IUF

Uniting Food, Farm and Hotel Workers World-Wide

Behind the melamine milk scandal lies an emerging crisis in corporate branding. One of the reasons for the heavy promotion of “global” brands was so that consumers wouldn’t know (and would eventually stop caring) where products are made. Now with a major food contamination scandal that has killed at least 4 babies in China and sickened thousands, consumers are asking why their favourite “local” ice creams, biscuits and dairy products are made overseas.

The major transnational food companies spent the 1980s in a frenzy of mergers and acquisitions, buying up local brands and grabbing bigger market shares. The takeover boom continued into the first half of the 1990s and was complemented by a massive shift in company financial resources into marketing these brands, building an image and creating consumer loyalty. By the mid-90’s companies like Nestle, Unilever and Kraft had built up extensive brand portfolios and held the largest market shares in a range of food products - everything from cooking oil to ice cream, instant coffee and biscuits. They were also under investigation for monopoly practices and price fixing in several countries as a result.

By the end of the 1990s the new logic of financialization set in. The brands themselves became valuable financial assets and their value could be boosted through a blend of Wall Street wizardry and aggressive marketing rather than better manufacturing. So there was an irrational shift to rationalization: cutbacks, restructuring and consolidation. Less is more. Now fewer brands were better. By focusing on a few global brands in overseas markets the financial value of these brands would skyrocket. Nestle and Unilever called these their “billion dollar brands”, while Kraft would “shrink to grow” - with just 10 global “power brands” by 2008.

With the focus on “global brands“many of the popular local brands bought up in the 1980s and 1990s were sold off or simply disappeared. Local jobs disappeared too with them as plants were closed, merged or sold-off. In some cases the global brand was simply the logo alongside the local brand name ... then the name disappeared, and the jobs. Unilever’s”Heartbrand"” ice cream logo, for example, carries global recognition, but is known as “Walls” in the UK and Asia/Pacific regions as well as Selecta (Philippines), Kwality (India), Algida (Italy), Langnese (Germany) and Kibon (Brazil).

With global brands location no longer mattered. Production was relocated overseas (and relocated again and again), while aggressive brand marketing ensured that consumers continued to believe they were buying a locally made product with a global identity. The locally branded frozen fish stick could make a round trip detour of thousands of kilometers for filleting in China on its way to the supermarket shelf, with no questions asked.

The power of the global brand for companies like Nestle, Unilever and Kraft lies with their ability to shift production to countries like China, while loyal consumers believed it was the same product. As an added bonus, the companies could trumpet their “green” credentials and commitment to tackling global warming while loading up the products with thousands of additional food miles. Behind the familiar local brand stands a caring, concerned global company…

Consumers loyal to the brands would also continue to believe that their favorite Kraft, Nestl