Using Intellectual Property Rights to Create Value in the Coffee Industry

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  I. INTRODUCTION                                                284  II. A SHORT HISTORY OF THE COFFEE BEAN                          285 III. GEOGRAPHICAL EXPANSION OF COFFEE PRODUCTION                 286  IV. THE COFFEE CRISIS                                           288   V. CHANGES IN CONSUMER CONSUMPTION PATTERNS--THE      DECOMODIFICATION OF COFFEE                                  291  VI. DIFFERENTIATED COFFEES                                      292      A. Specialty and Gourmet Coffees                            292      B. Single-Origin Coffees                                    294         1. Geographical Indications                              294         2. Trademarks                                            301         3. Certification and Collective Marks                    304      C. Sustainable Coffees                                      308         1. Ethical Consumerism                                   309         2. Organic Coffee                                        310         3. Shade, Bird, and Eco-Friendly Coffees                 313         4. Fair Trade                                            315            a. Definition and Historical Development of Fair               Trade                                              315            b. The Fair Trade Philosophy, Economics, and               Principles                                         316            c. Fair Trade Principles                              318                 i. Direct Trade with Producers                   318                ii. Long-term Trading Relationships               319               iii. The Minimum Price and the Social Premium      319            d. Fair Trade Labelling                               320            e. Certification                                      322            f. Fair Trade Coffee Facts                            322         5. Industry-Driven Certification Initiatives             325 VII. CONCLUDING COMMENTS                                         325 

I. INTRODUCTION

Coffee is the single most important tropical commodity traded worldwide. It is produced in over 50 developing countries, and it is estimated that some 20 million rural families, (2) or 125 million people, (3) depend on growing coffee throughout the world for their livelihoods. Over the past decade, coffee producers have been facing considerable difficulties because of low and unstable coffee prices. In 2002, coffee prices collapsed to 100-year lows in real terms, leading to a world coffee crisis. Meanwhile, the coffee economy in high income countries has been moving in the opposite direction, and the crisis is hardly visible from Starbucks-type western coffee chains. This paper examines how coffee producers in developing countries can use intellectual property, or intellectual property-related rights, as differentiation tools to move from pure commodity exports to higher-price exports in niche markets and create value. It takes into account the influence of new consumption patterns in the coffee industry and analyzes the various differentiation techniques that have been proposed, such as single-origin, specialty and gourmet, and sustainable coffees. Finally, it examines the situation of the coffee industry in Vietnam and Indonesia, who are also two of the most important coffee producers worldwide in terms of volume, and where the coffee sector has experienced an explosive growth since the 1980s.

II. A SHORT HISTORY OF THE COFFEE BEAN

The history of the coffee bean starts in Northeast Africa, in the province of Kaffa in Ethiopia, where the coffee tree probably originated. Used traditionally by Ethiopian nomadic mountain warriors as an early type of energy bar, (4) "coffee was first eaten as a food sometime between 575 and 850[,] long before it was made into a hot beverage in 1000-1300[]." (5) Western accounts of the discovery of coffee include various fanciful tales told by local traders to the first European merchants who came to Yemen to buy coffee in the early seventeenth century. …

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