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Intellectual property regulator says US ginger ale brewer exploiting Jamaica

Published:Sunday | December 4, 2011 | 12:00 AM

Steven Jackson, Business Reporter

The Jamaica Intellectual Property Office (JIPO) has described as exploitation of the island's brand, the decision by REED's, a fast-growing US listed company, to describe its flagship ginger ale as 'Jamaican style', even though the raw material used in the blend is sourced from other countries.

"By calling it Jamaica-style ginger beer, produced in the USA, they are taking advantage of the name, reputation and exploiting Jamaica," argued Carol Simpson, an attorney and head of JIPO, although she admitted that the company has not broken any law.

Chris Reed, founder and CEO of REED's, suggested instead that his product has placed the island in a positive light, but he would remove the name Jamaica from his product if necessary.

"We are not trying to exploit the island," he told Sunday Business in an interview last week. "We have a positive image of Jamaica. I think if given a choice, Jamaica would want us to continue promoting the island with our products," Reed said about his company, which earns more than US$20 million in annual revenues.

REED's was formed in 1987 and was listed on the over-the-counter market in 2006 and the Nasdaq a year later. Several attempts to source Jamaican ginger failed due to inconsistent suppliers, Reed said.

Instead, his ginger line of products, which gross between US$10 million and US$15 million a year, are sourced in South America and naturally mixed in the US. Supplying REED's would increase the island's export market for ginger by a factor of four from 170 tons to 820 tons and translate to some US$6 million a year, based on estimates from Reed and the Ministry of Agriculture.

The CEO reasoned that associating his products with the island's type of ginger - among the best in the world - improved its marketability. The company makes six flavours of ginger brew - Original, Extra, Premium, Raspberry, Cherry and Spiced Apple. The original contains the prominent labelling of "all natural Jamaican style ginger ale" despite sourcing most of the raw material from South America. Additionally, the website describes its products as natural sodas and traditional Jamaican ginger brews.

JIPO's Simpson said that some US companies have tended to market ethnic styled products in order to take advantage of the high immigrant diaspora in that country and that Jamaican style ginger beer was yet another instance.

"Should not Jamaica earn royalties from the sale of this ale?" she asked. "As Jamaicans, when are we going to benefit from our reputation? In fact, this product will be competing with the authentic Jamaica ginger (products)," she said.

Lobby for the protection of country names

According to Simpson, JIPO also continued to lobby for the protection of country names. Last year, JIPO unsuccessfully lobbied the World Intellectual Property Organisation in Geneva, Switzerland, for the protection of county names via an amendment to the Paris Convention for the Protection of Intellectual Property.

JIPO wants to prevent companies from using Jamaican style products without adhering to strict practices set out by local stakeholders. Producers of brands meeting strict standard requirements for the product would receive a geographical indication (GI) seal giving protection from counterfeiters. Coffee, rum and jerk products are items initially set to receive the GI seal, with subsequent rounds to include ginger and other products meeting the GI requirements.

"We will work with the agriculture ministry, RADA, producers and farmers in identifying and preparing other well-known products such as Jamaica ginger to obtain protection as GIs," she said.

Over nine months ending Sep-tember, REED's earned US$17.7 million in revenues, up 23 per cent year on year, according to latest financials to shareholders. REED's is projected to earn some US$25 million in revenues for its 2011 year based on estimates of its financials. The company predicts sales to rocket for its upcoming quarter, which would aid it in cutting its US$19.5 million in accumulated losses due to start-up and development costs, the company's CEO said.

Jamaica exported 15 tons of ginger in 2010 or about 10 per cent of its 170-ton potential export demand. The demand shortfall is due in part to a disease which hit the local root in the early 2000s, according to the Ministry of Agriculture, which said that a structured replanting exercise was under way.

- Steven.jackson@gleanerjm.com