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Ron Layton

Ron Layton
Light Year IP

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    Light Years Ip Final 1 Light Years Ip Final 1 Document Transcript

    • Distinctive values in African exports How Intellectual Property can raise export income and alleviate poverty 
    • In sub-Saharan Africa, something quite new is happening with Intellectual Property. IP is now being used in business strategies to boost export income for large numbers of African producers. Contents What’s all the buzz about? -5 The intangible nature of business today These innovations use Intellectual Property 6-7 The scale of opportunities (IP) in export strategies that involve literally 8-9 Developing an IP strategy millions of producers and are showing a new 0-49 Product briefs and exciting direction for success. This booklet explores some of the possibilities for large-scale opportunities to increase export income and improve the security of that income for millions all over sub-Saharan Africa.  
    • The Ethiopian fine coffee Divine Chocolate Ltd, sector has been in the news owners of the Divine over the last couple of years chocolate brand, now with a ground-breaking 45% owned by Ghanaian initiative that challenged the cocoa growers, has existing order in specialty also been in the news coffee, and to date has celebrating 0 years of brought more than 80 coffee rapid growth. distributors on board.  3
    • 98 007 Production Production Intangible value has grown costs costs Distribution in importance worldwide Distribution margin margin Intangible value is the value of the non-physical characteristics Intangible Intangible of a product, such as its uniqueness, reputation, or tradition. value value I n recent decades the intangible value of products in developed country markets has overtaken the An everyday product, such as a man’s tie, offers an example of this shift. Just 5 years ago, about half the retail price distribution. As little as 5% is being returned to the producers for the materials and manufacturing costs. physical value as the main source of of a tie represented its physical value – corporate income. In 98, 6% of the materials and manufacturing costs – Intangibles 9– Tangibles The management of IP market value of Standard & Poor’s while the rest went to the costs of When Philip Morris paid $.9 billion assets can no longer be 500 companies could be attributed to distribution. to buy Kraft, the second largest food tangible assets and 38% to intangibles. Little or none of the price represented company in the world, only $.3 billion considered a discretionary By 998, only 5% of their assets were the design, brand, or other intangible of that price was the value of Kraft’s function, nor is it solely tangible, while 85% were intangible. value of the tie. In contrast, today, tangible assets – hundreds of food This shift in the value of assets reflects around 95% of the price goes to the production and packaging facilities, the domain of the legal the ability of these intangible assets to rewards for the design or brand (the for products from cheese and veggie generate income. product’s intangible value) and to burgers to coffee, candy, and soft department. It must drinks. be treated as a core Kraft also had an IP portfolio – Market value of Standard & Poor’s 500 companies its technological know-how, brands, component of business 0% 0% 30% 40% 50% 60% 70% 80% 90% 00% trademarks, trade secrets, licenses, strategy. patents, and other forms of IP. The difference, $.6 billion, was the price Ron Carson Innovation Asset Group tangible intangible paid for Kraft’s intangible assets, it’s assets assets truly great source of earnings. 6% 38% 98 Business has changed music, producers in rich countries use With intangible assets being so various forms of IP tools to own and important to their income, IP control the intangible aspect of their tangible intangible management stands at the core of products. assets assets business strategies for producers and For them, IP is not merely a “legal 5% 85% 998 businesses in the developed world. Whether they produce computer issue,” it is the base of their business strategy, the means by which they software, home appliances, candy, or achieve their business objectives. n 4 5
    • Not only established Small company innovates for a place in the market Another US company offers an example of how the analysis of the multinational corporations! consumer market led to the identification of intangible values that were central to a small company’s business strategy. A small company called Method, Inc. was a manufacturer of home cleaning products, such as dishwashing soap, laundry detergents, and air Producer cooperative manages its brand fresheners. Noting that household products were considered a The experience of a US agricultural producer organisation offers a good sluggish, “anti-design,” and unemotional product category, the example of how producers employed IP tools as part of their overall business Method company, which had fewer than 0 employees at that strategy. Sunkist Growers, Inc. is a cooperative created by independent time, saw its chance to carve out a farmers who banded together in 893 to garner more profit from their successful niche in this industry, produce. In the early 960s, Sunkist’s licenses were non-royalty agreements. which is dominated by a handful of But by the mid-980s, Sunkist developed a profitable licensing program that manufacturing giants such as Proctor included royalties. This change contributed to growth & Gamble and Colgate-Palmolive. in revenues over a 0-year period from $3 million to almost $. billion. Sunkist’s Method focused on the intangible values licensing program is continuing of its products. One of the founders, a to expand decades after it chemical engineer, designed cleaning first began: from 005 to liquid formulas that didn’t involve 006, the program grew animal testing and were biodegradable. Method by nearly 5%. also used packaging design for consumer appeal. The company hired a designer to create a signature look for all of Method’s products. Consequently, the company’s bottles for dish soap and laundry detergent were designed to look like bowling pins and figure eights. After Method spent a couple of years building up its company profi le, Target, one of the largest retailers in the US, gave Method a chance and began selling its products. Today, Method’s products can also be found in other major US retail chains and in the UK. Its annual revenue, at about $7 million, is small compared to that of its huge competitors, but the company has successfully used creative packaging design, innovative names and scents, and eco-friendly contents to create an emotional brand whose value and competitiveness rests on intangible assets. 6 7
    • Managing IP is a key element in Exporting increasing Africa’s export income distinctive A frica could develop business strategies with IP built-in when prices can be expected to return and continue in the long term with the use products exporting to developed country markets where value is dominated by IP. Currently, of high-yield industrial agricultural methods worldwide. for almost all non-mineral exports from African countries can increase export Sub-Saharan Africa, valuable returns income by focusing on the intangible from IP are being captured in the value of products and then controlling importing country and not in the and managing that value through IP African country of origin. strategies that can result in long-lasting Unfortunately, strategies for export income gains. development in Africa have relied too Capturing long-term income from heavily on increasing the production the intangible value of African products of commodities and establishing new in export markets, using intellectual processing or manufacturing plants. property and business tools, is the key These strategies have put Africa in opportunity being addressed by the intense competition with other developing Ethiopian fine coffee sector and the countries that are also increasing Divine Chocolate company. production and manufacturing. It’s most common to think of IP African countries and other developing in relation to creative products – nations are competing with each other software, music, or literature, for for a small part of the production returns. example. But physical products, That is, they are competing for income including agricultural products from the ever-shrinking physical value and manufactured goods, also have of products. intangible value, such as their uniqueness, high quality, or design. Oversupplied and Underpriced As producers in poor developing Distinctiveness is the Key countries have continued to increase High quality and reputation are the supply of goods, prices have steadily the intangible elements used in the dropped. The decline in prices paid to successful IP initiative to increase export producers from developing countries income from Ethiopian coffee. Ethiopian IP controls the has been especially evident in the fine coffees are recognised globally as agricultural sector, where commodity some of the best-tasting coffees in the rewards that are prices have fallen over the last 30 years. world. However, the significantly high paid to distinctive A recent upturn in some agricultural prices has been seen because of retail prices for these coffees were being enjoyed by foreign coffee distributors products in export conversion of acreage to crops as a and retailers, while the producers were source of ethanol, but this increase is compensated at very low levels – around markets unlikely to hold. Oversupply and low 5-0% of the retail prices. n 8 9
    • Another successful IP-based business strategy was initiated by cocoa farmers in Ghana. G hana’s cocoa is known worldwide for its reliably high quality within the industry but not by consumers. Creating strong distinctive branding, guaranteeing a fairer trade agreement with farmers, and giving farmers ownership of the marketing company were identified as the key strategies for the producers to Ethiopian fine coffee capture higher levels of the retail price of chocolate products made from their cocoa beans and to trademarking and compete in a competitive, mature market. licensing initiative In the 990s, Ghanaian cocoa farmers set up their own cooperative business called Kuapa Kokoo, which then helped establish the Fairtrade chocolate marketing company Divine Chocolate Ltd. Today the Divine brand successfully sells their chocolate products in the UK, US and elsewhere. The brand’s Ghanaian roots are explicitly displayed on the chocolate’s packaging in the form of a pattern of traditional Adinkra symbols, and marketing communications A coalition of stakeholders, including growers, exporters, and government representatives, established the with their international buying partners. In addition, new brand management policies are being implemented which aim emphasise the quality of the cocoa as much as the Fairtrade credentials. Ethiopian Fine Coffee Trademarking and to increase overall retail values. These Because Kuapa Kokoo owns Licensing Initiative, which registered the changes are helping the producers to a significant share of the trademarks of Ethiopia’s most famous secure export prices that reflect the high company, it has meaningful coffees – Harar, Sidamo, and Yirgacheffe – retail values of their fine coffees. Begun input into how Divine in countries around the world. Companies in 004, the initiative has moved rapidly chocolate is produced and that sell, or want to sell, a trademarked through the implementation phases and sold, and a significant share Ethiopian coffee must obtain a license. has already contributed to increased in the profits. Most importantly, The Ethiopian growers and exporters are income from exported coffee two to three with a major share in the Divine brand, now in a position to engage more equally years ahead of schedule. n farmers can benefit from continuing improvement in income security, as well as their level of income. n 0 
    • IP in Action Producers in other developing countries have also identified the intangible value of their products and created successful business models using IP tools to leverage that value for higher income streams, including the following examples: Whether leveraging their Brazil Cuba Uruguay name, their image, their The company AmazonLife used both a A cosmetics company named Suchel Yerba maté is a traditional, tea- patent and a registered trademark as IP Fragrencia developed a branding like beverage enjoyed in Uruguay, reputation for quality, or some tools to increase export income. After campaign that drew on the reputation Paraguay, southern Brazil, and other distinctive aspect of their the company developed and patented a of Cuban cigars, along with the cultural Argentina. The Ache Guayaki tribe of product, these producers have process for creating “vegetal leather,” image of Cuba’s relaxed and sensuous Uruguay, associated with yerba maté, a leather-like material created from atmosphere. The company trademarked licensed the tribal name in a licensing recognised the intangible value rubber trees in the Amazon rainforest, its brand and is continuing to expand its agreement with the distributor, Guayaki of their products and used it registered the Treetap brand as a market in Europe and elsewhere. Sustainable Rainforest Products (GSRP). IP tools to build successful trademark. Treetap leather is used in The license enables the Guayaki tribe fashionable products such as purses to control ownership of its name and to business strategies. and wallets. capture income from the commercial use of the brand in export markets.  3
    • Business strategies considered negatively stems from the unrealistic pressure on African with IP can increase Companies are forging countries to use IP enforcement, rather than consumer legislation, to control the income for all alliances with each other trafficking in counterfeit goods. Unfortunately, these two issues – the Producers and distributors are business partners. Both will gain from in order to heighten the high price of patented drugs and the enforcement of counterfeit laws – have sharing marketing plans and quality improvement measures and can value of their IP assets confused many about whether IP should also share the results of success in retail markets. and to obtain mutually be shunned or embraced in a selective way. As a result, the truly large IP beneficial competitive opportunities that lie in export markets Working with distributors the Ethiopian coffee initiative, and advantages through have mostly been unexplored. When producers own more and earn the Ghanaian cocoa growers have more for the distinctiveness of their shown, today’s successful producers cross-licensing. Strategies based on IP products, they are more able to invest in have identified their intangible assets Capturing income from intangible Kamil Idris areas such as quality control, production as the foundation of their business values can sometimes be straightforward World Intellectual Property volume, traceability measures, handling models. They are using IP tools such and involve just one IP tool – licensing Organisation (WIPO) and other production improvements. as licensing, patents, trademarks, and a trade secret for instance. Or it can be These factors are often very important royalty agreements to own and manage fairly complex and involve a variety of for importers and retailers in marketing the intangible value of their products tools and related business actions. the final product. and increase their income. Their costs of shipping their products to the The IP tool selected to accomplish A small number of foreign importing distributors are business partners in nearest port. the goal will vary with the product. For distributors of Ethiopian fine coffee the management of their brands. Each developing country, including some products, the retail value is greatly initially resisted the producers’ the least developed, can create or find enhanced by branding and marketing. In trademark and licensing plans, claiming Reaching above survival unique assets with potential for IP-based other cases, brand owners may earn the that “the distributors should own the Business strategies with IP tools can export opportunities that can lead to best return by licensing the production brands, and the producers should just help producers living in poverty to move increased and more secure income that and/or sale of their product. grow the coffee.” The coffee project team beyond the bare survival level offered improves the livelihoods of low-income What IP tools have in common is made clear to their distributors that by producing agricultural commodities. families. that they are an integral part of the they, too, would enjoy long-term benefits It is one of today’s great tragedies that overall business strategy. They are the when producers owned and managed the majority of producers in the world IP more than just enforcement means to owning and controlling the their own brands. Coffee producer are pinning their hopes for a better Some people have negative perceptions income potential of the distinctiveness income increased in 007 and will be future on boosting production through about the concept of IP. One reason – that is, the intangible value – be it secured over the next five years. This hard work but have received less and for this reaction is the experience in uniqueness, invention, reputation, change is increasing the incentive to less in return from commodity markets. Africa with the high price of patented design, quality, or some other important work on production quality, reliability The recent increase in global food pharmaceuticals for the treatment of desirable asset. Business partners with of supply and tighter identification of prices will mostly benefit industrial HIV/AIDS, in which patent enforcement shared interests in the reputation and superior coffee, all of which benefit the agriculture in developed countries, puts them beyond the reach of people presentation of the product will aim to distributors. rather than producers in remote, in need. develop distinctiveness and market it As the experiences of Sunkist, Method, African agricultural areas with high Another reason that IP is sometimes attractively to retail consumers. n 4 5
    • The scale of opportunities Earning $0.bn to $7.6bn from Physical Exports and market access. From 996 to 006 export earnings of African non-mineral A range of African products with merchandise grew from $4.8bn to The potential to increase export income from applying potential were researched in this study $9.0bn– an increase of about 7% over IP tools to the development and marketing of products to determine the factors by which 0 years, or .7% per year. If this rate from Sub-Saharan Africa is significant. export income could be increased of growth is sustained for the next 0 through consciously developing and years, the resulting increase in the implementing an IP business strategy $8.7bn of exports with IP potential T he estimates presented in the table below are in most cases drawn from the views of technical and marketing This work aims to stimulate producers’ thinking about using IP strategies and to encourage project design for related to the retail and export sale of these products. The additional potential for would be to rise to about $0.bn. However, the two approaches – capturing intangible value through use experts on each product and IP business specific opportunities. It is intended to increasing export income across a wider of IP techniques and increasing income experts who have seen a range of IP tools be exploratory rather than definitive range of products from Sub-Saharan through conventional improvements – applied in different situations. They are and there are many more opportunities Africa can be estimated by applying the need not be thought of as mutually based on retail values gathered through than have been explored here. Producers average increased earnings of the 4 exclusive. In fact, they are often desk research and phone interviews and might think imaginatively about how products studied. complementary as seen in the Ethiopian provide indicative figures (rather than to enhance the distinctiveness of their Trade statistics for African non- fine coffee initiative – implementation econometric estimates). products. mineral merchandise showed that total stimulated investment in quality control export earnings in 006 were $9bn. and production improvements. The table below presents estimates of export income that could Light Years IP estimates that about one- be realised for 4 products that were researched in this study. third of these products offer potential Further Gains from IP for increased earnings through the IP business strategies can also positively Sub-Saharan Africa – Export Income and Potential Gains application of IP techniques. Those affect the income from Sub-Saharan products had export earnings of $8.7bn, Africa’s export of services, currently Products Studied Current Export Income Estimated Future Export Income and it was from that group that the 4 about $38bn p.a. The development of Low High products, with earnings totalling $.bn, successful IP-based strategies for the Kenyan tea $49,000,000 $536,000,000 $56,000,000 were selected for this study. $7.5bn craft exports sector is another Sudanese cotton $44,000,000 $60,000,000 $90,000,000 The research on the 4 products opportunity for substantial increases Ethiopian fine coffee $400,000,000 $,00,000,000 $,600,000,000 suggests that capturing their intangible in income, particularly valuable for Namibian marula oil $,000 $,300,000 $,700,000 value could increase export income by low-income artisans. Togolese black soap $50,000 $,000,000 $4,000,000 Senegalese tuna $3,00,000 $70,000,000 $00,000,000 a factor of between .3 and 3., shown It is important to remember that, in Tanzanian blackwood $,000,000 $5,000,000 $30,000,000 on the above table. If those factors of the global economy, creativity can lead Mozambican cashews $3,000,000 $48,000,000 $7,000,000 increase are applied to the 006 export to unexpected export income results, Ugandan vanilla $0,000,000 $50,000,000 $90,000,000 income of $8.7bn, it would be increased with a product sometimes intended Madagascan cocoa $6,000,000 $5,000,000 $5,000,000 to between $0.bn and $7.6bn. only for local consumption ultimately Malian mudcloth $00,000 $400,000 $700,000 This level of change and increase in generating large scale export income. Ethiopian leather $90,000,000 $300,000,000 $500,000,000 value is far greater than the increased For example, Mexican TV soap operas Television animation $500,000 $40,000,000 $00,000,000 earnings that could result from were marketed in Russia and became Creative industries $,000,000 $40,000,000 $60,000,000 applying conventional techniques to very popular, earning substantial Totals $,08,00,000 $,567,700,000 $3,54,400,000 export development, such as improving export income, an unpredictable Average Factor Expansion .3x 3.x quality, infrastructure, training, financial result. n 6 7
    • Developing an IP Strategy The stages of project design and evaluation Scoping Study A feasibility study includes Scoping Study During the scoping stage, broad consideration of capacity-building and Around $5,000 estimates of possible income gains changes to producer organisations and  month are developed based on an initial home country supply structures from » Establish how distinctiveness determines retail prices of similar products understanding of the final consumer the producer to the port of shipment. It » Estimate intangible value in these similar products markets and the export-import situation also considers conventional measures » Understand how intangible value is allocated to points on the supply chain for a particular product. to improve aspects of production, » Estimate the retail price of the product if positioned better in the retail market It is important for stakeholders to such as quality control, traceability » Establish the total intangible value at that price gain an in-depth understanding of how and, possibly, certification. This stage » Estimate how much more value might be gained in export and producer prices the value of their product is determined also covers estimates of the cost of » Determine whether to go on with more work on this product in the final markets. Is it the product’s implementing IP-based strategies as intrinsic uniqueness, its high quality, well as more refined estimates of design, or tradition that creates potential returns and when and how Feasibility Study intangible value and how is it captured these might occur. $0-50,000 and by whom? This determination is the 3 months basis for selecting business strategies Full Project Design and Costing » Study the negotiating power of exporters and importers that might be used to capture additional In the experience of Light Years IP, » Establish several possible IP strategies to increase export and producer prices income, and will lead to the choice of the about  months are needed for full » Estimate costs and potential benefits of these strategies most effective IP tools. project design at a cost of around » Evaluate strategies and select the best one $00,000. Following full design, » Develop a clear description of the steps to implement the chosen strategy Feasibility Study/ implementation budgets may be in the » Evaluate constraints and how to overcome them Initial Project Design region of $3–5 million. Fully developed » Determine whether to go on with more work on this product Having considered possible strategies cost and income estimates can serve to during the scoping stage, more detailed demonstrate the potential and to gain study will enable them to be ranked by support for investment funding. Full Project Design criteria, including likelihood of success $50-00,000 and the goals of an investment. The Learn More, Take Action  months next step is to design the organisational Attend workshops on ‘Using IP » Design project management able to change the product’s position in export markets structure needed to implement a chosen Strategies’ that will include training and » Identify the benefits to distributors and discuss the strategy with key ones strategy. For example, the Ethiopian assistance with your specific products. » Design the linkages from improved export prices to reach producers Fine Coffee Stakeholder Committee » Identify all skill areas needed, including those resident in the retail markets was created for the purpose of taking Contact: » Examine likely responses by participants in the supply chain action in their foreign markets, such Light Years IP » Develop detailed task timeline and logical framework as licensing of distributors and brand Phone: + (0) 547-755 » Evaluate production related issues to enhance project management. In contrast, a UK joint Fax: + (0) 558-4385 » Develop a detailed budget and funding proposals, discuss with funders venture company was created for Email: info@lightyearsip.net chocolate sales in the Divine case. www.lightyearsip.net 8 9
    • Product Briefs Fourteen briefs on the products listed in The fourteen product briefs that follow are intended to give a succinct profi le of the product and its current importance as a provider of export earnings for the producing the table are set out in the following sections. country. Each brief suggests the type of business strategies that relate to the position Background information on each product, value of each product in foreign markets. Possible strategies vary considerably – there is not likely to be a ‘one-size-fits-all’ strategy that would be appropriate for all products. chain information obtained under this study, This is true even where products seem quite similar. For example, Ethiopia’s position and reference material is available online at in exporting fi ne coffee is quite different than Tanzania’s; an IP strategy for Tanzania would likely take a different form, use different IP tools and require different www.lightyearsip.net/scopingstudy institutional arrangements. 0 
    • Kenyan Tea Kenya produces some of the best flavour tea in the world, with a flavour index second only to Darjeeling. The altitude, climate and volcanic soil of the Kenyan Highlands give its tea a distinct, rich, robust flavour. S ince it was fi rst introduced to Kenya in 903, tea has flourished in the east African country, becoming Africa’s effective marketing partnerships. The existing popularity and high reputation of Kenyan tea in both blends named region tea from all sources was $0.95 per kilo. Experts believe that there is potential to shift 0-0% of Kenyan tea Kenyan tea is highly respected largest tea producer. Globally, Kenya is and single origin teas is a testimony to exports to be sold as a named region at the fourth largest producer of black tea this. Kenyan tea has a benchmark role and used in blends by some of retail. If the 3% ratio of export prices after India, China and Sri Lanka, and it’s in many established blends with fi xed the most famous names in the to retail prices is sustained, export second only to Sri Lanka as the world’s flavour profi les. income gained from shifting only 0% tea world. Tea connoisseurs leading tea exporter. Within the past 0 years, Kenyan of Kenyan tea exports to named region Tea farming represents a significant tea has also begun to be recognised note that, due to its unique end product positioning would represent livelihood for more than 35,000 Kenyan as specialty tea, and sold as single flavour and complexity, an additional $5m p.a. If 0% of exports tea farmers and smallholders. Small- origin tea. One example is Milima tea are shifted, the additional export income Kenyan tea could be in its own scale farmers grow over 60% of the – sometimes called ‘golden Milima’. would around $50m p.a. tea to be sold at market, with privately Milima is a fi ne, high quality estate category; such as Rooibos, Combined with the above strategy, owned large-scale farms supplying tea produced in the Kericho region. Ceylon, and Darjeeling. experts also believe that % of these the remaining 40%. These small-scale Milima has a wonderful astringency in Kenyan named teas could be moved tea farmers own their land and have the mouth and plenty of body but with a to single origin or estate premium tea tea licenses permitting them to grow pleasing smoothness and elegance to it. higher than premium teas. positioning. Since single origin or estate and pluck the green leaf, and deliver Milima can generate retail prices even These two opportunities suggest a premium teas show an average retail it to buying stations run by the Kenya dual IP strategy – one for increasing price equivalent of $67.85 per kilo, if Tea Development Authority (KTDA). the amount sold as named origin or just % of Kenyan export tea is shifted Key points KTDA acts as managing agent to the named region tea, i.e. ‘Kenyan’, and one to the higher market position, this could smallholder tea sector and is technically » Tea farming represents an important for increasing the amount sold more generate a further gain of around owned by all of Kenya’s small-scale tea livelihood for more than 35,000 explicitly as single origin or estate tea, $9m p.a. farmers. KTDA’s remit is to support Kenyan growers and smallholders such as Milima. To achieve these two goals, an IP-based smallholders. Nevertheless, KTDA » Kenyan tea is being sold by retailers In 008, the benchmark retail price approach would include structuring the has not been able to optimise earnings at prices higher than other specialty in the UK for standard blends (i.e. tea marketing and managing the brands, in line with the rising retail value of teas, yet Kenya’s export earnings packaged without distinctive elements) enhancing the reputation in both retail specialty teas despite the growth in remain relatively low by comparison was the equivalent of $3.98 per kilo. and wholesale markets. The total gains direct sales contracting for premium » Currently, the specialty tea sector Kenya sold around 80,000 tonnes of tea of both strategies would be in the range teas outside the national auction system. is worth $.bn worldwide, and is through auction in 007 at an average $44m p.a. to $69m p.a. An additional The advances in premium teas primed to become a major portion export auction price of $.75 per kilo. strategy of improving the returns from and single origin teas offer new of the projected $0bn annual tea This equates to about 3% of the retail Kenyan tea that is essential to blends, opportunities to all whose teas fit in industry in 00 price of standard tea. such as English Breakfast, would add quality terms, and to those able to forge In contrast, the average retail price of further gains. n  3
    • Sudanese Barakat Cotton Sudan’s very fine yet little known variety of extra-long staple cotton, Barakat, is superior in its strength, fineness and softness, suitable for the weaving of luxurious cotton fabrics. B arakat ranks among the world’s highest quality cottons, approaching that of Pima cotton, which is largely Barakat cotton, primarily to Pakistan, Bangladesh and India. In 006, farmers received $0.64 Sudanese Barakat does not have the brand recognition among consumers for quality enjoyed by Egyptian and exported from the United States. Sudan’s per kilo for Barakat seed cotton (the Pima cotton. Yet Barakat cotton could Barakat cotton is 00% handpicked, handpicked material before ginning Knowledge of cotton easily be used in the highest value which maintains fibre length, and gently separates the fibre from the seeds). Once segments, depending upon the spinning planting in Sudan goes ginned on roller gins. The strength of ginned, about 35% of raw cotton lint is and weaving processes. Barakat’s this extra-long staple (ELS) cotton allows separated out of the seed cotton. Barakat back to the 8th century. value would increase if consumer the spinning of finer, longer yarns, lint is exported at an average price of name recognition and association with The major extra-long staple yielding a lighter, more supple and $.80 per kilo depending on the grade. high quality were established and durable fabric with thread counts three A wholesaler may pay around $33 for a variety is superior both in strengthened. This represents an IP to four times higher than commodity kilo (equivalent) of pima cotton shirting opportunity for Barakat cotton. fineness and strength. cotton. Superfine fabrics are only fabric. At retail, this same fabric will sell An IP-based strategy could aim to possible with the thinnest, smoothest, for about $66 per kilo equivalent. Sudan Cotton Company establish Barakat as closely similar longest cotton fibres such as those spun The finest extra-long staple cotton to Pima and Egyptian cotton, in from Barakat, Egyptian or Pima. fabrics are used in apparel, particularly collaboration with importers so that Cotton provides an important shirting fabric, and bed and table linens. both parties will gain by increasing livelihood for an estimated 00,000 The value of ELS finished products in quality manufactured and tailored demand and price at wholesale and retail growers and their families, in addition the premium retail market increases two products increases ten times, and can levels. It might also aim to secure for to employing seasonal labour during to three times over commodity cotton be as high as twenty times, the Sudan a share of the intangible value harvest time. The majority of Sudan’s products. At the very high end of the commodity price. in products made from and specifying ELS cotton is grown in the Gezira retail market, the value of these superior Much of the value of a cotton product the Barakat content under such product irrigation scheme. While the scheme is is added in the final stages of production promotions. government managed, tenant farmers when a brand name, designer label, or Currently, Pima cotton enjoys a Key points decide which areas and varieties to plant. prestigious trademark is applied. Many 40% premium over Barakat. Experts In recent years, more than half of Sudan’s » There are approximately 00,000 popular brands, such as American suggest that Barakat may reduce the cotton exports have been Barakat, which farmers who depend on cotton for their Apparel, will emphasize the raw material gap between Pima’s premium to 8%, requires a longer growing season but livelihoods plus seasonal labourers at used, such as ‘made with 00% American which could result in a $9-5m increase earns more at export. As shareholders harvest time Pima Cotton.’ This adds value to the end in export value alone based on last in the Sudanese Cotton Company, » Barakat is handpicked and grown in product as consumers equate high quality season’s volume. By combining this with the farmers are the producers and, east central Sudan under irrigation with Pima. While brand recognition is capturing more from the supply chain technically, the exporters as well. During » Cotton maintains a major role in important, designers also emphasize the and positioning Barakat cotton in new the 006/007 season, Sudan exported Sudan’s economy raw material used to further validate the markets, total export income could be approximately $44 million worth of quality of their product. raised to $60-90m p.a. n 4 5
    • Ethiopian Fine Coffee Ethiopia is the birthplace of coffee, growing some of the finest Arabica beans in the world, as well as boasting the widest genetic base for Arabica coffee. I t is believed that a young goat herder named Kaldi discovered the bean in the Ethiopian highlands after he receiving as low as 6% of the final retail price for its fine coffees. Farmers were receiving about $.00 per kilo, with the incomes doubled over 006. The initiative is a ground-breaking partnership between Ethiopia and coffee noticed his goats kicking wildly from exporting sector receiving about $.00 If the coffee is perfect, then distributors, roasters and retailers. The eating the red cherries. For centuries, per kilo. Wholesalers receive about initiative is unique in that Ethiopia really you have an intensity, and coffee quality has been closely tied $6.00-.00 per kilo, with the final retail intervened in the foreign markets to with Ethiopian culture, with coffee price about $0-8.00 per kilo. In one a balance, and a complexity of achieve its goals, but also offered benefits ceremonies being a daily practice promotion in the United States in 005, aroma that is wonderful. You to the distributors of its distinctive amongst Ethiopians. An estimated the retail price for Sidamo reached an product. The distributors gain by have chocolate, you have flowers, fifteen million people are involved in astounding $57.0 per kilogram. The contributing their views and energy to the coffee industry in Ethiopia. Of this, retail prices reflect the value of the you have fruits, you have honey, joint promotions and by jointly securing roughly six million participate in the hard-earned reputation and willingness you have toast, you have all access to an increased supply of the production and trade of the most famous of consumers to pay premium prices for unique coffees. kinds of complex aromas. and distinctive fine coffees – Sidamo, distinctive, high quality coffee. Ethiopia now has over 80 licensees Yirgacheffe, and Harar/Harrar, brands In 004, with assistance from Light Dr Ernesto Illy in 8 countries with a target of 50-00, that are Ethiopia’s own Intellectual Years IP, the Ethiopian Intellectual Illy Cafe at which point higher prices can be Property. Property Office began the initiative in permanently secured. An umbrella In recent years, the demand in the conjunction with the Ethiopian Fine brand has been developed which covers United States for gourmet and fine coffee Coffee Stakeholder Committee, which is made up of unions of coffee farmer the three fine coffees and creates market has grown at an annual rate of over cooperatives, private coffee exporters, awareness of Ethiopia’s unique capability 0%, and new markets have opened in and other bodies responsible for the to deliver more fine coffees to market, Key points India and China. Coffee connoisseurs development of the coffee sector. The due to having by far the largest range and know that some of the finest coffee in » Ethiopia is the birth place of coffee, three famous brands were secured with types of unexposed fine coffees. the world originates in Ethiopia; the providing some of the world’s finest trademark registrations in around 30 With this strategy in place and the country has a strong reputation for these Arabica beans countries and distributors were required constant development going into the heritage coffees. Yet for years Ethiopian » An estimated 5 million Ethiopians to obtain licenses to sell them. In this initiative, it is projected that, in the long fine coffee was earning about the same depend on the coffee industry for their way, Ethiopia took a degree of control in term, all of Ethiopia’s export of coffees export price as non-distinct commodity livelihood the foreign distribution of its fine coffees will be sold as branded fine coffees. It Arabica, which is subject to substantial » Ethiopia serves as a model of how through licensing its distributors. The is estimated that producers could raise price fluctuations. The Ethiopian producing countries can take control first year of licensing saw improved and secure their income at around the farmers of fine coffee were not gaining of distribution in foreign markets negotiating positions, resulting in short $6-8.00 per kilogram level. Total coffee the benefits of their superior product. in order to receive higher and more term increases in export prices. The export income of $400 million before the Prior to the trademarking and secure export income Oromia Union of Coffee Cooperatives initiative would then be raised to around licensing initiative, Ethiopia was reported that in 007 Yirgacheffe farmer $.-.6bn p.a. n 6 7
    • Namibian Marula Oil For centuries, indigenous women in the rural areas of Namibia have cracked the nut of the marula fruit to extract the kernels from which marula oil is made, an oil with highly regarded healing properties. T he marula tree is found throughout Southern Africa. Marula oil is rich in antioxidants and oleic acid, essential the specific natural product used in their personal care lines. This differentiates their products from the thousands of oil, marula oil producers could generate more than the current income levels of $,000 if business strategies with components for the preservation of others that simply advertise as using IP were in place to popularise the healthy skin. These characteristics, ‘all-natural ingredients.’ This kind of Consumers are looking for ingredient, expand its usage, and ensure as well as the exceptional chemical promotion appeals to consumers seeking products that are natural, have that Southern African producers, using stability, make marula oil ideal for out new products with unique stories traditional techniques, were the only a story behind them, and have producing cosmetics. Additionally, behind them. The Body Shop has clearly recognised suppliers with no synthetic marula and other African plant extracts capitalised on the distinct social and healing properties – positioning simulations being acceptable. This and oils have qualities that make them cultural aspect of marula, as well as it Africa in an ideal situation to type of IP strategy could triple export ideal ingredients for fortified foods, being a natural product. earnings. Further earnings might also so-called “cosmeceuticals”, and other The natural ingredients contribute to share its cultural knowledge follow with the expansion of its use in health care products. the intangible value of these products. of traditional beauty regimens premium branded products. One of the two buyers/processors in The retail price for a small unit of Strategies could be applied to a using local plants. Namibia is a cooperative that represents shimmering eye shadow from The Body number of distinctive products in this about 4,500 women producers. Shop that contains marula oil sells for sector, producing export income gains Companies are marketing natural four times more than the eye shadow for producers in several parts of Africa. ingredients in their products more than sold in chain supermarkets. Marula oil distinct massage oils. Premium massage The export income gains could total ever before. A Namibian cooperative is also used as a massage oil, with prices oils earn a higher retail price due to the many millions from a range of African supplies The Body Shop, one of the in line with other premium massage natural essential oils in them. natural products. most well-known all-natural cosmetics oils, and sells for much more than non- Currently, producers are receiving As the popularity of marula and companies, with Namibian marula oil, $.35 per kilogram for marula oil. The other natural ingredients begins to which the company uses in almost all exporting sector collects $3.45 per rise, small companies based in Africa Key points of its make-up. The Body Shop attests kilogram for the same oil, which has a have expressed their need to assert that marula is “an amazing natural » Over 4,500 Namibian women extract wholesale price of $3.5 per kilogram. intellectual property protection. Due to moisturiser” and advertises marula’s marula oil in order to earn an income The average equivalent retail price for the informality of the trade, retailers are long history within Namibian culture » The demand for natural and exotic pure marula oil is $6.50 per kilogram. often able to reap the benefits of using and production by a women’s co- products is continuing to rise in While marula producers are well the name ‘marula’ in their products, operative. The profiled use of unique raw developed markets organised and have even patented a while the producers are virtually ingredients by the retailer raises the » More than ever, retailers are by-product of marula, Marulene, there forgotten. A business strategy that retail value of products such as lipsticks, advertising natural ingredients in is still potential for marula producers may focus around certification and foundations, blush and eye shadow. their products: an intangible value that to consolidate and refine the positioning distribution aspects could be employed The Body Shop is one of the few commands higher retail prices of their product in retail. As there is to protect African producers from future companies that have started to identify clearly a niche market for this unique misuse of their products. n 8 9
    • Togolese Black Soap This uniquely natural soap has been handmade by women in West African communities for centuries, with the recipe being passed down from generation to generation. B lack soap, also known as ose dudo, anago, and alato soap, is a traditional treasure of Togo. It is The demand for natural personal care items is continuing to rise in developed markets. Companies that base their by an IP-based strategy to capture part of the intangible value that is earned by higher priced soaps. Experts believe that produced from a unique mixture of plant product line on being all-natural, such as Black soap is distinctive from black soap has the potential to become as wastes such as cocoa pods, plantain Tom’s of Maine, Burt’s Bees, and Lush, other all-natural soaps: plant well known as shea butter, illustrating leaves and bark, shea plant by-products, have seen tremendous growth in recent the need to manage this unique product waste is being recycled into a and/or palm kernel shafts, as well as years. Lush commands premium prices in the interest of low-income producers. vegetable oils such as palm oil or coconut for their natural soap, retailing for more product that has magnificent Most black soap producers are only oil. Most conventional soap is made than four times that of other natural skin healing qualities. The receiving about $0.44 per kilogram for from oils and chemicals, but black soap soaps. While much of this value is due their soap. Exporters are receiving secrets of beautiful skin are is produced from oils and agro-wastes, to brand recognition, Lush also stresses approximately $.5 per kilogram. Black resulting in a very unique creation. The the hand-made, natural, exotic elements being shared from Togo, a soap wholesalers are receiving about all-natural soap is touted as having an of its products. Other all-natural country that has perfected $7.00 per kilogram while the retail extremely soothing effect on dry and soaps typically retail for double that of price is around $34.00 per kilogram. It is black soap production irritated skin as well as clearing acne conventional soaps. Black soap fits the important to note that the trade is still and red areas. Due to the purity and profi le of these products that are earning throughout generations. very informal. It is estimated that Togo simplicity of ingredients, it is said to be higher retail prices. is currently exporting about $50,000 one of the healthiest soaps for the skin. As black soap has not strongly worth of black soap. Togolese black soap has a very high penetrated the market, the retail chains that carry black soap labels, though Given the market situation, with the percentage of unrefi ned shea butter have not been developed, with most black not all are produced in Africa. As the proper IP strategies which might involve and unrefi ned palm oil. The other soap being sold by small internet-based popularity of the product continues to distribution and certification changes, ingredients (local recipes vary slightly retailers. There have been a few brands rise, some retailers are using the label experts estimate that black soap by region) are also distinctive: plant African black soap. Importantly, some producers could capture an additional waste is being recycled into a product black soap is being made with black dye, 00-400% premium on the price per kilo Black soap facts Key points that has magnificent skin healing containing none of the key qualities of they are currently receiving, and could qualities and is also environmentally » There are an estimated 00,000-00,000 true black soap. However, true black build a market yielding export income sensitive. Although this soap does not small-scale producers of black soap in soap is from West Africa – it is the raw of $-4m p.a. yet have a world reputation, natural Togo ingredients, as well as the traditional Togo is one of four West African soaps already have a reputation for » Black soap is one of the healthiest hand crafting of the soap, that make the countries that is exporting black soap being gentler on the skin, and evoke soaps for personal care usage soap authentic. Both genuine black soap, as an artisan product. An IP based feelings of comfort, safety, nature, » Experts believe that black soap could as well as imitation, can be found in a business strategy might be built for and nourishment. These aspects are become as popular as shea butter in the few natural food markets, though they Togo or a combination of different becoming increasingly important to mainstream market are not widely available. country stakeholders, possibly consumer choice in skin care products. Black soap producers could be assisted involving cooperatives. n 30 3
    • Senegalese Artisanal Tuna Fishing in Senegal is not only a means to earn an income; it has been deeply embedded in Senegalese culture for centuries. F ishing in small pirogues (flat- bottomed boats) with nets is the traditional way of life and main source albacore and skipjack species. There is an opportunity for Senegal to gain more income from traditional fishing and of income for 600,000 Senegalese improve the livelihoods of thousands Capitalising on the environmental and cultural fisherfolk. Fishing generates an of fishermen. aspects of traditional fishing methods, reflected estimated 70% of the Senegal The average retail price of gourmet government’s annual revenues. The yellow fin tuna is more than 3 times in a gourmet canned tuna brand, could return a small-scale fishing sector provides what conventional canned tuna sells for. 60% of fishing exports and is one of This higher price rests on a number of higher and more secure income for thousands of the country’s main sources of foreign factors, including the eco-friendliness, Senegalese fishermen. exchange earnings. Dakar, the capital the quality of the tuna, the method of city, is an important Atlantic tuna catch, and packaging. Increasingly, port. There is one cannery operating in consumers are concerned with these Senegal, SNCDS, exporting the majority issues. These distinctive attributes kilo. Wholesale prices of gourmet tuna gains continuing to increase over of its production to Europe. appeal to established niche and gourmet in importing countries may reach $0.00 time as the brand becomes stronger. Fishing is not only a means to earn markets in Europe, where consumers per kilo and retail is at the equivalent of Complementary to the IP strategies a living, it is deeply embedded within are willing to pay more for their tuna. $40.00 per kilo. are actions that improve aspects of Senegalese culture. Many coastal Currently, fisherfolk receive less Senegal has the opportunity to physical production. The Senegalese villages have long been centred around than $.00 per kilo of tuna. Exporters/ develop a product that is distinct in inter-professional artisan fishing-sector fishing, with traditional fishing canners are receiving around $4.9 per the final retail market helping the organization, CONIPAS, is taking action techniques being passed down from fishing industry to earn more income. to strengthen the small-scale fishing generation to generation. However, the An IP strategy could see Senegal sector by improving facilities including Key points livelihoods of thousands of fishermen realising its potential for positioning quays, preservation and processing have been threatened in recent years » 600,000 people are reliant on fishing tuna exports fully in the premium plants to foreign hygiene and quality as Senegal struggles to compete with as a means of income in Senegal and gourmet bracket. Senegal’s long standards. large-scale international industrial » Senegal lands some of the finest fish traditions and artisanal fishing methods The Senegalese fishing sector may fishing fleets. species in the world, including the offer an important underpinning for also be able to increase export income Canned skipjack tuna is widely sold, gourmet yellow fin tuna a branding strategy that can appeal from existing exports by building yet there remains a large demand for » Consumers are increasingly concerned to consumers by emphasising the negotiating strength in the supply more distinctive types of tuna; those about the production methods of the traditional fishing practice which has chain through IP business techniques with an emphasis on gourmet flavours, products they buy: environmental a much lower impact on fish populations. and applying these techniques to new sustainability, or origin. Yellow fin and social aspects are becoming more A gourmet branding strategy could help products. These two strategies combined tuna, which is classified as gourmet, important the country raise its export income from could result in total income gains in the demands a higher retail price than the canned yellow fin tuna by 50%, with order of $40-70m p.a. n 3 33
    • Tanzanian Blackwood The tree of music, Blackwood, also called ‘mpingo’ and ‘grenadilla’, is an exceptional wood found in southern Tanzania, growing sparsely in dry open forests or in the savannah grasslands. B lackwood is a member of the Rosewood tree family and grows to full maturity in 70-00 years. Due to Retailers always note if a clarinet is made from the exceptional grenadilla wood, as the wood is a key selling point stressing the integral role of blackwoods in the production of fine woodwind instruments. IP business tools could various factors, much of the woodlands for clarinettists. Skilled techniques be used to build a new identity, or co- The high quality reputation in the rest of Africa have been depleted. are involved in manufacturing an branding element alongside existing Communities in Southern Tanzania instrument, yet the wood is the essential that blackwood has in the brands, for all instruments made with have been active in gathering the wood raw material and a valuable component music industry is a major blackwoods. or felling the blackwood trees on behalf of the finished product. As blackwoods are a natural determinant in the final retail of the sawmills that process them. Blackwood trees are community resource subject to sustainable supply Demand for African blackwood is due resources. Currently Tanzanian price of woodwind instruments constraints, Tanzania could, within to its unique qualities for woodwind communities cutting and gathering the compared with instruments this strategy, restrict the supply of instruments, primarily clarinets and wood are receiving $0.05 equivalent for blackwood to those prepared to engage made from other woods. oboes. African blackwood is core to the every clarinet produced, with an average in marketing work to develop a clearer definition of high quality woodwind retail price of around $5,000. The association in the minds of both instruments and a proportion of the Tanzanian export sector earns about users (musicians) and music lovers retail price is specifically attributable to $30 per clarinet while the wholesalers/ In addition to grenadilla wood, (audiences) of quality instruments with the type and quality of the wood. manufacturers are receiving around clarinets can be made from rosewood, Tanzania’s unique resources. In addition to its use for instrument $,500. It is important to note that the hard rubber, or plastic. Plastic Concerns have been voiced production, African blackwood is sought cost of crafting the clarinet is about 5- clarinets are often sold to beginners at regarding the physical sustainability after by craftspeople in both Tanzania 40% of the final retail cost and the craft a considerably lower price range than of the blackwood tree. In full project and abroad. The waste produced from is highly skilled. wooden clarinets, ranging from $00 to design of initiatives to capture these the manufacturing of instruments is $500. Rosewood and blackwood clarinets opportunities, many production, significant – around 75% – as only the can retail from $,000 to as much as, environmental and institutional issues Key points flawless heartwood is used for clarinets. exceptionally, $,000. The average price would need to be integrated. Long term This scrap wood is valuable raw material » There are more than 4,500 people in of a grenadilla clarinet is about $5,000 resource management can be enhanced for the Makonde people of Tanzania, various villages where blackwood is for medium to high quality. if connected to increased income to whose wood carvings are some of the found A comprehensive business strategy blackwood cutters and gatherers. best in east Africa. Traditionally crafted » For a clarinet that is produced and with IP elements could directly help Experts believe that Tanzania could for ceremonial purposes, these carvings retails for an average of $5,000, communities where the grenadilla wood capture an additional $0-5m annually are now an important export product. communities are receiving only $0.05 originates to capture a greater share of the estimated $00m total retail value Outside of Africa, specialist craftspeople » Without blackwood, woodwind of the end price. Blackwood cutters, of the clarinet market and in partnership use African blackwood for turnery, inlay instruments would not be considered gatherers, artisans and processors with users and audiences might be able work, and small constructed items such high quality could develop a direct relationship to build an additional blackwood artisan as jewellery boxes. with instrument makers and retailers, business worth $00-300m. n 34 35
    • Mozambican Cashews Management of the Zambique cashew brand may earn more for Mozambique than on-shore processing. M ozambique was once the world’s largest producer of cashew nuts, supplying 30% of global production. its historic high, with an estimated 940,000 smallholder farmers cultivating the nut. The cashew nut processing At its height, Mozambique supplied industry in Mozambique has been slowly The cashew is an important crop, it is an important 40,000 tonnes a year, with a significant revitalized and 0 processing plants export crop, it is an important protein source for families. proportion being processed prior to are now operating within the country. export. However, civil conflict, ailing In 005 Mozambique exported 3,00 It provides a valuable income earning opportunity for trees and economic policies resulted metric tonnes (3. million kilos) of raw Mozambicans in an expanding international market. in the virtual collapse of this once cashews at a value of $8m and 000 booming industry. By the late 990s metric tonnes ( million kilos) of kernels International Institute for Environment and Development Mozambique exported to India 98% of its (shelled nuts) at $4.3m. Farmers received raw cashews for processing. Although about $0.65 per kilo of raw nuts, which Mozambique is producing high quality were then exported at $0.87 per kilo. cashew nuts, importers and consumers Kernels, however, were exported at about jumbo cashew nuts, one of the highest revenue for Mozambique, along with often believe they are buying Indian $4.40 per kilo, commanding a much grades, sell for US$9-.50 per kilo at an effort to build up distinctiveness cashews, unaware that they were grown higher price than raw nuts. wholesale. At retail these nuts sell for in the perceptions of final consumers in Mozambique. Importers of cashew kernels further $8-5 per kilo depending on the outlet. and increase the intangible value of The cashew tree, Anacardium process the nuts, roasting, adding The primary marketer of Zambique cashews. Experts believe that occidentale, is native to Brazil and was flavours and using them in food Mozambique’s cashew kernels is the export income could be increased to introduced to Mozambique in the 6th production. In the retail market, the Agro Industriais Associados (AIA), between $48m p.a. and $7m p.a. century but it was not until the 0th whitest and largest nuts are the most formed by seven cashew processing It is worth noting that processing century that the commercial value of the valuable and graded the highest. Whole plant owners. AIA also serves as an plants will only offer minor benefits to nut was realized. This small evergreen advocacy group, addressing key policy the industry and the country. Although tree is easily cultivated, vigorous, issues such as quality control and processing generates employment, it Key points drought resistant and requires little export price. AIA developed a brand must be financially viable as a physical care. The cashew nut comes from the » There are about 940,000 smallholder of Mozambican cashews under the industry to remain sustainable. Efforts kidney shaped seeds that adhere to the farmers growing cashews in name Zambique. The Zambique brand, to extract more income from the export bottom of the fleshy, plump, pear shaped Mozambique however, has not figured prominently market do not depend on processing, red-yellow cashew apple. The nuts, » Mozambique cashew production is in retail sales of cashews. Given that since joint ventures or partnership considered a high value luxury food, are currently at one third of its historic shelled nuts sell at retail for as high as with external processing firms could picked, collected and exported as raw high eight times the export price, a branded be a means by which Mozambique may nuts or kernels. » Cashews are an important crop for product should return greater income retain control of its final export product, Currently cashew production in household consumption to Mozambique. An IP strategy would capture intangible value and increase Mozambique is less than one third of aim to capture a greater share of retail income to farmers and exporters. n 36 37
    • Ugandan Vanilla Uganda’s green gold, picked at its peak and carefully cured, has a rich, complex flavour with the cream soda and smoky notes associated with world-renowned bourbon vanilla, but with a spicy overtone. V anilla beans, long slender pods, are picked from vines and cured over a period of three to six months, using the whole bean grade A. Uganda has recently established some worldwide recognition, and confidence in its vanilla beans vanillin content, has the potential to be distinguished as a specialty product. One opinion expressed suggests there is an traditional method of sun drying and continues to grow. These beans [Ugandan] over-supplied capacity worldwide in the sweating in wooden casks, where pods Thousands of farmers cultivate extracting industry, so a conventional are set in the sun during the day and Vanilla planifola on their small farms are quite simply the finest strategy of on-shore processing will be covered with blankets for the night. This in central and eastern Uganda, where gourmet Bourbon-style unlikely to succeed. Instead, the Divine allows the flavours to develop slowly and the rich, loamy soil, plentiful rainfall Chocolate model of a jointly owned fully. Of the more than 50 compounds and tropical environment allow them beans we are now seeing distribution and marketing company within the vanilla pod, vanillin is the to flourish. Each plant requires hand in the market – surpassing based in the final markets could be most significant; it produces the vanilla pollination, and picking the beans when considered, along with a deliberate aroma and flavour and imbues the fully ripe is critical to obtaining optimal even the finest Madagascar PR-based campaign to highlight the pod with a distinctive flavour profile. flavour as vanillin develops in the last Bourbon beans we carry. story of the distinctiveness of this Ugandan vanilla contains a notably few weeks of maturation. Farmers sell specialty product, as pod or extract. high vanillin content of around % (up green vanilla beans to firms that cure Amadeus Vanilla Beans The extraction, if desired, might be to 3.% is found in the highest Ugandan and export them. Ugandan farmers sub-contracted, as the prime purpose grades) whereas Madagascan vanilla, capture about $8 per kilogram while of such a company would be sales and currently the most well reputed and export prices for cured “pod” beans are for cured pods. At retail, these pods are marketing. recognised origin, generally averages around $5 per kilogram. attractively and hygienically packaged In 006, 00 tonnes of cured vanilla about .8%. The most common vanilla A wholesaler in the foreign market for the end user and may sell at retail for exports earned nearly $5 million; products in the retail market are beans may receive around $3-38 per kilo around $8 for five pods or the equivalent production in 007 was up to 400 tonnes. and extract; pulp, paste and powder are of $35 per kilo. Pure Ugandan vanilla Uganda has managed to produce the also available for (food) manufacturing. extract is generally not sold in the best characteristics of fine vanilla and Key points While Ugandan vanilla beans have retail market but goes directly to food provide steady high quality supply only become readily available within » There are an estimated 00,000 production companies or is blended while increasing production rapidly. the past four to five years, they are now farmers plus seasonal labourers in the with other vanillas, balancing the Through applying a business strategy considered among the top three or four production sector flavour profile. Ndali Estate, a small that includes IP to raise retail value and varieties, according to an expert. In » In 007, Uganda produced 400 tonnes Ugandan company, exports very high gain more from the supply chain, experts addition to producing high quality beans of cured beans worth in excess of US$9 grade vanilla products including both suggest that the current Ugandan export and using time-honoured production million extract (at $0 per kilo) and cured pods price could increase 0-50% by securing and curing methods, Uganda delivers » This variety has the highest known (at $,00 per kilo). a greater share of the existing revenue premium quality beans consistently and levels of vanillin, responsible for the In the view of some exporters who stream. A larger joint venture strategy in even supply. Up to 40% of Uganda’s flavour and fragrance are testing the market, Ugandan might result in an export income volume beans are of gourmet quality, that is, vanilla, with its particularly high of $50-90m p.a. n 38 39
    • Madagascan Cocoa The island of Madagascar is not only one of the world’s most ecologically diverse countries; it also supplies some of the world’s finest cocoa, that is, Criollo cocoa. I ndustry leaders are calling the current surge in demand for dark gold “chocolate fever”. The consumer trend attention are the origin of the cocoa, traceability of cocoa bean production, organic and fair-trade certification, reputations as single origin suppliers, in line with the recent trend towards single origin chocolate. Madagascar is to dark, rich chocolate, high in cocoa health attributes, and environmental one. As a low volume, specialty cocoa content and with strong natural flavour sustainability. The retailing advances With a variety of trends producer, Madagascar is in favourable has sent the chocolate industry off in for single origin chocolates are notable position to raise its export income search of high-end, single origin cocoa and offer potential benefits for producers fuelling the cocoa from cocoa through applying a careful sources from all parts of the world. Some who can create appropriate international market, Madagascar is in business strategy to optimise earnings varieties of cocoa have seen an 800% marketing partnerships. on the total volume available. An increase in price in the last two years Worldwide sales of chocolate in 007 favourable position to raise approach might build on the exclusivity with traders paying 0 times the market were valued at around $80bn, while of the product in a framework that price for specialty cocoa beans, and the revenues from cocoa beans were less its export income from benefits all formal stakeholders. That fi ne chocolate market is expected to than $5bn, showing that producing cocoa through applying IP is, even though cocoa is, conventionally reach $.6bn in 008. countries together are receiving only speaking a traditional ‘commodity’, it Like tea, wine and coffee, the qualities around 6% of the retail value, a ratio of business tools that would could make sense to remove it from this of cocoa beans are in fact also set to a 6:. The ratio of beans (cocoa) to retail categorisation. significant degree on the farm where (chocolate) is even greater for gourmet benefit all stakeholders. This might be achieved through better they are grown, resulting in distinctive and other differentiated chocolate product marketing and messaging taste profi le and flavours. This is true products. Currently, integrated grinding and proactive support in the retail in spite of significant downstream and manufacturing companies are able, environment to build the presence processing to produce the end products due to market dominance, to capture the intangible value of fi ne cocoa in the of unique brands, such as Malagasy in the confectionery market. The beans chocolate product. Chocolate. A survey of chocolate retail are distinguishable by the soil, local Around 60% of growers in Madagascar pricing shows that, while Malagasy Key points environmental attributes and the careful produce cocoa on small family farms of Chocolate is currently achieving retail handling they receive by growers, and » Producing countries, together, are about -0 hectares. Data suggests that prices above premium chocolate, it is depend in large degree not only on the receiving only around 6 percent of these cocoa producers are receiving still some 30% below the average price tree type or species, but precisely where the value of their products between $0.0 and $0.6 per kilogram for for single origin chocolate. and how they are grown and tended. Like » Madagascar is the only African their cocoa beans. Experts believe that strategic most mature markets, segmentation and country that the International Cocoa Where the distinctiveness of origin partnership and low-cost marketing differentiation, as well as traceability, Organisation (ICCO) recognises as a is significant, a part of this brand value campaigns can be implemented to make have become more and more valuable in producer of 00% fine cocoa can potentially be shared between the up the 30% gap and, through some the last decade. » The range of fine cocoa in Madagascar distributor and the supplier in the place adjustment to margins, export income While quality certainly matters, other has yet to be completely discovered of origin. Around 8 producing countries could be raised from about $6m p.a. to characteristics that have begun to draw have managed to establish their about $5-5m p.a. n 40 4
    • Malian Mudcloth (Bogolan) This variation on a textile inspired from the uniquely Bamanan ‘bogolanfini’; including spinning cotton yarn, weaving strips of fabric, preparing dyes and mud, and painting the patterns. T he Bamanan, a tribe of two million located largely in Mali, painstakingly create ‘bogolanfi ni’. enhance the value of a bogolan cloth by producing fi nished items such as handbags, pillow covers and scarves, are common for a very large number of artisan products from Sub-Saharan Africa (and from Least Developed Traditionally the patterns and designs which sell for prices equivalent to full Because bogolanfini has Countries in other continents). carried messages and the cloths were pieces of cloth. A pillow cover made important traditional uses and An IP strategy could directly build worn at life’s pivotal transitions. All- from bogolan costs twice that of a mass on three aspects of the intangible value natural vegetal materials are collected produced pillow cover. Artisans have because the designs themselves of bogolan. The IP is derived from from within the immediate region and been adapting bogolan to accommodate are loaded with cultural production traditions, evolving design made into dyes by the artisan. Mud is a wide range of products without significance, these artists who work and aesthetic distinctiveness. used to paint the background around diminishing its singularity and An IP strategy could unify worldwide the pattern and symbols; this technique recognisable intangible value. draw on its style or techniques presentation and marketing of designs, requires great skill, time and patience. Artists, many of whom have trained at evoke all of these referents. and control the use of designs and pagnes The meticulous attention to design the Institut National des Arts à Bamako, Victoria Rovine by certification, or by licensing the distinguishes this craft. ‘Bogolan’, also create unique cloths, sometimes University of Florida garments, furnishings and other fi nal known as mudcloth, is a new take on the abstract, sometimes resembling products producers make. This could traditional bogolanfi ni. Bogolan designs traditional bogolan; they may sell their expand the applications of authentic are often simplified and the cloths have work directly to clients or retailers, by founding ateliers or workshops that bogolan to quality retail products been adapted for use in home décor, which will retail at up to $50. Several teach this distinctive craft to young (clothing, furniture, accessories) into clothing, accessories, and even shoes. artists have capitalised on both the people, who learn an important income a variety of categories, mostly at the Mudcloth has gained recognition economic and social value of mudcloth generating skill. higher end of the retail market, and due to local fi ne artists promoting and For their work painting a ‘pagne’ protect against the risk of counterfeiting. exhibiting their work in Europe and (eight to ten strips of cotton sewn A bogolan aficionado believes the market Key points Francophone Africa and also because of together) measuring approximately 45quot; has not nearly reached saturation and, the work of celebrated Malian fashion » The traditional, completely handmade x 70quot;, artisans earn $-. The merchant/ certainly, individual high quality pieces designer, Chris Seydou. Artisans work textile uses dye made from a solution exporter may then sell the cloth for could bear price increases of 0%, and in workshops or cooperatives painting of leaves and mud collected and about $9. Wholesale prices range perhaps 5%. Global marketing and cloth that has been provided to them fermented for up to a year between $-4 and at retail, a pagne management could triple the income by a merchant/exporter. There are also » Traditionally, one piece could take can sell for $35-65 with prices reaching of artisans and artists and gain a far merchants known as ‘suitcase sellers’ up to three weeks to create up to $5. Alternatively, independent larger share of the retail value, adding who operate on a small scale. The value » There are at least 00 workshops artisans who fund themselves may sell $375,000 to export income. Institutional of exports in 006 is estimated to be in San and many individuals and their pieces for $-48, depending upon issues, including the widely spread and around US$00,000, an imprecise figure cooperatives throughout Mali that negotiations with the buyer. small scale production situation, would due to informal trade. are producing bogolan Price ratios where artisans earn need to be incorporated into an IP- Retailers in the US and Europe further -3% of the retail price of handicrafts enhanced strategy. n 4 43
    • Ethiopian Leather Three types of skins coming from Ethiopia result in some of the finest leather in the world: Bati, Cabretta, and Selallie. All fetch high retail prices in developed markets. E thiopia is home to the largest population of livestock in Africa, with at least 40 million people owning about $40-50 for the leather that will be manufactured into a coat outside Ethiopia. An importing wholesaler/ labels, such as Taytu. Supporting these differing elements with a package of IP-based business Ethiopian leather is recognised livestock. Sheep and goat skins represent manufacturer will then make the coat strategies would enhance existing the bulk of Ethiopian leather production, with the final retail price being at by manufacturers all over the reputations and communicate new producing an estimated 5 million skins least $400. world for its high quality, yet ones, in order to produce more export annually. This sector is important in Herders and family sheep owners are income and secure that income for all hardly anyone in the general reducing poverty, as a large percentage receiving around $ for the skins that stakeholders in Ethiopia. Given the of the population is directly affected by will be used to produce one Cabretta golf public associates the quality recognition by wholesale buyers of the leather industry. glove that is both strong and thin, and of the leather with Ethiopia. Ethiopia’s fine leather and the intangible Ethiopian product names that have for better than other skins. The exporting values tied to it, experts believe many years reflected distinctive high- sector is obtaining $5 for the leather that Ethiopian leather producers could end leather products are Bati Genuine, will be manufactured into the finished and manufacturers know it is one of increase their export income by three which refers to thin goat suede, Bati-type glove. Outside of Ethiopia, the glove the world’s best and are prepared to to five times. The 007 export income and Selallie Genuine, which refers to a retails for $5. pay premium prices for it. This kind of was just over $90m, growing most by special type of hair sheep skins. Cabretta, Bati, and Selallie skins are reputation is important when devising expansion of volume and some increased There is also recognition in the all internationally recognised for their an IP strategy, as reputations have processing. Additional processing may wholesale market of the superiority of strength and other qualities, resulting intangible value and can result in greater create ‘value-added’, but only if the Cabretta leather for making gloves, not in premium prices being paid for these export income. processing is profitable. ‘Value-captured’ only for sport but in fashion as well, types of leather. Also, some of the fine Also, twelve Ethiopian leather through IP-based strategies can produce though many consumers are unaware leather goods coming from Italy are made companies recently developed a brand of better net returns, an outcome that can of the Ethiopian origins. Ethiopian from Ethiopian Bati, as wholesalers luxury leather goods, Taytu. This brand be determined from a feasibility study Cabretta leather is distinctive for being is based on Ethiopia’s image as being with consideration of costs and benefits. soft and yet strong at smaller thicknesses authentic, and possessing the ‘essence The quality and preservation of Key points than other leathers making it the best Leather facts of Africa’. The brand is distinctive, the hide are affected by dipping for type of leather for golfing gloves, with » At least 40 million Ethiopians raise capitalising on Ethiopia’s geographical disease prevention and quality control some retail prices double that of non- livestock to supplement their income location and culture, both of which have during slaughter and post slaughter Cabretta gloves. » Two international standards for high strong intangible values. This luxury transport to tanneries. In order to ensure Bati goat skin is known to produce the quality leather are Ethiopian: Bati designer label had a successful launch; high quality leather from Ethiopia, softest, finest suede. Ethiopian herders Genuine and Selallie Genuine the entire collection sold out at the a scheme that provides incentives to are receiving about $0 for the skins that » Ethiopian Cabretta leather is Paris fashion accessories collections herders and collectors to give more will produce a Bati coat. After tanning recognised as the best material for in autumn 006. Fashion experts note attention to the quality of the skins and processing to ‘wet blue’ or better high quality golf and fashion gloves that consumers are beginning to tire of should be incorporated into an IP-based levels for export, the exporter collects big brands; they are looking for unique business strategy. n 44 45
    • Television Animation For the first time in history, modern technology has closed the distances between Africa and export markets, for digitally transmitted products. T he arrival of high speed fibre optic cable in more parts of Africa has opened opportunities for graphic- in recent years. Broadcasters’ fees now cover only 0% of production budgets, forcing producers to look at how they with greater income security. A joint venture between a foreign creative producer and an African Transmission of digital products intensive export businesses in Africa, can reduce their upfront budgets. production company could provide a has dramatically levelled the since developed country clients require Typically, a producer will write, design cost-based export business in the short rapid access to the production process. and story-board the animation show playing field for Africa, a change term and a strong base for creative TV This is an historic and remarkable and ask an off-shore company to handle unprecedented in world trade. and animation work in the mid term. change, in that remoteness from markets the line production – the colouring, Ron Layton, CEO, Light Years IP Within Africa, demand currently exists is a major reason for competitive rendering and production of frames. for commercials, television bookends, disadvantage in exporting faced by most The artistic skills, IT support and filmmakers, special effects and of Africa. Many African countries face management skills needed for line the US market until the early 990s. By education. While there is already some very high costs of bringing physical production exist in a number of African then, several developing countries had a animation capability in a number of goods to a port, meaning that exports are cities that are newly connected with fibre share of line production, notably South African countries, annual incomes only competitive if returns to producers optic cables of large capacity. Korea and the Philippines. Regrettably, of more than $m is thought to be rare. are extremely low, among the lowest Animation production had shifted both countries failed to develop Given the size of the global animation export incomes in the world. from the US and Europe to East significant creative capacity, so they were market and the potential scale of the Now, for the first time in the modern Asia at much the same time as light dependent on labour cost advantages for a business, it would be reasonable to era, the effective distance of African manufacturing made the same shift. purely price-based export business. Both speculate that a country could build producers from export markets, for a Creatively as old as film-making, it was a countries lost market share to China and export income in the order of $40-00m range of digitally transmitted products, television production industry driven by India throughout the 990s. per year. The impact would be several has become virtually nil. This is a For animation, a phased strategy times higher if several countries or dramatic levelling of the playing field might be built up from an initial joint companies also set up animation Key points in international trade competitiveness, venture to provide production capacity capacity, as the market is large. perhaps unprecedented in world history. » The world-wide animation market for developed country producers in Further opportunities lie in digitally It will take some creative business is worth $50-75bn dollars, with an the very cost-sensitive TV production transmitted export products. In the long thinking to capture the opportunities additional $00-50bn coming from industry. A key element in a long term term, such businesses and industries that high volume data carriage offers merchandising strategy would be the training and need to develop creative and design skills Africa. Television animation, as an » The playing level for digital products development of creative staff working to have greater potential and security example, may stimulate some of this has evened out considerably in recent for an animation studio to become of income, as true Intellectual Property thinking. years due to technology reaching designers. Once a studio has the ability owners. The export income estimates The worldwide animation market is remote areas such as Africa to contribute to the creative element for this sector are shown at $40-00m per worth about $50-75bn with a further » African countries could become major of new animation and the finance to year in the summary tables, but these $00-50bn coming from merchandising. players in digital animation share ownership of rights, it becomes an estimates should be revisited in two to The market has changed dramatically Intellectual Property owning business, three years time. n 46 47
    • Creative Industries domain”, Light Years IP and others are working on new strategies to address small percentage of traditional remedies are commercially developed worldwide, this issue. These strategies are aimed Light Years IP believes that the export at securing (and recovering) rights potential deserves attention through in final market countries for cultural the design of commercially sound and T he Creative Industries, as defined by the UK Department of Culture, Media and Sport, identifies 3 industries Sub-Saharan export data for the creative industries for 005 is shown below. Sectors US $m and artisan owners and to build direct connections between rights owners and the returns due to them. “Manos socially sensitive programmes. Graphic Design for classification. The industries Textiles ,76 del Uruguay”, formed in 968, is a For African landlocked countries with include the arts and antiques markets, Crafts 7,484 cooperative of artisans formed with an access to fibre optic data transmission, architecture, advertising, crafts, Furniture 55 innovative strategy – to establish retail a long-term investment in graphic design, designer fashion, film and video, Travel goods 35 outlets in final markets, like Italy, under intensive businesses could be considered music, publishing, performing arts, Arts and antiques 8 their own brand. as a priority area for investigation. Joint computer and video games, software, and Music  venture design studios with modern television and radio. These sectors are Film 3 Film production management and overnight characterised by their cultural content Advertising 8 The global film market is worth about transmission to markets could build and high levels of intangible value. Architecture 8 $8bn. Africa has strong traditions of production-based export businesses The total market size of the creative Audio-visual services  play-writing and performance, and these initially, which may include such industries worldwide is estimated to Publishing  have helped to support its film-making. products as plans for surveyors and be $,700bn. Growth rates in 000-06 Other heritage/cultural services  Outside of Nollywood, production is architects. Then, raising standards to averaged 6% a year, twice the rate of the Misc. Manufactures ,4 mostly artistic and export activity is produce more complex products, like rest of the economy. On this basis, the Clothing ,345 very small at present. Creative thinking books and storyboards, should be seen worldwide figure for 008 is estimated Total ,373 is needed to find niches in the global as part of a long-term move to becoming at $3,033bn. market and to design strategies for an IP business. Creative industries are a major Textiles and Crafts accessing them. growth area in all regions, showing African crafts are widely recognised, For future development faster and more robust growth than employ a substantial proportion of the Licensing traditional manufacturing and services population and contribute to the region’s Several countries see potential export An initial estimate of $40m p.a., in terms of employment, added value economic growth. It is very common to gains in the licensing of inventions, representing early potential in the and profit. The bulk of production and find analysis of value chains showing traditional knowledge and traditional non-craft areas, is included in the consumption takes place in Europe, the artisans receiving % of the retail value medical knowledge. scale of opportunities table (see page United States and Japan, followed by of their products in foreign markets. A In some African countries, traditional 6), but no forecasts for the other other OECD countries, and then China, sustained doubling of this share would healers keep their knowledge as secrets creative sectors has been included India and Brazil. uplift the economic position of low- known only to their families, as a source for total potential export income. It is Many developing countries have a rich income artisans and small farmers. of employment for future generations. anticipated that these other creative culture and routinely produce cultural Craft exports are frequently undercut This tradition, still strong in Ethiopia sectors will be analysed in detail in products that, while appreciated locally, by cheaper factory-produced imitations and other countries, is commercially the future. are not often monetised, or if so, only or by hand-made goods from production valuable in that the information is held In particular, substantial impact marginally. Export income to Sub- line shops in low-cost manufacturing as “trade secrets”. Several countries would be made by successful strategies Saharan Africa is currently very small countries. Although traditional designs, have been working on the process of enabling the crafts export sector to in most of the creative sectors, other such as Bambara batik from West establishing ownership for a sample gain higher and more secure income. than crafts and textiles. Africa, are said to be “lost into the public of such trade secrets. Although only a 48 49
    • Notes Notes
    • Notes Credits Produced by Light Years IP Funded by the UK Department for International Development Production Research and writing by Light Years IP Ron Layton Pauline Tiffen Damen Layton Alison Dressler Ming-ru Chu Heather Sarkissian Boris Popovic Creative sector research by John Howkins Editing by Marian Wiseman Wiseman Communications Design by Sam Millard Contributors Mike Finger Consultant in Trade and IP Economics Getachew Mengistie, Director General Ethiopian Intellectual Property Office Product sector experts Photo credits Cover, inside cover, pages , , 8, 0 Bronwyn Edwards, Brandhouse Chocolate stack, page 3 Fiona Duale Divine chocolate, cocoa pods, pages 3,  Divine Chocolate Ltd Rubber trees, page 3 Fred Hoogervorst, Panos Pictures Cuba, page 4 Jeremy Horner, Panos Pictures Uruguay, page 4 Stefan Boness, Panos Pictures Printed on recycled paper © 008 Light Years IP 53
    • Light Years IP 6 Pennsylvania Avenue SE Suite 6 Washington, DC 0003 Phone: (0) 547 755 Fax: (0) 558 4385 Email: info@lightyearsip.net www.lightyearsip.net Department for International Development  Palace Street London, SWE 5HE Phone: (00) 703 0000 Fax: (00) 703 009 www.dfid.gov.uk 54