Freedom, Markets, and AOCs.
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British interest in AOCs — the EU system of controlled origin food and drink names, not the US politician — bubbled to the surface most recently during Brexit negotiations in the late 2010s. If we were leaving the EU we might as well reclaim the right to call British sparkling wine Champagne said many Brexiters.
At that time the debate had a distinctively anti-French feel to it. I imagined the British right’s preference for trademarks — a good American and British capitalist invention, best washed down with a shapely glass bottle of Coca-Cola or a pint of Bass Ale — was patriotic. But that illusion was soon dashed when I learned that France invented the modern trademark system as well as the AOC system.
If you want to celebrate that, I suggest buying a pepper grinder from Peugeot Saveurs. Their lion logo, which you probably know from the cars, is one of the oldest modern trademarks still in use. It is eighteen years older than Britain’s first modern trademark, the red triangle of Bass Breweries in Burton-on-Trent and “the world’s first pale ale”.
AOCs.
In 1411 the French King said that only cheese from Roquefort-sur-Soulzon could be called Roquefort. The first appelation d’origine controlée (AOC). A protected designation of origin (PDO). A protected geographical indicator (PGI). Una denominazione di origine controllata (DOC). There are multiple versions of dozens more acronyms to say nearly the same thing, with subtle differences, in all of Europe’s languages. My favourite is the Greek ΠΟΠ. There are a few common logos endorsed by the European Union so that you don’t have to know all the words. I’ll keep using the original French acronym in this post.
To this day you can only call cheese Roquefort if it is produced in Roquefort-sur-Soulzon, a village near the town of Millau, famous for its modern viaduct.
There are currently seven producers of Roquefort. From the largest dairy group in the world, Lactalis, you can buy Roquefort branded as Société. It’s available in supermarkets in most of the world. From a cooperative of local sheep farmers you can buy Roquefort La Pastourelle. From the Combes family you can buy Roquefort le Vieux Berger. That’s if you can find it. Their production is so small that you’ll either need to visit Roquefort, or have a very good cheesemonger.
From other forms and scales of capitalism in between the extremes you can buy different Roquefort at different prices, with different tastes and properties. But it will always be made blue with penicillin mould, from the unpasteurised milk of Lacaune sheep, and it will be aged in caves in the village. It must additionally pass a test that says it meets the taste standards expected of Roquefort, though meeting these standards alone is not sufficient to carry the name.
Standards cost money and Roquefort is expensive despite the internal competition within its protected name. But if you want something similar for a bit less money, try a clone. I suggest Danish Blue which is presented very similarly to Roquefort, though it mustn’t used the protected name. It is substantially cheaper by being made from pasteurized cow’s milk and it is aged for less time and in a factory instead of a cave.
Freedom.
I understand why people are uneasy about AOCs. They are a state-mandated restriction of speech. I cannot call my British sparkling wine Champagne. They are also the creation of a restricted market. The only way to use the name Champagne is to buy land in Champagne and make wine to standards set by a group of insiders, the Comité Champagne, who define what grapes can be grown, on what land, how they can be made into wine, and how long that wine must be aged. Even if you could make a wine in Britain that tasted so much like Champagne that the expert tasters of Champagne couldn’t distinguish it from their products, you could not use the name.
Libertarians like Stephen Kinsella are coherent if unconvincing on why AOCs should be abolished, along with other forms of intellectual property protection such as trademarks, patents and copyright. Watch his stuff, it’ll make you think.
But when a person suggests that AOCs like Champagne and Roquefort are cast aside without extending the argument to getting rid of trademarks like Coca-Cola, I don’t see the same coherence. I suspect that they’d agree with me if they thought about the issue more, and differently. And that’s exactly how I felt reading Ben Ramanauskas’ recent blog post arguing against AOCs.
Trademarks.
Trademarks are similar to AOCs in many ways. They restrict speech and they create a restricted market. I cannot sell a soft drink Coca-Cola even if it is identical to the one sold by the company that holds the trademark. But they are also importantly different and in many ways worse.
Ideas around protecting manufacturers from forgeries and emulation had been around for centuries before France created the first modern trademark system. That system strengthened those protections, but the biggest innovation was that the protected names could be bought and sold.
This meant that trademarks could be put on balance sheets and financialised more easily. Money was increasingly raised on the back of fast-growing names like Guerlain, Louis Vuitton, and Hermès.
When large sums started being raised to create new trademarks, Britain and America moved to copy France’s legal innovation.
When the Coca-Cola company put their minds to expanding to Spain in the 1950s they realised that the older Spanish drink Kola-Koka — rumoured by many to be an inspiration for their drink — and its trademark would be a barrier to their expansion. So they travelled to Spain, bought the trademark from Destilerías Ayelo, and bought about the end of the soft drink by that name leaving only an alcoholic Kola-Koka drink to persist.
This purchase and destruction of the similar brand was important. Trademarks are always monopolies within a class of good. No competition is allowed. It is one of their strongest features and biggest weaknesses.
In theory, if a trademark is not aggressively defended such that a rival, or many rivals, can introduce enough confusion among customers to make the name generic, then a trademark will be lost. Trademarks thus incentivise legal threats against new entrants even if the risk of confusion is low. And since defending these often spurious claims is expensive, the trademark system gives an advantage to larger companies who can afford legal teams to defend both sides of that argument. Aldi’s regular simulations of established trademarks such as Rossini beer which looks like Peroni and Norpak butter that looks like Lurpak are backed by big legal teams working with branding teams who constantly monitor where courts are drawing the line between fair inspiration and deliberate confusion. And it is important that companies do that work and keep spending big money on legal overheads. Aspirin is no longer a protected name in the USA or the UK despite originally being a trademark of the Bayer corporation because they failed to do it.
The monopoly that trademarks enjoy leads to a more accidental innovation — the quality of the products carrying the protected name isn’t regulated.
By the 1600s Roquefort’s prototypical AOC had evolved to include standard methods and quality controls. The villagers who had the right to make the cheese realised that they could only sell it at a high price if they guaranteed a reliable product at a high standard and yet they had to let anyone in the village set up in competition with them and produce cheese if they wanted. So they created guilds and later societies to police the standards that gave value to the shared name while maintaining internal competition within the AOC if people met those standards.
But trademarks were strict monopolies. The Coca-Cola company owned the Coca-Cola trademark and it was theirs to build or destroy if they wanted. When they drastically reformulated their drink in 1985 there was no suggestion that they lose their trademark.
Globalisation.
The USA is home to the world’s most valuable trademarks and it has been America’s policy for decades to use trade deals, trade organisations, and sanctions to force the world to respect and defend them. New rules and precedents have crept into trademark law to protect big companies while existing rules are stretched. Hoover has become a completely generic word in British English and yet the US Hoover company retain their trademark. Cola bottle sweets sold in British sweet shops could be labelled Coca-Cola bottle sweets with no risk of confusion with the drink, but the US Coca-Cola company is protected by new and stretched interpretations of trademark laws. At huge cost that small companies cannot afford, huge teams of lawyers battle it out to find the precise legal line between inspiration and confusion when cloning big brands.
France is home the world’s most valuable AOCs and it has been France’s policy, alongside similar EU heavyweights such as Italy, to make the EU’s trade policy a tool for amplifying that value. They have pushed hard to bake AOC recognition into trade deals and to try and claw back recognition where it has been eroded such as with British Champagne Perry (now called sparkling perry and branded as Babycham). These legal battles are costly, though probably much smaller than the legal costs associated with trademark policing. More economically significant are the long delays to trade deals involving the EU caused by French and Italian insistence that AOCs are strongly protected and extended.
Liberty and milk.
Most free-market liberals are uncomfortable with both trademarks and AOCs. They are the policing of speech by the state and the granting a restricted market to a select few. And yet most people agree that they make markets work better for consumers by letting them quickly and easily buy a cheese, a wine, or a soft drink and be reasonably sure that they’re getting what they think they are.
Both systems have upsides and downsides.
I think the innovation that trademarks can be bought and sold has accelerated investments in quality that we all enjoy. I dislike the requirement to constantly survey the market and the incentive to start legal proceedings regularly and spuriously to protect trademarks.
I think the internal competition of AOCs is a fantastic innovation. I cringe at when they are awarded poorly, such as in the case of Newcastle Brown Ale whose AOC was written so tightly that competition was almost impossible.
I would keep both. And I’d also ban Oat Milk from being called Milk and margarine from using the word Butter. But that’s an argument for another time.