Ethiopian Coffee Network

The distribution license agreement is very simple. Signatories agree that they recognise Ethiopia’s ownership of their coffee marks and that as licensed distributors they support Ethiopia’s efforts to manage its fine coffee brands and foster a stronger partnership between the Ethiopian fine coffee sector and overseas distributors. The agreement provides for quality and usage guidelines, sets up a basis for disclosure requirements, allows easy licensing for subsidiaries, and includes an agreement on joint advertising and marketing between Ethiopia and the licensee to build the reputation of Ethiopia’s coffee to the benefit of all involved.

No. There is no licensing fee attached to this agreement. This is a royalty-free contract.

There is no licensing fee attached to this agreement. This is because Ethiopia seeks to manage the brands of its fine coffees in collaboration with the network of licensed distributors in order to increase consumer demand and export revenue for generations to come. Increases in revenue as a result of successful brand management will provide Ethiopia with sustainable income far greater than would be generated through royalties.

The Government of Ethiopia is fully committed to this project as a means of increasing farmer incomes and is only involved in the coffee trade to the extent that it licenses exporters and implements quality controls and improvement projects and development programmes. Future governments will be influenced by the coffee stakeholders who understand fully that license fees are a very inefficient way of raising national coffee export income.

As such, improved returns and trading proceeds, that is, higher prices, will go directly to the cooperatives and exporters and then on to farmers. This is a private sector driven initiative and not an aid project.

Firstly, much of the consumer base of the specialty coffee industry includes socially well informed individuals who quite consciously make purchasing decisions based on the reputation of the company from whom they are buying their coffee. Joint publicity with Ethiopia and other signatories gives licensees an opportunity to publicly affirm the company’s commitment to socially responsible business practices. Signing the agreement and joining the network in a new type of buyer-seller partnerships is a strong demonstration of this.

Secondly, the availability of coffee from Ethiopia has been variable at times, largely due to lack of information across the board as to what amount of coffee is likely to be purchased at a given time and price. Signing distribution agreements whereby both farmers and retailers can be assured that there is a steady and sustainable supply of coffee from farmers and coinciding demand for that coffee from distributors, will help to decrease the business risk for distributors.

Thirdly, as Ethiopia and its partners build the brand management strategy and reputation of their fine coffees, the market may be able to support a higher retail price, thus further benefiting farmers and retailers. The goal is to achieve a win-win scenario for farmers, coffee roasters and distributors and consumers. As premiums reach Ethiopia, there will be more incentive and ability to invest in production and quality management systems which will increase the quality of the coffee as well. The current share of the retail price reaching coffee farmers is so low, barely covering costs, that even minimal market signals are likely to produce strong results, especially if they can be maintained over time.

Farmgate prices for Ethiopian farmers will increase as the export revenues for the fine coffees increase. Farmgate prices have historically been connected to the NY commodity price and they have been subject to the price fluctuations of the global market. As export prices for fine coffees in Ethiopia are de-linked from the commodity price and connected to retail prices, the farmgate price will become connected to the retail price as well. Also, export prices will stabilize for long durations of time due to the stability of the retail price reference point, simplifying farmgate price calculations for producers as well as other points in the chain.

In order to ensure that this indeed occurs and farmers benefit, extensive awareness raising activities and monitoring will be required. Awareness raising activities will be carried out in the regions where the trademarked coffees are produced to set farmers' expectations in terms of their expected benefits from the initiative and nation-wide information will be dispersed. Periodic price checking will be carried out to check whether farmgate prices are increasing and long term monitoring will identify improvements in the chain as well as challenges to the initiative's goals.

No. We are not trying to register and protect coffee "generics". The TMs being applied for are for specific heritage coffees that have been grown and marketed for many decades. They are not generic, and are all what is now termed specialty coffee and have cache´ and credibility among coffee connoisseurs.

Yes. All companies that want to promote a Trademarked Ethiopian coffee will require a license. The TM licenses are royalty-free. The licensing agreement itself is a straightforward document, similar to distribution agreements in many other industries. It acknowledges Ethiopia’s ownership of the names Yirgacheffe, Harar, and Sidamo, and sets the basis for joint marketing promotions and overall brand enhancement of the targeted Ethiopian coffees with the participating coffee companies.

Ethiopia has secured trademarks for Yirgacheffe, Harar, and Sidamo in the EU, Canada and many important coffee markets. Contrary to some reports, Yirgacheffe has successfully been registered as a trademark in the USA.

See the Table below for the application status of these marks. For a full up-to-the-minute report on where marks have been registered, and a copy of the licensing agreement contact the EIPO via licensing@ethiopiancoffeenetwork.com.

Trademark Application Status (January 2008)

Note:
* Subject to no further opposition.
# Prior claim to Harrar by Japanese company abandoned. All applications subject to an invalidation petition by the AJCA. Invalidation case recently suspended by Japan IPO to allow for negotiations.
+ Pending no objections filed.

Yes. Being a Licensee is an opportunity for importers and distributors to participate directly in the production and marketing strategies and long-term planning for these coffees.

Most coffee-importing companies already take an active interest in an efficient and more equitably managed coffee sector in their origin countries. Many roasters and retailers want to know more about the precise origins of the coffee beans, and social and environmental conditions.

The license agreement addresses concerns beyond only the formal recognition of Ethiopia’s ownership of its IP; it is also a tool for engagement of the private sector in the affairs of the coffee trade within Ethiopia. A licensee is a de facto member of the Network of Licensed Distributors.

The agreement gives more voice to Ethiopia’s marketing partners, importers, roasters, wholesalers etc. and through the EIPO facilitation, a forum in which to raise concerns and propose ideas, discuss policies and develop promotions as and when opportunities or problems arise. In particular, collaboration is expected on a long-term branding and promotional strategies, which will be developed by the Ethiopian Fine Coffee Stakeholder Committee and the licensed distributors to benefit all players in the trading chain.