in early 2012; expansion of the now 110-companies strong licensee network; trademark registrations of the umbrella brand; and two goals that seem as tricky as they are ambitious. One is dealing with Africa’s first-ever commodity exchange, ECX, based in Addis Ababa.
Speaking of the Ethiopian Commodity Exchange (ECX), take a look at it and get to know Eleni Gabre-Madhin:
Ethiopia’s fine coffees are now traded on ECX, which claims to translate price premiums to farmer incomes more directly, “meaning that supply responses from farmers are gradually increasing.”
Each promotion in markets will be designed to match supply forecasts, to the benefit of farmers, cooperatives and the licensed importers and distributors in market countries.
And then the envisioned crescendo of all this activity:
Ethiopia has decided to create a modern corporation to manage the brands, promotions and the network of distributors for the long term benefit of farmers, exporter and distributors. The corporation will be built on the lines of the famous and highly successful Ethiopian Airlines, starting in 2011 with top Ethiopian business people on the formation board. International support to this corporation will be through contracts with world class brand managers, IP specialists, experts in network management…
Continue reading IP Colony: A Short Story
Entry filed under: bits, campaigns & advocacy, collective branding, licensingville, marca equatorial, margins & strategy, mondo multilateral, non-profit ip, traditional knowledge. Tags: Brandhouse, brands, coffee, ECX, Ethiopia, Ethiopian Airlines, intangibles, IP colony, poverty, SCAA, Starbucks.