Rebranding Indonesian Palm Oil: A Lesson of Starbucks Traceability Journey

INDUSTRY.co.id - Jakarta - Rebranding occurs at any time through initiatives such as altering brand identity, incepting a new name, symbol or design associated with its new offering. Rebranding, commonly, is motivated to recover drawbacks of current brand that is experiencing downward business trend or at the end of business spectrum to have further innovation.

There is another type of rebranding, the revolutionary rebranding, is typically initiated from a response to external demand which to some extend unrelated to existing brand value (Harvard journal of law and technology vol. 24 number 1 fall 2010, unbraiding, confusion, and deception). For example, McDonald’s changed its brand image from a fast and affordable food into a healthy diet-concerned restaurant through re-concept commercial contents by carrying out nutritional information until re-design stores by changing color from red and yellow into green and white to show their new position as pro-environmental product to market. Revolutionary rebranding carried out by McDonald’s aimed to answer negative campaign of obesity issues.

In plantation business, Starbucks is a profound success story of altering negative suspects of unfair trading business coffee market into pro-equal society business through rebranding new business concept. Starbucks was firstly well-known as a premium coffee shop that used to serve good quality coffee. Image of premium brand was successfully rocketing selling price of each cup of coffee they charged to consumer who was commonly from middle to upper level of economy.

Buyers perceived that having a Starbucks-logo cup on hand prior to starting day or while entering office in the morning was a lifestyle for modern citizen and as if affirming the social status. Business changed when Starbucks came across issue of unfair business practice with coffee planters. Market accused Starbucks was not giving a proper price of beans purchased from farmers while they charged coffee to market multiple times. This situation led Starbucks to transform business image to be more humanity rather than “just financially wealthy” before losing existing market trust.

They started to deliver concept of traceability business by selling history of coffee consumers being purchased from planting origins, farmers profile, until process in each business level until being served by store in a cup. Implementation of this concept offered an experience to coffee lover virtual expedition to meet farmers, roasters, baristas, and regions through a web-based digital platform. Customers may enjoyably surf coffee story by scanning barcode or enter number series put on the back of each bag of whole bean coffee on the Starbucks’ website.

Besides promotion strategy, upstream business concept was redesigned to be more pro-farmers as is being introduced to market. Starbucks intensively introduced Starbucks Farmer Support Center worldwide to anchor position of farmers were no longer a coffee supplier but member of Starbucks’ family who produce coffee bean for family business. Starbucks was active to build engagement with farmers by giving education of cultivating with good ethics and conduct, attached assistance on the field, and proactive consultation in order to produce high quality coffee as required by Starbucks’ standards. Farmers, then, were registered as authorized Starbucks suppliers who adopted Coffee and Farmer Equity (C.A.F.E) Practices prior to collaboration with Starbucks in supplying beans.

The first large scale of oil palm in Indonesia was established over a century ago since the Dutch colonial era. During that time, aided by scientific research of modern technology, oil palm in Indonesia were more productive than in West Africa where the seeds originated. Despite benefit from this business was unevenly distributed to its workers, mostly are locals, oil palm was successfully generating profit and spurring economic growth along The East Coast of Sumatra. In its current existence, palm oil in Indonesia is able to descend its variant not only edible products but other such as the newest is for fuel blending, biodiesel.

Apart from its success story as the fast-growing business, palm oil also encounters issues in global starts from unethical agricultural practice, land tenurial conflict, under-aged and woman employment, and lastly environmental issues such as deforestation. Those, as if, turn potential of palm oil into barriers to capture potential market ultimately in the European Union zone where set of standards for imported plantation commodity has been upheld since this last decade.

Question, how if lesson from Starbucks is applied to Indonesian palm oil since both cases show similarities in any form such as plantation-based business, global market captive, closed relationship with farmers’ small-scale business, and high expectation to perform ethical business as directed in SDGs. A revolutionary respond to any expectations should be firstly initiated by having positive-will to open mind and heart to hear and analyze each noise from external and altering it into input to enrich strategy.

Negative campaign that is progressively addressed to Indonesian palm oil brand as a “not sustainable product” should not be captivated as the sound of hatred at the first chance but rather than a market expectation to what quality of palm oil should be better off. When all eyes were on Starbucks due to the accusation of unfair trading with farmers, they rapidly turned back issue by changing business scheme from beans off-taking concept into good partnership with farmers. 

Starbucks Farmer Support Center is the epicenter of all revolutionary strategy which selling more value of farmer’s home-business improvement above the company’s profit increase. Story behind that collaboration with farmers becomes a tool of promotion to embrace buyers to be together joining with Starbucks in responsibility program to foster farmers’ coffee business throughout the world. A sound database is another strong point from which Starbucks prepares solid promotion materials. In building data center, Starbucks is successfully combining their consistency in performing business service excellent with disciplined data recording, application of information technology in automating business process, and the art of presenting deliverables to customers.

Likewise, Indonesian palm oil could have implemented the same way as Starbucks’ in order to regain market trust on good agricultural practice. First, developing a sound palm oil data center comprising of integrated maps of oil palm area to spatial planning maps, profile of smallholders, land ownership status, number and quality of trees, and supply chain of crops. From solid data, Indonesia palm oil could set differentiate marketing prospects and strategies based on characteristic of data.

Second, building market linkage approaches based on the needs of each type of farmers. Government and palm oil big companies should work collaboratively to apply approaches and interventions starting from conducting investment in value chains to improve connection for farmers with related trading partners and buyers in formal markets, contract farming to support farmers of financing and technology also protecting from risk of low supply quality, certification scheme to support smallholders production and marketing to meet ethically-minded consumers, until public-private approaches to value chain investment in order to inclusive business which is involving all sources along the chain including helping informal smallholders to access the complex world of formal corporate business.

Third, supporting farmer organizations to be more well organized, upgrading their financial and business skills in order to gain larger economies of scale through demand driven collective marketing. The objective is to incentivize farmers to run business collectively under independent business-minded organizations so that is able to support durable trading relationship. Nowadays, few of smallholders are willing to be grouped under one entity due to reasons of less awareness of the benefit of collective farming business and trust issue to management primarily in profit distribution transparency.

Government has been working to encourage the forming of farmers-group through incentives in palm oil grant-programs such as replanting, farming equipment and estate facilities, and estate human resource development. One of the requirements to access that fund is farmers have to be grouped in a cooperative or farmers-group from which the funding proposal is submitted to the government. That initiative has gradually overcome many issues of independent farmers business institution, farming skills improvement, continuous data building from the coming funding proposal.