Geographical Indications Drive Economic Value

I recently attended a whisky-tasting event and came to discover that I now have a proclivity towards single malt vintages that are light and floral with notes of grassy organics. (I had to google that descriptor by the way, I’m not yet that erudite!). My key learning though was that the words “Scotch Whisky” are actually intellectually protected as a geographical indication. The World Intellectual Property Organization (WIPO) defines a geographical indication as a right that enables those who have the right to use the indication to prevent its use by a third party whose product does not conform to the applicable standards.

Scotch Whisky means a whisky produced in Scotland that has been distilled in Scotland from water and malted barley to which only whole grains of other cereals may be added, all of which have been processed at that distillery into a mash, converted into a fermentable substrate only by endogenous enzyme systems and fermented by the addition of yeast. It has to be distilled at an alcoholic strength by volume of less than 94.8% and its production has been matured only in oak casks of a capacity not exceeding 700 litres, which maturation has taken place only in Scotland for a period of not less than three years. It must maintain the colour of plain caramel that has a minimum alcoholic strength by volume of 40%.

By ensuring this strict definition, which is then backstopped by a UK government driven verification framework, the product is provided a high brand quality that allows for premium pricing and global recognition. With a value of about £ 4 billion(Kshs 550 billion) to the Scottish economy annually, and employing over 10,000 people, it’s not hard to see why intellectual property protection via the geographical indication route makes economic sense not only to protect Scottish jobs but to also deter a booming counterfeit industry trading on a centuries old distinct product.

The Ethiopian government ran into a similar issue when they discovered that the global coffee retail chain Starbucks were selling “Ethiopian coffee” at a high premium with very little benefit trickling down to the Ethiopian coffee farmer and zero control on whether that coffee was indeed originating in Ethiopia. In 2004, the Ethiopian government launched an initiative to bridge the gap between what global retailers were charging and what the Ethiopian farmer was receiving for a sack of the same beans. The Ethiopian Intellectual Property Office’s objective was to generate high retail prices for the most famous Ethiopian coffee brands Harrar®, Sidamo® and Yirgacheffe®. However going the geographical indication route was going to be prohibitively expensive since it would require quality control at all points of the coffee production in the region where that geographical indication was being sought.

A good illustration of this can be seen in Scotland where all business that are involved in any stage of the production of Scotch Whisky must first register with Her Majesty’s Revenue and Customs by listing all their relevant sites within and outside Scotland, including distilleries, maturation facilities, blending and bottling plants. Consequently, the total annual cost of the verification scheme of around £350,000 (Kshs 48 million) is being shared across the Scotch Whisky industry in accordance with European Union rules.
The Ethiopians opted to go the trademark registration route instead, as it did not require a specific coffee to be produced in a specific region or have a particular quality connected to that region. Trademark registrations allow the owner to exploit, license and use the trademarked names in relation to coffee goods to the exclusion of all other traders. It does however require that trademark to be registered in multiple jurisdictions in order to provide protection, which is also an expensive undertaking. Before the Ethiopians went this route, coffee farmers were receiving as little as US$1 per kilogram and this is expected to grow to US$6-8 eventually, after their income doubled following the trademark registration.

Registering geographical indications is expensive in the short term but highly beneficial to the local producers in the long term as has been seen with terms like “Swiss made” for watches made in Switzerland or “Cognac” for brandy produced in the Cognac region of France.In light of our undeniably high quality tea, there remains a case to be made on whether it is worth the energy to be applied by an entity like Kenya Tea Development Agency to push for global recognition and resultant higher prices for Kenyan produced tea.

Carol.musyoka@gmail.com

Twitter: @carolmusyoka