As the larger food companies continue to expand both domestically and internationally through acquisitions, their brand portfolios become larger and more widespread. While some choose to advertise their ownership of certain brands, in other cases it is kept quiet, with many consumers unaware of who owns what brand. Bernice Hurst reports on the benefits and pitfalls of brand waving.
Brand ownership is normally of little interest to consumers. Exceptions are generally apparent only when trust becomes an issue. If there is reason to trust – or not – a holding company, that sentiment can trickle down to some or all of the brands in its stable.
Brands are more often used as currency bartered between holding companies to increase their profits. Ownership is of little or no concern to consumers unless a formula is changed so drastically as to render it either totally unpalatable or totally irresistible. Neither of those factors would likely be noticeable without a major marketing campaign whereby a new owner decided that its horn had to be blown. Otherwise, a simple change of hands would likely go completely unnoticed by the public.
Trust issues can include political opinions, however. Many Americans stopped buying French brands in response to that country’s reported disapproval of the Iraq war. Conversely, there were media reports that sales of American brands declined in Europe for the same reason.
Commenting after the July speculation about a takeover of French-owned Danone by American owned PepsiCo, Datamonitor analysts concluded that, “The high profile reaction of pundits and politicians alike should not detract from how important certain brands can be to consumers and their sense of national identity. It would seem unthinkable to many French shoppers that the classic ‘Petit Suisse’ dessert could ever be manufactured by an American company, or that Evian could come from the same company as Pepsi.”
Nationalism and patriotism are the enemies of globalisation. Most brands now distribute in hundreds of countries with ambitions to be truly worldwide but with actual ownership residing either in the country of origin or some other “developed” region. Read United States or Europe. While some exchanges between continents may be acceptable, just think about the uproar when Chinese companies want to buy brands to build collateral. But once the media coverage moves on, will anyone plucking a package from the shelf even think about links between where contents are manufactured and where head office is located?
Most infamous of all, and perhaps the longest lasting boycott in the food industry, are those who have been protesting about Nestlé’s sales of infant food to mothers in developing countries for the past twenty years. But that may beg questions about the number of consumers who know that Nestlé owns brands such as Maggi, Buitoni or Carnation and that they have more than one joint venture outside the US with General Mills. If anyone has examined purchases of those brands by Nestlé’s critics, the results have not been highly publicised.
Trust and loyalty should be mutual, a symbol of the relationship that exists between retailer and customer.
Official investigations of monopolies or unfair competition may exonerate companies legally but their attitudes and policies may start to inspire a downturn in public acceptance. Of this, some are well aware. As organic food grows in popularity with consumers, for example, large manufacturers are buying up small producers. What they are not doing is broadcasting their ownership. Brands may receive considerable injections of development and marketing cash but one thing they can’t always count on is a little logo telling shoppers that they belong to XYZ International.
Brands can be just as much about hiding, camouflaging and testing as they are about building market share, credibility and reputation. Trading is as much about shareholders as market share. Buying and selling names can be more important than buying and selling products.
Camouflaged ownership means that consumers don’t know who owns many brands, a strategy deliberately forged and implemented by boards for whom shareholder information and income is more important. Introducing and withdrawing brands, as well as running possibly conflicting brands in tandem, is easier when consumers don’t know their origin. Those who prefer to purchase organics, for example, might be less inclined to choose brands owned by conglomerates than smaller independents that may be perceived as more dedicated to the product than the profit. You have to do a fair amount of digging to find out that well-known and long-established British brand Rachel’s Organic now belongs to American Horizon Organic, which, in turn, is owned by one of the country’s biggest food companies, Dean Foods.
How dumb are consumers? Or, rather, how dumb do manufacturers and retailers think they are? Marketing a brand with – or without – a connection to its parent is a big decision. There can be layers upon layers such as Kraft Foods’ Nabisco division whose brands include Oreos, Chips Ahoy, Ritz, Honey Maid, Barnums and many more. Ask shoppers who owns those big names and it’s a pretty safe bet they won’t be able to track them back to source.
Some prefer to wave their brand flag, of course, using methods such as co-branding to make their involvement known. Jean Heggie, marketing leader of American soy protein manufacturer Solae Co, says that food manufacturers are “very receptive to co-branding partnerships”. Solae is working to ensure that customers know products from General Mills, for example, include their ingredient. So long as ingredient brands and finished product brands support one another, she believes, co-branding reinforces product sales.
Retailers also face issues of openness. While much has been made of Asda and Tesco’s expansion into non-food, especially cheap clothing lines and shops devoted exclusively to them, Primark has been building its reputation as specialists in the cheapest of cheap clothes. Its ownership by Associated British Foods (ABF), parent of Twinings Tea and Ryvita as well as many other well known supermarket brands, may not be a secret but there is certainly nothing obvious in the shops to link them with the food conglomerate.
IKEA’s imminent leap into the food market, on the other hand, will be transparent. Like Marks & Spencer, their food bears only its own brand name and will be sold primarily – if not exclusively – through its own retail outlets. Even the M&S Simply Food fascia avoids competition, promoting no name other than Marks & Spencer.
There is little doubt that brand loyalty exists, and billions are spent annually reinforcing this, but derivation is less important to end users than to manufacturers. Deciding how publicly to claim ownership is just one of the many challenges marketing departments must continually confront. Brandwaving is yet another game in which consumers are pawns.