Fairtrade and Branding

1. Fairtrade and Branding WIPOOpen-ended Forum on proposed Development Agenda Projects 13.10.2009 Paola Ghillani & Friends AG

2. Paola Ghillani & Friends AG This presentation seeks to provide some background on how the fair trade -labeling and -branding sector operates, with some examples, with a view to understanding what could be WIPO's potential role

3. Paola Ghillani & Friends AG Definition of fair trade (FINE) • „Fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing rights of, marginalized producers/workers-especially in the South. • Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.“

5. Paola Ghillani & Friends AG FLO, Fairtrade Labelling Organisations international • 1997, founded by its members organisations, the 17 labeling National Initiatives worldwide • an international association with offices in Bonn, Germany

7. Mission of FLO • Certify and control that the product labeled with the Fairtrade certification mark is produced AND traded according to the International Fairtrade Standards (FLO) • Ensure disadvantaged producers/workers in developing countries get access to the market at Fairtrade conditions through National Label Initiatives, member organisations of FLO

8. The Fairtrade Standards Producer standards • Small farmers / Hired labour • Generic / Product specific • Minimum requirements / Process requirements Trading standards • Price • Premium • Medium/long term commitment

9. FLO Cert GmbH • Certification company owned by FLO • Follows ISO standards for certification bodies • Functions • Producers inspection • conformity to FT standards • FT benefits are used for social and economic development • Certification • Trade auditing • to cross check reported sales and reported purchases

10. Producers and companies registered with FLO • 24 national fairtrade labelling organisations incl. 2 associated members (Commercio Justo Mexico and Fairtrade label South Africa) • 746 FLO certified producer organisations in 59 producing countries • 1,5 Mio producers • 6 Mio dependant/affected people • 249 FLO registered companies worldwide • 2700 companies in 24 countries using the Fairtrade label generating a turnover in public price of 2,3 Billions Euro

11. Promoting producers support Support producers to strengthen their position: • commercial performance • quality produced • institutional building Link between producers and support: • identify needs for support with producers and FLO cert • identify donors and technical expertise • bringing together the right partners and facilitate FLO Producer Support Facilitator: • closely linked to product managers in the north and producers and liaison people in the south

12. Use of premium money

13. Paola Ghillani & Friends AG The banana case in Switzerland

14. Paola Ghillani & Friends AG Sustainable Development? • Unifies 3 objectives: • Economical performance • Social development • Respect of the environment • Corporate Responsibility towards „Stakeholders“

15. Paola Ghillani & Friends AG Source: Inrate, rating for sustainable investments LOHAS (Lifestyle of Health and Sustainability): • Conscious consumers towards sustainable development preferfair traded and fair produced, as well ecological products and alternative medicines. • They are ready to pay more for these kind of products. • USA: 1/3 of consumers are LOHAS • EU: Market share for organic food, growth 1997-2000 up to 75% • CH: Market share for organic food, growth 2000-06 up to 52% • Turnover FSC wood between 2000-06 resulted 15-times higher • D: Market for organic cosmetics has doubled (2003-06) • Sustainable consumption is a Mega-Trend!

16. Paola Ghillani & Friends AG Proliferation of Labels and Brands Challenges: credibility of the standards and independance of inspections and certification decision, traceability,without forgetting the corporate governance of their governing body.

17. Paola Ghillani & Friends AG From Fairtrade to sustainability labels/brandsThe coffee case: 2nd most traded commodity in the world after oil! • Eliminate the worst social and environmental practices. No Price differential • Professionalism including social and environmental aspects. Good agricultural practices. Corporate Responsibility program for brands. Traceability. Independent inspection/certification. Market price + premium (5-10%) • Environmental and social aspects. Consumer label / Corporate Responsibility program for brands.Market price + premium • Poverty reduction: economic return and support for cooperatives of small scale growers. (No Fairtrade standards for coffee plantations).Consumer label. Minimal FT price guarantee + premium CCCC

18. Paola Ghillani & Friends AG Labelling Branding Options for producers in LDCs • Option 1: Create and put on the local and export market their own FT or sustainability certification mark • Option 2: Create and put on the local and export market their own FT or sustainability Brand (ex. Patagonia, Natura, Switcher, etc.) • Option 3: Qualify for an existing FT or sustainability certification mark

19. Paola Ghillani & Friends AG Option 1: Create and put on the local and export market their own FT or susainability certification mark • Needs a strategic plan that clearly define, the differential advantage as compared to competitors, which countries and which consumers group to target at what price • Needs the identification or creation of a marketing entity which will market the products with certification mark including a marketing budget • Needs FT or Sustainability standards to be put in place and an independant inspection and certification body • Could benefit from the facilitation of WIPO in order to protect as much as possible the certification mark as an entry barrier against competition

20. Paola Ghillani & Friends AG Option 2: Create and put on the local and export market their own FT or sustainability Brand (ex. Patagonia, Natura, Switcher, etc.) • Needs a strategic plan that clearly define, the differential advantage as compared to competitors, which countries? and which target group at what price? • Needs the creation of a marketing agency which is going to market the Brand • Needs FT or Sustainability standards to be put in place and an independant inspection and certification body • Could benefit from the facilitation of WIPO in order to protect as much as possible the Brand as an entry barrier against competition

21. Paola Ghillani & Friends AG Option 3: Qualify for an existing FT or sustainability certification mark • Needs to fulfill the FT or sustainability standards and to be inspected/certified against these standards in order to get a certificate that is recognised by importers and buyers/retailers, who will be then ready to buy at fair prices, and promote the certification mark with the help of the national labelling initiatives towards the consumers • If whished by the producer organisation, it’s possible to have an own certification mark for their domestic market under the rules of FLO for Fairtrade, or under the accreditation of IFOAM for organic labels, or other umbrella labelling organisations • Could benefit from the facilitation of WIPO in order to understand better the rules of use of the certification mark dictated by umbrella organisations such as FLO, IFOAM, UTZ Certified, Rain Forest Alliance, MSC, FSC, WWF etc.

22. Paola Ghillani & Friends AG The example of Comercio Justo Mexico • Created in 1999 by a cooperative of small coffee producers • Are an associated member of FLO

23. Paola Ghillani & Friends AG WIPO as a facilitator ? part1 • Ideally a new unexpected labeling/branding model, a new innovative business idea is invented by the producer organisation, and can be patented together with a new certification mark or brand. (trademark). • In the preparation of the application for the certification mark/trademark protection in the chosen jurisdictions and segment of products • In the certification mark/trademark protection itself in the chosen jurisdictions and segment of products

24. Paola Ghillani & Friends AG WIPO as a facilitator ? part2 • The advisory/consultancy role from WIPO in this process towards its Member States and, in partnership with them, to local producers, shouldn’t be underestimated; it can even play a decisive role in order to identify what can be protected and to ensure a better protection. This could improve the competitive advantage of the certification mark/trademark.

25. Paola Ghillani & Friends AG WIPO as facilitator? Part3 • Can only happen if the producer organisations, wanting to create a new Certification Mark/Brand or to be part of an existing labelling system, make their home work in terms of business analysis and strategic planing, in order to clarify and define the Basics to market their idea, ex. Positioning as compared to competition, strategy, etc.

26. Paola Ghillani & Friends AG ” Don’t ever think that a small group of conscious and dedicated people aren’t able to change the world. In fact this is the way it always happened!”Margaret Mead