Once popular brand names targets of growing backlash
12/19/2004BARCELONA - The late John Stuart, founder of the Quaker Oats Company, knew what puts gold plating on every package.
"If this business were to be split up," he remarked of a company with annual sales now exceeding $2 billion, "I would take the brands, trademarks, and goodwill. And you could have all the bricks and mortar - and I would fare better than you."
Brand USA, by some accounts, is running perilously short on goodwill in the global marketplace these days due to anti-American attitudes.
Some American brand names such as Coca-Cola, McDonald's, General Motors, and Starbucks, could take a beating if consumers launch serious boycotts of American products.
Experts insist that other companies - most notably, Heinz - have few worries because their brand names are icons for everything that makes consumers ignore a product's nationality.
Concerns about a European consumer backlash grew late in November, when a study concluded that U.S. companies may lose business in Europe during the next four years due to anger at Bush Administration policies. Done after the presidential election by Global Market Insite Inc. in Seattle, the survey included 8,000 people.
GMI found anti-American feelings stronger than at any time since the Vietnam War. About 20 percent of European consumers said they would boycott American brands to express their displeasure. The hit lists included icons such as United Airlines, Marlboro cigarettes, American Express, General Motors, and CNN News.
The backlash even has engendered a new phenomenon - anti-American brands such as Mecca-Cola. Introduced in heavily Muslim areas of France in 2002, the Coke/Pepsi clone now is marketed in 50 countries. Its slogan: "No more drinking stupid, drink with commitment."
Simon Anholt, one of the world's best-known brand consultants, agreed. He has advised governments, corporations, edited journals, and authored books on branding, including the upcoming, Brand America.
"The circumstances may now be extreme," Mr. Anholt asserted. "We are now witnessing the unfortunate combination of six effects, which are coinciding for the first time in history."
They include cumulative ill-will from wars in both Vietnam and Iraq; America's perceived militarism and go-it-alone foreign policy; the Enron, Arthur Anderson, and Tyco scandals, which tarnished American corporate images; America's snubbing of the Kyoto treaty on global warming; and negative media images of American society from books and movies such as Fastfood Nation, Bowling for Columbine, and Fahrenheit 9/11.
In addition, America is running short on goodwill that buffered negative feelings in the past. Many European consumers no longer have the fond memories of America as liberator of Europe during World War II that softened anti-Americanism in the 1960s and 1970s.
"My guess is that Brand America is perilously close to one of those tipping points where something almost unassailably powerful and popular becomes almost irreversibly loathed, almost overnight," Mr. Anholt said. "If this happens, it would have dire consequences for all U.S. exports, whether commercial, cultural, social, human, or political."
With only 1-in-5 Americans having passports, few may be aware of Europe's contempt for the United States.
"I am genuinely shocked by the degree of anti-American sentiment and casual denigration of America one hears daily," said Ian Kirk, who founded 1827 Consulting, a brand development firm in London.
Video screens in Spanish subway stations, for instance, recently featured performances of "Supersize Me," the biting parody of unhealthy American fast food menus. "All day, every day, super size, super size," go the lyrics. "The American way. Getting fat."
Michael Moore's film, Fahrenheit 9/11, depicting President Bush as an incompetent world leader, is a hot item in video rental stores throughout Europe.
The German magazine, Stern, put General Motors on its cover as the firm, which lost $2 billion in Europe in the last 4 years, considered cutting jobs. It showed a cowboy boot, complete with GM logo and stars and stripes, stomping German workers.
"Just like all Americans hate the word 'terrorist' there is an extremely large population, which is equally rejecting the word 'American,'●" said Naseem Javed, founder of the consultancy ABC Namebank and author of Naming for Power. "All corporate communication, public affairs, and corporate image keepers must pull the teams together and tackle these new issues."
Some of the most serious problems for Brand America have been in the countries that Defense Secretary Donald Rumsfeld antagonized by dismissing as "old Europe." They happen to be two of Europe's biggest markets for U.S. products: France and Germany.
German consumers, for instance, have lost their appetite for McDonald's burgers and fries. In October, McDonald's announced that the resulting loss had just about wiped its Europe-wide sales growth.
Coke makes 90 per cent of its profits outside the United States. Its sales in Germany are down 16 per cent compared to 2003. Wal-Mart; Gap; General Motors, which has 11 plants in 8 European countries; and Marlboro are among companies that have reported sales slumps in Germany or France. Euro Disney, Europe's biggest theme park operator with Disneyland-Paris, is $3 billion in debt and faced bankruptcy earlier in 2004.
Companies usually dismiss anti-Americanism as the major cause of their problems in Europe. Instead, they point to poor economic conditions in some countries, health concerns about fast foods, tough new health warning labels on cigarettes, a cool summer that cut soft drink consumption, declines in tourism, and other situations.
American firms own more than 60 of the world's 100 most valuable brand names. Their products can become a lightening rod for anti-Americanism because global brands are not just corporate logos on package labels, according Martin Roll, who heads VentureRepublic, which advises European companies on branding. Brands sometimes become symbols of the country-of-origin - its lifestyle, social values, leaders, and environmental stewardship.
Nobody is sure exactly how many European consumers think of products in political terms, Mr. Roll pointed out, or how much lightening American brands actually are attracting. "Of course, there are political consumers, but the majority would evaluate the brand in terms of attributes, benefits, and the value it carries," he noted
Lucian James, head of marketing consultants Agenda Inc., agreed. "I think that consumers are able to distinguish between a government administration and the products of any particular country," he said.
Casual conversations with consumers in several European countries also suggest that shoppers draw a line between politics and purchasing decisions. When they shun American brands, it's for other reasons.
"No, no, no, no," said Antonio Navarro, a banker here. "Bush does not write my shopping list. Never. I decide. Is the quality good? And the price? I never buy American fast food, not because it is American, because it is not healthy."
Mr. Anholt has found that even the most politically conscious consumers make those distinctions.
"I've spoken to young Muslins about their views on America, which are predictably savage when the question refers to America in general, yet entirely moderate when the question refers to American products or the interviewee's own relationship with America."
One interview was typical: "I hate America, I spit on the flag," a young Muslin student responded when Mr. Anholt asked his feelings toward America. He had a different response when asked about his personal ambitions after finishing school. "Oh, to go and study at MIT or Harvard."
Douglas Holt, the L'Oreal professor of marketing at Oxford University, found a similar contrast in a study of how consumers in 41 countries regard global brands. It included brands such as McDonald's, Coke, Nestle, Shell, Nike, and Motorola, which are sold everywhere. They have become symbols of globalization, the trend toward integration of economies and societies that has fostered protest movements.
"We found that it simply didn't matter to consumers whether the global brands they bought were American," said Mr. Holt, author of the book, How Brand Become Icons. To be sure, many people said they cared and voiced sharp criticism of the United States. But Mr. Holt found that the rhetoric rarely affected purchasing decisions.
The study concluded that only one person in 10 worldwide would not buy any product with a global brand. But Mr. Holt termed that "an extraordinary number," representing a market the size of Germany or the United Kingdom.
Mr. Holt said consumer boycotts are a risk for certain product brands. Some are well known as American (GM and Coke), trumpet their origins (American Express and American Airlines), or symbolize American values or lifestyles. Europeans see McDonald's, for instance, as pioneering a new way of American life, and Marlboro cigarettes and Levis as symbols of rugged individualism.
Some companies are responding with efforts to de-Americanize their brands, Mr. Anholt said. They acquire and market local brands, or market products without identifying any relationship to the U.S. parent company.
Coke, for instance, sells 400 brands in 200 countries, with soft drinks named Almdudler, Bibo, Tian Yu Di, and YouKi. The cans and bottles seldom mention the brand ownership.
In November, Hormel Foods launched its first TV advertising campaign in the United Kingdom for Spam, the canned meat product. Hormel described it described as "a celebration of all things British from camping to great British institution of the pantomime."
Ford Motor Co.'s acquisition of Volvo, Land Rover, Jaguar, and Aston Martin gave it a stable of solidly European brands, which few consumers associate with the United States.
DaimlerChrysler has taken a different tact with marketing of its Jeep, Dodge, and Chrysler brands abroad. "Dieter Zetsche, CEO and president of the Chrysler Group believes that the company should not appear like another European competitor," said spokesman Jason Vines. "He wants to be recognized as selling American brands. Jeep is one of the strongest American icons around - up there with Coke. Next year we introduce Dodge to Europe."
By all accounts, Heinz is the prime example of a brand with invisible national origins. Business Week's list of the top 100 global brands ranks Heinz No. 42. It said the Heinz brand name was worth $7 billion, compared to $67 billion for Coke (No. 1), $27 billion for Disney (No. 6), $25 billion for McDonald's (No. 7), and $22 billion for Marlboro (No. 10).
"I guarantee that 99 out of 100 British consumers will swear that Heinz is a 100 percent quintessentially British brand," said Mr. Anholt. Consumers in many other countries also regard Heinz as a local brand, according to Lucian James, of Agenda, a brand consulting firm in San Francisco. "I imagine that many people learned for the first time about the American origin during rising familiarity with Teresa Heinz Kerry in the recent presidential election."
Jack Kennedy, director of strategic communications for Heinz, recalled meeting a British citizen who was surprised to see Heinz products on American shelves when he first arrived in Pittsburgh.
Part of Heinz's secret to such a strong local identity in Europe is longevity, Mr. Kennedy said. Henry J. Heinz himself introduced the brand into the United Kingdom in 1886, and it became part of the consumer landscape. Heinz also has strengthened its local identity by marketing products adapted to local tastes. One example is "Heinz Salad Cream," an institution in Britain but unknown in the United States.
Mr. Roll cited another Heinz plus - a wide reputation for quality - that makes consumers disregard the country of origin. "Quality is one of the strongest components of building an image, and Heinz has it," he noted.
Sicco van Gelder, author of the book, Global Brand Strategy, suggested that Brand America's future in Europe might depend on actions companies take to "Heinz" their brands and insulate themselves from U. S. government policies that ruffle European feathers.
Contact Michael Woods at: mwoods@nationalpress.com.