chapter  12
17 Pages

Geographical indications, coffee and economic development: The Ethiopia–Starbucks case

ByJEREMY STREATFIELD, JAMES WATSON

Delivering from an African coffee farm to a Starbucks franchise requires expertise at each level of the production process. The farmer, roaster, trader and retailer each have a number of techniques at his or her disposal that add value to the final product. If the coffee drinker associates the coffee brand with the production methods, they may prefer to consume that particular variety (just as consumers of wine derived from certain regions in France are willing to pay more than they would pay for generic equivalents). Traditionally, this sort of product recognition has brought more negotiating influence and a greater percentage of the retail sales price to the farmer and producer of the product, as well as a higher margin for the retailer. As a result, farmers have an increased incentive to protect the value of their brand by overseeing more stages of the marketing and business aspects of the product and will work more closely with the retailer to ensure that this quality is maintained through to the consumer. These transferable business skills and the greater access to foreign markets, coupled with a greater access to much-needed capital, will benefit both the Ethiopian coffee farmer as well as the coffee retailer (in this case, Starbucks). In the Ethiopian coffee dispute, Starbucks’ motivations may not be readily apparent, but there are intangible benefits as well as additional profits to be made. The company portrays itself as a socially and environmentally responsible corporation that empowers poor farmers. This corporate branding helps to justify the higher prices it can charge consumers for its specialty coffees. It has already taken advantage of Ethiopian coffee’s exotic origin and traditional production processes to provide their cafés with an attractive mystique and a more profitable product line. This mystique of a rare specialty coffee could be further enhanced if Starbucks were its sole purveyor and if it were grown, processed and packaged by Ethiopian artisanal enterprises, although Ethiopia’s domestic processing capacity is not yet sufficient.