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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.