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GP9Jul03: Unbranding Next?  The Rise of the Unlikely

Our Fourth of July Surprise.  To get America ready for the Fourth, Ms. Julia Reed, journalist of diverse interests and a soon-to-be-bride, did an ice cream essay for The New York Times Magazine (June 29, 2003, pp. 53-54) where she featured homemade peach ice cream.  Our family put her recipe to the test just before the holiday and found it not to be wanting.  Somehow it reminded us of another Fourth decades ago in the Garden State, when we went out and picked quarts of fresh strawberries in the hot Jersey sun and then, rock salt and all, stirred them into a cold confection that was 90% berries and 10% cream.  Delicious.  Our only quibble with Miss Reed—minor, indeed—is that our hand-cranked ice cream was even better than that she has turned out in today’s automated Williams and Sonoma whoop-de-do ice cream maker.  That said, hers is still very much an “A.” 

The Taste That Got Away.  You can’t buy a decent commercial ice cream these days, so it has become ever more urgent, virtually a patriotic act, to make your own so you and the grandkids can remember the bundle of flavors that course through the real McCoy.  Nestle and Unilever, Europe’s giants of tastelessness, have gobbled up huge chunks of the American ice cream market, locking up a bunch of supermarket brands.  Like all consolidators, they are taking big lumps of cost out of the product, turning ice cream into chilled insipid, furthering the degradation that occurred under previous owners.  Politically correct Europeans are all aflutter over genetically modified crops:  instead, they probably should bestir themselves about companies further down the food chain who take some of the essence out of our foodstuffs.  The two conglomerates are creating an opening in the market for boutique companies who can offer the real goods. 

The Real Thing.  Increasingly, the real thing ain’t.  Coca Cola seems ever more watery.  Some say it went into painful decline when it started filling the bottle with corn syrup.  We were recently reminded that there was once a real Coke when a friend, just returned from Europe, told us about having cokes with zing in Russia, Finland, and Denmark.  Ironically, the beverage moguls in Atlanta seem to have made it imperative to go aboard to get a decent bottle of pop.  But the upside, of course, is that we are better without it, and our pocketbooks are healthier, too, since management is currently trying to get its prices per unit up. 

Put a Cork in It.  This week a report in the Times (Saturday, July 5, 2003, pp. B1, 4)  details the stout resistance the Portuguese wine makers are offering to the urgings of wine manufacturers elsewhere to install screwtops or plastic corks on our bottles.  Naturally the Swiss (there go those Nestle folks again), not knowing the difference, now cork half their bottles with substitutes.  We have noted on the Global Province (see Global Wit 252) that the wine writer at the Times, after first coming out for the plastic, has changed his tune and become a screwtop fan.  The Portuguese account for one-half of the $2 billion in real corks sold annually, so they’re passionate, even self righteous about this issue.  We ourselves have long noticed that plastic and metal impart strange and offputting tastes to all kinds of beverages.  Only the tasteless,  the same people who  tolerate commercial ice creams, can  celebrate the unsavory plastic corks or the cheap, rather ugly screwtops.  

Value Subtraction.  In wine or ice cream or soda pop or refrigerators or a 1,000 other products, there’s been a relentless drive to build bigger and bigger, market-dominant global companies that can gain massive advantages of scale.  Invariably that has meant taking value out of the actual product (be it peaches in your ice cream or chip capacity in your cell phone), while investing ever more heavily and continuously in marketing and advertising to saturate customers the world over with messages.  It is fair to say that marketing expenditures have gotten out of hand, just like campaign finance, and that they are doing a disservice to the economy.  In many instances, companies no longer really prize their products, but worship, instead, their brands.  There is often an inverse correlation between marketing expenditures (as a percentage of sales) and product quality, the same kind of correlation that exists between campaign costs and the quality of our politicians.  Somebody has to pay for all that TV advertising, couponing, and store detailing.  The bucks come out of the product, and, it can be said, the product is being hollowed out. 

Unbranding.  On the Global Province, we have talked about the growth of non-marketing, a countervailing tendency (see Agile Companies 186 and Letters from the Global Province, 25 June 2003), and unbranding.  We have become rabid fans, as have many others, of the understated, much talked about ads put out by Honda in the United Kingdom.  We know of boutique craft companies in several fields who ultra-control their marketing expenditures in order to use finer materials and better assembly techniques.   

In other, words, there is a grand assembly of people out there besides Ms. Reed who know they’re not getting peaches in their ice cream and are on the look out for something better.  Through word of mouth, through niche magazines, through the Internet, they’re discovering value-added products.  Their new spending habits are exposing the vulnerabilities of purveyors whose offerings are all brand and no substance.  For instance, very demanding consumers bonded together by their common interest, rather than marketing dollars, are beginning to drive the specialty coffee market, the caffeine segment that is showing real growth.   This gradual drift to quality portends some momentous changes for advertising agencies, magazines plus other media, and retail outlets of all sorts.  Many in these traditional marketing channels complain that they have not seen such economic pain since the 1930s, experiencing flat or declining revenues, part of which stems from some fundamental changes in the marketplace.  

P.S.  Our Annual Report on Annual Reports 2003, called The Shock of Recognition, will be published in the next few weeks.  We discover there that tough and rather unprecedented economic events have compelled companies to adopt dramatic new strategies, although this transformation is masked in the reports by miniscule disclosure concerns and corporate governance showboating occasioned by new legislation and a punitive legal atmosphere.  It is this new economic marketplace that is giving birth to “unbranding” and other unlikely trends.  We will be posting this new report in the Annual Reports section of the Global Province.

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