18 December 2009 Mark Artus
International deals involving traditionally much-loved British brands Cadbury and British Airways have been in the news of late. Here, Mark Artus, CEO of brand agency 1HQ, examines the impact that foreign involvement will have on consumer attitudes towards both businesses.
Two quintessentially British brands have taken centre stage in the business press over the past month. While confectionery company Cadbury and airline British Airways operate in radically different markets, their cultural resonance in the life of the nation means that changes in their ownership, in the case of Cadbury, and alliances, in the case of BA, have an impact beyond the purely financial.
If Cadbury becomes part of Kraft's US-based foods empire and BA enters into alliance (albeit as the senior partner) with Spanish carrier Iberia, the business rationale will undoubtedly be sound, but the benefit, in terms of consumer attitudes towards the brands, is less clear-cut.
The ultimate corporate power behind the brands we love has not been much of a concern in the past. Most of us outside the business community would be hard-pressed to associate Persil or Flora with their owner, Anglo-Dutch giant Unilever, or, for that matter, see any special significance in Proctor and Gamble's ability to manufacture and market both Pringles crisps and Head and Shoulders shampoo. But this is changing.
The multinationals themselves are beginning to take a more active stance in developing and promoting the credentials of the corporate brand – particularly in emerging markets, where international scale and status is a positive association for new consumers, seeking reassurance in the choices they make.
Corporate ownership, and in some cases investment in brands, is not always good news for consumers, however. The success of a new breed of entrepreneurial brands, such as Innocent and Green & Black's, has been built in large part by their appeal to an emerging 'No Logo' generation, keen to support the little guy against the industrial-scale behemoths. This David and Goliath struggle becomes part of the brand legend. So when Innocent accepts investment from Coca Cola, or when Green & Black's becomes part of Cadbury, this legend is suddenly tilted on its axis. Accepting the corporate dollar inevitably calls into question the independence of the brand and, in turn, its ability to go on offering consumers a distinctive alternative. At worst, it can appear as a wholesale abandonment of founding principles.
In most instances, the justification for change is the advantage of scale that comes with it. And it's scale that is the driver for both Kraft's pursuit of Cadbury and BA's courtship of Iberia. But as we've already seen, big is not necessarily beautiful when it comes to consumer perceptions of brands. For both BA and Cadbury the issue is not simply size per se, as both are already big brands in our minds. Instead, it is the internationalisation, the dilution of their Britishness, which comes with the deal.
Despite periodic government and business attempts over the years to appeal to the UK consumers' sense of national pride in our purchasing behaviour, we have shown ourselves to be more open than most to accepting overseas brands. But it could be argued that in the case of Cadbury and BA, the categories in which they operate mean we may be a little less ready to accept their re-location to the 'global village'.
Chocolate in general, and Cadbury in particular, holds a peculiarly fond place in our collective national consciousness. It brings with it a nostalgic resonance, perfectly suited to uncertain times. In recent years, our interest in more exotic, niche and connoisseur alternatives from Continental Europe and beyond has grown. But sales figures don't lie. With a UK market share of around 35% Cadbury remains our chocolate. Rationally, we may accept that production has shifted to overseas production sites. But while Kraft's offer includes assurances of continued manufacturing at Cadbury's UK plants, it's the prospect of US ownership of a ‘national treasure' that is likely to propel the story from a newspaper's business section to its general news pages. Should that happen, the consequences for our emotional attachment to the brand are difficult to predict, but are unlikely to be positive.
In the case of BA and Iberia, ownership is not the issue. But at the same time, an increasingly international flavour puts a little more distance between us and a brand whose reputation is already suffering. Old-fashioned, less than generous in its dealings with passengers, and far from efficient, BA already appears less suited to ‘flying the flag' than more dynamic competitors such as Virgin. We may still feel that warm sense of being a step closer to home every time we are welcomed on board by its embattled cabin crews, but the gulf in our attitudes towards them and the company they represent continues to widen.
So, while the business and financial imperatives driving these deals are clear-cut, the potential damage to the brands involved has to be understood and managed. And that starts with the people who make these brands possible – the workforce. Issues of job security, pay and conditions are vital in ensuring the willingness of staff to embrace change, and to remain genuine advocates for their brands.