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TransFair USA Eyes a Brand MakeoverPosted by Matt Earley at about 2pm on Thursday September 23, 2010
TransFair USA recently announced that it is changing its name to “Fair Trade USA”. According to an article on bizjournal.com, the rationale for the move is that “the simplified name change will better support the group’s brand.”. Strategic rebranding might make sense for any business that is trying to increase presence in the market or that is seeing its market share eroded. There are, of course, risks in doing this. When a company has spent years-- as in TFUSA's case-- building its brand, the move seems to be a particularly risky choice. To understand what advantage they are seeking by the change, we need to look at what this strategy could accomplish for TF in the fair trade market.
What TFUSA does, and has done, well is marketing. This has always been very interesting to me as they are not really by definition a marketer, they are a “neutral third party” certifier of transactions between coffee growers, coffee importers, and coffee roasters as well as a “promoter” of fair trade. Be that as it may, according to their books they have traditionally spent much more of their yearly operational budget on marketing rather than on actually auditing transactions. As a matter of fact, it was not until the past couple of years that they have put real resources into developing anything resembling a systematic auditing program for the roasters and importers who sell TFUSA “Fair Trade Certified” products. Instead of developing a true auditing/certification program TFUSA chose to put all of their eggs in the proverbial brand-building basket.
With this investment in mind, why would an organization that has spent over a decade putting resources into building strong brand identity suddenly decide to change their name? The answer is that they have put themselves at risk of becoming irrelevant in the “new” sustainable coffee market by a willingness to sell "fair trade" to the highest bidders. Because of this they are, somewhat desperately, trying to gain more legal and marketing control over the term “fair trade” here in the US as it faces challenges to its relevance due to ever-weakening minimum standards.
TFUSA has, in the past few years, run into stiff competition for “brand” supremacy with concerned consumers. If they had made different strategic choices in their growth and development, they may have been able to rely more on alliances built with “mission-based” roasters and NGOs for support. However, over the past decade they have successfully alienated most of the movement-based fair traders by unquestioningly hitching their wagon to an unimaginative “growth at any cost” strategy. During that time TFUSA consistently allied themselves with large corporations like SBUX and Procter and Gamble while ignoring the concerns of both small-scale “alternative trade” roasters and the small-scale producers whom we partner with. While producers and others in the larger FT movement have lobbied FLO to raise the increasingly ineffective FT minimum standards and invest in “alternative trade organizations”, TFUSA has dragged its feet fearing the possibility of losing the big conventional businesses that pay their bills. The results of that strategic choice have now become apparent as the big players refuse to fully commit to TF and the smaller ones are, for the most part, choosing to move on.
This situation has been developing slowly over many years, so we should ask: “why is it finally coming to a head now?” The answer to this seems to lie in the rise of the IMO “Fair for Life” certification that many committed FT roasters (and growers) are turning to as an alternative to the FLO/Transfair system. To put it plainly-- the IMO certification is reportedly cheaper, based on auditing as opposed to marketing, and less cumbersome than FLO/TFUSA's version. And more, by using the term “Certified Fair Trade” in its language, the IMO program is liberating a term that has been monopolized legally in the US by TFUSA for years. In the past, the more committed “fair traders” had nowhere to go outside the TFUSA model for third-party certification-- they were the only game in town. There now appears to be a better alternative and that development must make TFUSA very nervous.
Somewhere along the way, TFUSA became confused in its mission. Instead of realizing that their important place in the FT movement was to help their licensees promote fair trade and their own brands through scutinizing and certifying their transactions, TF decided that their mission should focus almost exclusively on developing their own “brand” to sell. This continued role confusion is exactly why they will ultimately slip into irrelevance in an increasingly sophisticated “sustainable” coffee market. To avoid that fate, TFUSA should consider sincerely engaging and listening to other stakeholders in the FT movement and include them in their governance structure instead of attempting to control and lead them by force as they have in the past. Word on the street is that TFUSA is out of compliance with the make-up of their closed and corporate-friendly BoD. Apparently they are violating FLO guidelines by having a private and untransparent governance structure. Why not comply with their parent organization's rules and bring other fair traders in instead of trying to control them through legal wrangling and image crafting?
Caught between a rock and a hard place, TFUSA has strategic choices to make. And, as in the past, instead of using their current challenge as an opportunity to engage in positive self-critique or to listen to other stake-holders in the fair trade movement, they seem to be relying on an image adjustment. However, simply attempting to more tightly control the identity of “fair trade”-- something that has never been their property-- is surely a dead end for “Fair Trade USA”.