[image from abc. For those new to the Ethiopia coffee trademark issue, start here]

Whether or not Starbucks actually deserves to be called a green company, the mermaid’s certainly been pretty successful at marketeing itself as such. But now that Starbucks has come out in fierce opposition against Ethiopia’s efforts to trademark its coffee names, that green halo might disappear for good.

Says Douglas Holt, L’Oreal Professor of Marketing at the Said Business School at University of Oxford in a short paper (PDF): “Starbucks’ anti-development stance is likely to cause significant damage to their brand, imposing a far greater hit on profits than any increase in commodity prices the company might encounter were they to support Ethiopia’s cause.”

Douglas sez that Starbucks has built its reputation on “powerful brand symbolism” that promotes “its coffees as artisanal products” — and that the “leading coffee brands from Ethiopia—Sidamo, Harrar, and Yirgacheffe—have played a starring role in allowing Starbucks to claim these artisanal and exotic qualities.”

With its Black Apron Exclusives line, Starbucks has been upselling fine Ethiopian coffees, charging $24-26 per lb while many Ethiopian farmers who grow the coffee can barely make ends meet (see Black Gold). How can Starbucks get away with this? Sez Douglas:

The specialty coffee market is failing simply because a handful of companies like Starbucks have extraordinary market power and are able to use this power to control the value chain. Starbucks is able to play off the millions of small producers around the world and so are able to set the terms of trade.

By comparison, in Ethiopia, specialty beans are produced by an estimated 600,000 small growers with little knowledge of commodities markets, no capital reserves, and no ability to act cohesively as a group to sell their coffee. As a result prices are set for them at niggardly world commodity levels and they have no choice but to take it.

Because Ethiopian brands are traded under the Starbucks trademark, Starbucks controls the transaction with customers and reaps the economic benefits.

Times UK reported on Douglas’ piece, and quoted one dude, Brian Smith, research fellow at Cranfield University, who disagreed with Douglas somewhat. Brian said “Western consumers had limited sympathy with subsistence farmers in Africa and although they might be prepared to pay 5p more for a fair trade latte, they might not walk an extra 50 yards to another coffee shop to avoid Starbucks and its policy on trademarks.”

However, Brian’s only disagreeing with Douglas’ contention that this debate will hurt Starbucks’ image and profits. Brian doesn’t really weigh in on the merits of the individual arguments.

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