Featuring
Matthew Hennessey
The Wall Street Journal; Former Carnegie Council Staff
If you consider yourself a good global citizen, Starbucks Coffee could be keeping you up at night—and it might not be the caffeine.
A bitter trademark dispute has been brewing for almost two years between the Seattle-based coffee chain, the Ethiopian government, and the poverty relief organization Oxfam International. In October, Oxfam took the disagreement public when it launched a public relations campaign urging Starbucks to sign a licensing agreement with Ethiopia and drop its obstruction of a pending trademark application. Starbucks vigorously defended itself with a full-page paid advertisement in the New York Times.
Not long ago, Starbucks and Oxfam saw eye to eye. As recently as 2004, the two worked together in an effort to improve the trading positions of coffee farmers in developing countries. But the relationship soured and in 2005 Oxfam terminated the deal.
The current dispute originated with Ethiopia’s efforts to obtain a U.S. trademark for three locally produced coffee beans: Sidamo, Harar, and Yirgacheffe. Oxfam maintains that trademarking the names of these popular coffee varieties will enable Ethiopian farmers to reap a greater share of the premium price that the varietals command in international markets. Ethiopian farmers typically receive five to ten percent of the retail value of their coffee, which sometimes sells for as much as $26 per pound.
Oxfam and Starbucks both acknowledge the importance of coffee for the Ethiopian economy. Nearly half of the country’s export earnings are derived from coffee and 15 million Ethiopians are employed in the coffee sector. When coffee prices fall, as they did in the early part of the decade, Ethiopian farmers often raze the coffee crop and plant khat, an illegal narcotic.
The U.S. Patent and Trademark Office (USPTO) granted a trademark for Yirgacheffe in April, but the National Coffee Association (NCA), an industry lobbying group, has petitioned to deny the trademark requests for Sidamo and Harar. The Ethiopian government and Oxfam maintain that Starbucks orchestrated the move, a claim that Starbucks has denied.
"We did not get the NCA involved—in fact it was the other way around, they contacted us," Starbucks's senior vice president of Coffee and Global Procurement, Willard (Dub) Hay, told the BBC in October. The NCA website lists Hay as chairman of its Government Affairs Committee.
In a recent interview with Policy Innovations, company spokesman Andy Fouché defended Starbucks’s record in Ethiopia. Since 2001, according to Fouché, Starbucks purchases of Ethiopian coffee have increased 400 percent and the price per pound that the company pays is up 50 percent.
“Starbucks is really committed to sustainability both in terms of the farmers we buy our coffee from and the communities where we operate stores,” Fouché said. “Oxfam criticizes us without understanding what we do in Ethiopia. The accusation they made, that we don’t pay premium prices to farmers in Ethiopia, is inaccurate. We do.”
Starbucks is keen to communicate what it terms its “integrated” approach to fair trade. This includes its Coffee and Farmer Equity (C.A.F.E.) Practices, a set of environmentally, socially, and economically responsible coffee-buying guidelines that emerged from its continuing partnership with Conservation International. Starbucks also makes loans to farmers to help them weather downturns in crop cycles.
The company rejects the notion that the principles of fair trade should guide its purchasing decisions. Instead, Starbucks prefers to focus on quality and sustainability.
“In 50 years, we want to produce the same or higher quality coffees as we always have and the way to do that is to keep our suppliers in business. Starbucks pays a premium for the fair trade coffee it buys in order to keep these farmers in business,” Fouché said.
Oxfam sees it differently.
“There's no reason why the Ethiopian trademark situation and C.A.F.E. should be mutually exclusive. They should be complementary to what Starbucks is trying to accomplish,” said Seth Petchers, Oxfam America’s Coffee Program Coordinator.
“Starbucks has built their brand to a certain degree on the reputation of their coffee and on what they say they do for farmers. Now, they have an opportunity to assert themselves as leaders in the fair trade movement by doing the right thing and acknowledging the [trademarked] names,” Petchers continued.
Starbucks should know how powerful a trademark can be. The company’s familiar green logo is a favorite target of globalization skeptics. Demonstrators famously protested the World Trade Organization’s 1999 meeting in Seattle by smashing the windows of several Starbucks storefronts. These images vaulted Starbucks into the echelon of branded, global corporations that face increasing pressure from NGOs, environmentalists, labor unions, and student groups seeking to promote a fairer international trade regime.
For many years, Starbucks has been working hard to convert its critics. The company has been lauded for the generous compensation packages it offers employees, and for its contributions to charitable causes. Its partnership with Conservation International is designed to encourage coffee cultivation methods that protect biodiversity and improve the livelihoods of coffee farmers. In 2005, Starbucks won the World Environment Center Gold Medal for International Corporate Achievement in Sustainable Development.
Despite these efforts, Starbucks faces an image problem. The picture of an award-winning corporation that looks after its employees and supports poor farmers conflicts with other stories of union-busting and environmental wastefulness.
Can these opposing images be reconciled? Oxfam is hopeful.
“We aren't attacking Starbucks as a whole,” Petchers said. “We'd consider having a relationship with them again in the future.”
