Brewing up a storm

When I buy coffee beans from my local Starbucks, Ethiopian Sidamo wins hands down every time. But where does my brand loyalty lie? With Starbucks? Or with Sidamo?

This week Ethiopian prime minister Meles Zenawi and Starbucks CEO Jim Donald failed to settle a trademark dispute during talks in Addis Ababa. British charity Oxfam accused Starbucks last month of trying to stop Ethiopia trademarking its best-known coffee beans — Sidamo and Harar — and denying farmers potential income of more than $90 million, a charge which Starbucks rejects.

Some 80% of Ethiopians live on less than $2 a day. If the beans were trademarked, Starbucks and others would need a licensing agreement to sell them, giving Ethiopian growers more power to set prices. But Starbucks and the US Patent and Trademark Office say the Ethiopian brands cannot be trademarked because they are generic terms for coffee rather than distinctive marks, and that trademarking is against the interests of Ethopian farmers.

It’s marketing hypocrisy, reckons Douglas Holt, professor of marketing at the Saïd Business School, University of Oxford and formerly a professor at Harvard Business School. One of the most important marketing techniques Starbucks uses, he says, is the promotion of its coffees as artisanal products, imbuing them with the aura of traditional local craft — exotic coffees produced by peoples far removed from modern life in Seattle, Stockholm or Sydney. As the birthplace of coffee, Ethiopian coffees have played a starring role in allowing Starbucks to claim these artisanal and exotic qualities.

Starbucks’ strategy of late has been to upsell these exotic coffees, including Sidamo and Harrar, as Black Apron Exclusives™, selling them for $24-26/lb, instead of the standard $10-13/lb.

For the Ethiopians, cultivating markets for their own branded goods is an exciting path toward digging themselves out of poverty. In contrast, says Holt, "Starbucks opposes Ethiopia’s efforts in order to shore up its market power, not out of paternal concern for the plight of Africa."

Holt says Starbucks should pause to recall the backlash when Nike customers found out their $120 Air Jordans were being dissed by anti-sweatshop campaigners.

Please Starbucks, don’t make me switch my beans.

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  • prostarbucks

    Starbucks has done more to raise the price of coffee for local growers than Fair Trade has ever done. Fair trade actually excludes many small businesses because it forbids hiring employees of any kind.

    This kind of collectivist system is ill conceived and leads to products of poor quality - sold at an artificial premium. Look at collectivist wine growers in France vs. well known, privately owned vineyards, and the prices they command.

    Despite the best intentions of consumers, I don't see how subpar product sold at premium prices is in the best long-term interests of coffee growers.

  • Eremasi Tamanisau

    It is the hypocritical concern by Starbucks for the welfare of Ethiopeans that clearly comes through. Sub-woofing through is the amoral maximising of profit regardless of the welfare of Ethiopeans, truth, or high sounding concerns that is the driving force behind Starbucks.

    Now, the US Patents Office is an interesting player in this bout. As naturally expected, the US Patents Office will support the big boys out of self interest.

    This episode is another of the all too familiar example of the West's real concern in helping third world countries improve their lot.

    I am hopeful that the truth will prevail and that Ethiopia be able to patent its coffee beans.


  • Jim Lane

    Despite all the horse puckey Starbucks puts out about helping support these small coffee growers, they have not one bit of hesitancy in pulling hs like this.

    When was the last time you saw them selling, by the cup, a Free Trade coffee or a combine Free Trade Organic coffee? Don't hold your breath.

  • David Carlson

    Very important post! It's about time for Starbucks to realise that we all have to help to create a united world. I thought that kind of imperialistic behaviour was long gone. Maybe someone can tell Starbucks to listen to their customers?