Ethiopia creates quality coffee brands

From Starbucks to Tesco and Nestlé to Kraft, Western multinationals have profited from the enormous mark-ups they make on some of the world’s most prized products such as speciality coffee, tea and chocolate.

But the producers and growers of some of these commodities in developing countries have often experienced declining incomes. That could change if developing nations succeed in trademarking the products and launching them as popular brands.

In the latest move by Ethiopian coffee growers to get a higher price for their beans, the Addis Ababa Government has hired a UK design agency to develop brand identities for their speciality coffees. The move comes after Ethiopia succeeded – in the face of US opposition by Starbucks – to gain trademarks for the coffees.

Brandhouse will create an umbrella brand for Ethiopian Fine Coffees and separate brand identities for the high quality Yirgacheffe, Sidamo and Harrar varieties. This will help protect and ultimately promote one of the nation’s most valuable commodities.

While Western consumers are paying sky-high prices for top quality coffee in bars and cafés, the value added to the beans has mainly benefited Western coffee marketers. The Ethiopian Government is fighting to recapture some of that value for the growers.

The farmers hope branding will enable them to boost both consumer demand and price premiums for the varietals.

“These brands are a promise to our customers, retailers and roasters that we will deliver good quality coffee,” says Tadesse Meskela of Ethiopia’s Oromia Coffee Farmers Co-operative Union. Meskela is the subject of the film Black Gold, an exposé of the multibillion dollar coffee industry which shows his journey round the world as he seeks a fair price for his growers’ beans.

Speaking to Marketing Week from Addis Ababa, he adds: “The brands can also protect the names of those speciality coffees so they are not used by growers in other countries. Through negotiating with speciality coffee buyers, we can obtain a better price for our products.”

The new logos will be unveiled next month at a meeting of the Specialty Coffee Association of America. The brand launch comes after Ethiopia last year managed to obtain US trademarks for the three varietals, considered to be among the finest coffees in the world.

Coffee chain Starbucks initially opposed the trademark requests. For years it has marketed the Sidamo variety through its cafés, commanding prices of up to $26 (£13) a pound. Yet Ethiopian farmers receive between 75 cents and $1.60 (38p-81p) per pound. Starbucks argued the trademarks would harm those farmers, potentially hiking prices and hitting demand. But after the intervention of Oxfam, which unleashed a ferocious lobbying campaign supporting Ethiopia’s trademark requests, Starbucks relented. The trademarks are owned by Ethiopia and it now has the task of policing use of the coffee varietals in markets around the world and promoting them as brands.

The push will serve as a test for other developing nations seeking to turn their high-quality commodities into brands to boost the value the products command in Western markets. As an Oxfam spokesman says: “We would like this to be the first of many. It shouldn’t just be the large companies who reap the benefits from these commodities.”

Ethiopian Ambassador to the UK Berhanu Kebede points out that Ethiopia is the birthplace of coffee and believes this is a strong story to tell consumers: “Ethiopia is known for drought and famine, but we have to show the other side of the story. Ethiopia is the source of these beautiful brands of coffee. By branding the coffee, we are branding Ethiopia itself.”

He believes the brands will help enhance the lives of 15 million coffee producers in the country. “Ethiopian farmers have worked hard for generations to improve the flavour and quality of their coffees which, once branded, will attract better prices, rewarding farmers for generations of ingenuity and skill,” he says.

Another sector of Ethiopian production that could benefit from trade marking is the leather industry, says Kebede. “We need to move onto other products,” he adds. And in a separate attempt to gain recognition of its history and culture, Ethiopia’s intellectual property office slammed fashion designer Matthew Williamson for using designs based on traditional Ethiopian dress without attribution. It is looking for ways to trademark the designs.

According to Lightyears IP, a non-profit US intellectual property firm that is helping Ethiopia with its coffee programme, Ethiopia only receives about 6-10% of the value of its coffee, but this should increase through trademarking. By comparison, producers of Jamaican Blue Mountain coffee capture about 45% of its retail price.

Lightyears has also helped the South American Ache Guayaki tribe protect the use of its name by a US company marketing a traditional drink called Yerba Mate. Lightyears IP believes that getting control of intellectual property is a powerful way for developing companies to extract more value from their products.

Other products that have benefited their growers through control of intellectual property include Darjeeling tea, which can only be produced by estates in the Darjeeling area following strict controls imposed by the Tea Board of India. There are also controls on the areas of India and Pakistan that are allowed to produce Basmati rice.

One problem for developing countries which launch brands will be a lack of funds to communicate and promote them. Ethiopia, one of the poorest countries in the world, is relying on benefit in kind from Brandhouse and other agencies.

But according to Simon Anholt, a former advertising executive who now advises countries on national branding, there are strong opportunities for brands from around the world to tell their stories without the need for huge marketing budgets.

“The history of marketing is full of brands which haven’t outspent their competitors but have outsmarted them,” he says. “Little brands can come from nowhere and wipe the floor with their bigger rivals.” He points to Diesel breaking through Levi’s market dominance by telling a more compelling story. But he accepts that it will be important to spend money supporting speciality brands once they are established: “Some spending is needed, so having a great logo is essential. But there are enormous amounts of development aid money floating around to back these sorts of things.”

Meanwhile, Brandhouse managing director Crispin Reed says of the win: “We are not just creating a brand for the world’s most authentic coffee producing country, but we will hopefully help redefine the image of one of Africa’s best kept secrets. Ethiopia is transforming itself into a successful and aspiring nation that is fast emerging onto an international stage in markets like tourism, hydro-electric power, floriculture and other surprising areas.”

It remains to be seen if the higher prices that should accrue to Ethiopian farmers for the brands will lead to lower demand. Much will depend on the effectiveness of the marketing behind them.

Brands have been criticised by campaigners for disguising the exploitation at their heart behind alluring logos. But the tables could be turning. If Ethiopia’s experience with branding speciality coffee is successful, it could open the way for other developing nations to brand their way out of poverty.