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 strat...
The Ethiopian fine coffee        Divine Chocolate Ltd,
    sector has been in the news      owners of the Divine
    over ...
98                                       007
                                                                             ...
Not only established                                                               Small company innovates for a place in ...
Managing IP is a key element in
Exporting             increasing Africa’s export income
distinctive           A     frica ...
Another successful IP-based
                                                                                          busi...
IP in Action
Producers in other developing countries have also identified
the intangible value of their products and creat...
Business strategies                                                                                                       ...
The scale of opportunities                                                                   Earning $0.bn to $7.6bn
     ...
Developing an IP Strategy                                                                The stages of project design and ...
Product Briefs




Fourteen briefs on the products listed in          The fourteen product briefs that follow are intended...
Kenyan Tea
Kenya produces some of the best flavour tea in the world, with a flavour
index second only to Darjeeling. The a...
Sudanese Barakat Cotton
Sudan’s very fine yet little known variety of extra-long staple cotton,
Barakat, is superior in it...
Ethiopian Fine Coffee
Ethiopia is the birthplace of coffee, growing some of the finest Arabica
beans in the world, as well...
Namibian Marula Oil
For centuries, indigenous women in the rural areas of Namibia have
cracked the nut of the marula fruit...
Togolese Black Soap
This uniquely natural soap has been handmade by women in West
African communities for centuries, with ...
Senegalese Artisanal Tuna
Fishing in Senegal is not only a means to earn an income; it has
been deeply embedded in Senegal...
Tanzanian Blackwood
The tree of music, Blackwood, also called ‘mpingo’ and ‘grenadilla’, is
an exceptional wood found in s...
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty
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Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty

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From SES08's panelist Ron Layton of Light Years IP

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  • While this wasn't the actual PPT that SES08's panelist Ron Layton (Light Years IP) used, it's actually better for us to remember what his presentation was all about. Very interesting.
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Distinctive values in African exports: How Intellectual Property can raise export income and alleviate poverty

  1. 1. Distinctive values in African exports How Intellectual Property can raise export income and alleviate poverty
  2. 2. 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.
  3. 3. 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
  4. 4. 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
  5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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

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