Geographical Indications of Origin as a Tool of Product Differentiation: The Case of Coffee

Abstract

An increasing interest in geographical indications of origin (GIs) as a tool of product differentiation can be observed in the so-called specialty coffee sector. Similar to the approach for wine in France and Italy, more and more coffee-producing countries try to establish appellation systems for coffee. Whereas some countries and regions such as Colombia or Jamaica have already legally protected GIs for coffee, most coffee GIs are still informal, meaning that no legal protection has been obtained so far. But the recent acceptation of the term Café de Colombia as a Protected Geographical Indication in the European Union and the Ethiopian Trademark Initiative document the increasing engagement of coffee-producing countries to achieve an appropriate legal protection for their GIs. From an economic point of view, data from U.S. online retail stores indicate that single-origin coffees receive significant higher retail prices, with 100% Kona coffee from Hawaii and Jamaican Blue Mountain coffee being the most expensive ones. Furthermore, results from a hedonic pricing model based on Internet auction data for single-origin coffees show that the country and the region of origin is already an important price determinant in the specialty coffee market.