Brands generally arise in situations of plentiful production. In the US, there were boom periods for new brands after the Civil War in the 1860s and again after WWII. Manufacturers with extra capacity introduced brands as a way to encourage consumption, and as a result of competition with other producers seeking a larger share of a saturated market. Today, established brands come mostly from developed (Western) economies, though it seems only a matter of time before developing nations catch up and begin to see their own brands achieve success, regionally and globally.
The process of catching up is often uneven and unfair. Makers of established brands have an obvious advantage when entering a new or emerging market. They have the know-how and resources to market their brands, and can easily dominate local competition, either by importing or by making their branded goods locally.
Although producing locally creates jobs as well as providing know-how for local managers and workers, multinationals can drive valued and traditional local brands out of business simply because these lack the capital and aggressive management to defend their market. Governments, driven by politics rather than love of brands, don’t help much. They tend to look after the jobs and revenues of the big deals, and let small owners of local brands languish.
A global brand can be attractive in a small country simply because of its worldly cachet. Giant makers of fast-moving consumer goods (FMCGs) such as Altria (formerly Philip Morris), Procter & Gamble, Nestle, and Unilever, capitalize on the efficiency of being very big and simply deploy the same brands and advertising from country to country—even when the products aren’t the same. It’s no secret, for example, that Stella Artois is brewed locally in places like Croatia and New Zealand, not imported from Belgium; Procter & Gamble customers complained for years that the Tide detergent manufactured in Belgium for Western Europe was of higher quality than the Tide made in the Czech Republic for sale in the East.
Sometimes an enlightened multinational will maintain or revitalize a local brand, perhaps years after it was last seen on the market. In eastern Europe, many local brands were given new life after the end of communism opened the region to foreign investment. Czech carmaker Skoda, long the butt of jokes in countries such as the UK, completely re-engineered its vehicles after Volkswagen took over in 1991. Model names from the 1940s and 1950s, like Felicia and Octavia, were revived and Skoda now regularly wins Car of the Year awards all over Europe. Major breweries in Prague and Pilsen, with only minor upgrades to their products, saw global exports skyrocket to unprecedented levels after new management from SABMiller and Bass took over the brand marketing.
What brands can do for beer or cars, they can do for candy too. Prague’s big chocolate maker, Cokoladovny, was acquired by Nestle and Danone in 1991. Old product brands were livened up and new ones reintroduced to the local market with great success. In one case, the popular, unofficial name of an old favorite—fidorka—was adopted as the new brand name, an excellent example of listening to your customers.
Success doesn’t just come when foreigners take over. The maker of Kofola, a Czech soft drink, disappeared after the end of communism, but the brand was brought back in the late 1990s by a group of local managers who had gained experience in marketing for multinationals and started a new venture to revive the once-popular cola.
Globalization seems unstoppable, but many corporations have realized that big, global brands don’t enjoy unlimited appeal. There is value in local brands for the simple reason that they form part of the local culture and win over loyal, local customers because they’re “ours.” But the best local brands can also transcend their borders and go global themselves. China seems to epitomize the next phase of globalization: it is moving away from making commodity goods to building its own brands in shoes, computers, electronics, white goods, and other areas. Interbrand, in its report Best Brands in China 2006 (produced together with BusinessWeek), noted that “among the best Chinese brands, brand management is already relatively sophisticated and progressing at a rapid pace. Chinese brands are increasingly using global best practices and are becoming formidable competitors to non-Chinese brands, both domestically and globally.”