Let me try to explain the importance of branding, because I think it's often something that we take for granted in our society. It's a word we only assume we know the meaning of.
In an emerging economy context, branding is crucial, because it refers to the issue of intellectual property. I can give you the on-the-ground example in Haiti of Donna Karan, the DKNY brand, a huge global brand. Donna Karan went to Haiti, as Macy's did, and began doing business with very small producers, atelier-level producers, micro-entrepreneurs, or one person who perhaps had three to five employees. What they did, of course, was simply revert to business as usual with large players coming in to small economies and taking advantage of the desperation of those small players' need for any kind of purchase order. So what they did was buy product, had product produced under the Donna Karan brand, or under the Macy's brand....
Brand is something that captures value. That's why people have brands. That's why if you put Nestlé's brand or Tim Hortons' brand on your doughnuts, you will get sued by many, many lawyers and lose a lot of money. The brand protects value. It does the same thing with micro-producers. I'd like to quote a study done by Light Years IP, a major organization in Washington, D.C., which did this work in West Africa. They studied the effect of big branding on small producers in the coffee industry and, I think, in the cacao industry in West Africa. What this study concluded was that small producers were retaining less than 3% of the value at the source, because they sell their coffee to Nestlé, the biggest coffee buyer on earth, and the Nestlé brand captures that value.
This has led to some very interesting developments. Divine Chocolate is a product that was created in partnership with some Europeans and 20,000 cocoa farmers in Ghana in West Africa. Prior to this brand coming into the market, those 20,000 cocoa farmers sold their chocolate to Hershey's. Hershey's has a brand, so Hershey's made the money. Hershey's was then setting the price for cacao, and that was getting lower every year to the point where, like in the coffee business, farmers were harvesting their cacao and losing money, because they had no control over the value chain. They couldn't capture any value at source.
Divine Chocolate came along, a brand that is a 50-50 partnership between some very smart European marketers and the farmers themselves, a co-op of 20,000 cocoa farmers, and they created their own brand. They took it to market. It's highly successful in Europe, and that value returns to the owners of the brand, the cocoa farmers.
This is what Brandaid Project practises. The baseline studies that we've completed for this CIDA project are for four communities, and they're baseline studies at the front end of this project. What we intend to demonstrate is that when we create brands that protect the intellectual property--in this case, designs that artisans originate for products--those products will go into the market under a brand name that those artisans own, and the value captured at source will be something like 20% to 25%. Currently, as I said, it's less than 3%. In some cases it's less than 1%. Of products that are exported, five to ten cents of every dollar stays in Haiti—and that goes for apparel, commodities, mangos, coffee, everything.
So branding is crucial to capture value, and it's crucial also to security in the market and market share.
Am I making myself understood?
