‘Unethical Starbucks to lose customers’

Addis Ababa – United States coffee giant Starbucks’ row with Ethiopia entered a new dimension after an Oxford academic said its unethical behaviour would make it lose face with its educated middle-class customers.

Douglas Holt, the L’Oréal Professor of Marketing at Oxford University’s Saïd Business School, said the coffee house’s “rash attempt to shut down Ethiopia’s [trademark] applications” would hurt the ethical brand the company has tried to create.

Ethiopia had applied to trademark its most famous coffee names, Sidamo, Harar and Yirgacheffe, to enable it to capture more value from trade, control their use and allow farmers to receive a greater share of the retail price.

Last month charity group Oxfam said that Starbucks’ attempts to derail the application, by asking the National Coffee Association of USA Inc. to oppose approval of the trademarks, could deny producers an estimated £47mn (about $88.5mn) a year. It added that Ethiopian farmers earn as little as $0.75 for a pound of beans, which Starbucks earned up to $26 a pound for.

Holt said that Starbucks’ unethical blocking of the application would lose the company more than any rise in prices as customers switched brands. However, convenience would probably make this unlikely.

Starbucks has denied that it was attempting to influence the application, but said that trademarks were not the best way to help growers and that a kind of certification should be employed instead.

However the director-general of the Ethiopian Intellectual Property Office, Getachew Mengistie, said that Addis Ababa had found trademarks were more likely to strengthen the position of farmers to enable them to earn a fair price for their efforts.

Starbucks’ chief executive Jim Donald was allegedly preparing to meet with Ethiopian Prime Minister Meles Zenawi. The two would sit as almost equals. Ethiopia’s GDP was $11.2bn, while Starbucks’ annual revenues sat at $7.8bn. -Business in Africa Online