While the Democrats are digesting their loss in last week’s US presidential election, many US businesses will be contemplating what four more years of George Bush in the White House will mean for the image and sales of their brands.
The unpopularity of the Bush administration and its foreign policies overseas are taking their toll on the “great” American brands outside the US.
Many of the best-known US brands have suffered high-profile financial woes recently. Euro Disney – which operates that beacon of Americana, Disneyland Paris – Coca-Cola, General Motors and McDonald’s have revealed problems in the past couple of years. Although the companies blame their poor performance on a mixture of economic factors affecting different European countries, such as high unemployment, taxes and regulation, experts warn that the coincidence of the rise of anti-Americanism cannot be ignored.
Hate Bush, boycott burgers
According to a survey published last month by GMI World Poll, unpopular US foreign policies are posing a direct threat on market share for many American-based companies.
It claims that American businesses are in danger of suffering from a shift in buying habits as nearly 20 per cent of consumers outside the US say that they will avoid American brands in response to the country’s position on foreign affairs. The poll of 8,000 people around the world showed that more than half had an increasingly negative perception of the US. Participants, owing to their anger and frustration over US policies, were consciously considering changing their buying habits.
Simon Anholt, chairman of Earthspeak, and the author of the recently published book Brand America, believes another four years of Bush is going to have grave consequences for American brands, and America itself as a brand: “There have already been casual protest brands, such as Mecca Cola, which are primarily political,” he says. “But things are now moving beyond that. For instance, German restaurants are beginning to refuse American Express cards. This is new territory. It is clear that American policy is affecting the marketing of products from the US.”
Anholt points to Coca-Cola’s policy of developing more than 400 different brands around the world, of which very few are identifiably American. And while Anholt accepts that “being local” is just good marketing, he says that the company was to some extent forced into this strategy, because being seen as American is no longer a positive attribute.
Some companies have gone further to distance themselves from their American roots. In Bahrain, for instance, it is alleged that Pepsi gained market share by portraying Coca-Cola as the American soft drink and Pepsi as its local rival.
But McCann Erickson chairman and chief executive Rupert Howell says that Coca-Cola’s problems are nothing to do with unpopular US foreign policy: “The issue for companies such as Coca-Cola and McDonald’s is not that Bush is in power and therefore people are actively boycotting their products. These brands face other problems: the obesity issue and consumers’ changing tastes. Anyway, Coca-Cola has gone beyond being a US brand.”
The backlash has begun
Allyson Stewart-Allen, a director of International Marketing Partners and co-author of the book Working with Americans, disagrees. She believes consumers may have started boycotting brands already because of their American heritage.
She says: “The election result will have an immediate, crucial effect on US business confidence internationally and on American brands,” she says. “There have been three recent separate pieces of research that show the rest of the world is less enamoured of the US, and its products. If you read the GMI research, the NOP research and Research International’s findings you will discover that a loss of confidence has been attributed to Bush’s foreign policy.”
However, Stewart-Allen does agree with Howell that brands such as Coca-Cola and McDonald’s have already learned that they cannot trade on their American heritage and have instead starting ditching it for a more local approach: “The American selling-point used to be about aspiring to a lifestyle. It represented indulgence and a slice of the American Dream. But people are falling out of love with America and American brands.”
For several years, and particularly in recent months, McDonald’s has been adopting local strategies such as grassroots football sponsorship and developing tailored menus for individual markets. It seems to be aware that it can no longer transplant its US menu wholesale and expect the rest of the world to buy it. For instance, it has stopped short of introducing the super-sizing strategy (made famous by the recent film Super Size Me), under which 36-ounce drinks – the equivalent of three cans of Coca-Cola – are sold in US restaurants. “They haven’t done it, because they know how people will react,” says Stewart-Allen.
She claims that under the Bush administration, US brand heritage will continue to lose its value. “This isn’t just something that started last Tuesday,” she says. “It’s been a slow creep. First of all, US companies have to understand that the creep is happening.”
Time to talk tact
However, some US companies are trying to change the outside world’s perception of them. Stewart-Allen points to Business for Diplomatic Action (BDA), on whose advisory board she sits. BDA is a non-governmental pressure group that aims to help US companies understand how the world is seeing them and publishes guides to help them act more “local”. Its mission statement issues a chilling warning to US brands that are continuing to trade on their American heritage: “While many US corporations have not yet experienced a direct hit on their bottom lines, attitude always precedes behaviour, which means a negative impact on sales is only a matter of time.”
BDA is headed by Keith Reinhard, who as chairman of DDB Worldwide is well placed to advise brands on these issues. His agency’s clients include some of the largest iconic American brands: Pepsi, Dell, Exxon Mobil and McDonald’s.
The BDA is the latest in a long series of attempts to do something about America’s declining image abroad. For instance, shortly after the 2001 terrorist attacks on the US, Charlotte Beers, the former chief of Ogilvy & Mather in the US, was appointed as undersecretary of state for public diplomacy. She produced a $15m (£8m) advertising campaign featuring Muslims who had successfully integrated into America. This changed few minds, not least because target countries generally declined to show the campaign. Beers departed shortly afterwards.
Some American companies do not believe they have much to worry about. General Motors is about to rebrand Daewoo as US marque Chevrolet. A spokesman for GM Europe says: “Chevrolet is a global brand, not an American global brand. If it has an American ring to western European ears that is because western Europeans associate it with North American products,” he says. “But if they went to Brazil, they would see quite different Chevrolets. Perceptions will change dramatically.”
The spokesman says GM will not be pushing Chevrolet as an American brand, but as a brand that is good value, reliable and family-based. “Our research shows that there will be no long-term linkage between Chevrolet and political issues,” he adds.
Many in the UK advertising industry agree with GM. “I don’t think being a US brand is a problem. Only two to three per cent of the UK population actively boycott US brands,” says Ogilvy & Mather group development director David Muir. “Very few people will refuse to buy goods just because they hate the country they come from.”
Few fail to make the point that, in Europe, US corporate culture has historically had a reputation for “taking over the world”. But they also admit that the attitude of most American brands has changed and that there is an acceptance that the great American Dream is no longer marketable.
As Bartle Bogle Hegarty group director Steve Kershaw explains, “Even with Levi’s we stopped selling the iconic image of the American rebel a long time ago.” But Kershaw does not believe that that fate of American brands has much to do with Bush’s politics.
The giants are stirring
In contrast, Euro RSCG London chairman Ben Langdon believes that events such as the war in Iraq seem to have accelerated ambitious global brands’ willingness to listen and adapt.
Some believe that so long as American companies continue to offer good products they have no need to worry. “People buy products and brands that deliver what they want, and American brands are very good at that,” says Grey London managing director Chris Hirst.
But American products are facing increased competition from reliable and cheaper consumer goods produced in Asia and the former Soviet Union.
“Chief executives in China and such are obsessed with building world-class brands,” says Muir. “They can’t get enough information on best practice in global brand-building. And this is going to become a bigger issue for the US in the next 20 to 30 years.”
Anholt believes the US is in danger of being complacent. He says that since the Thirties, US information agencies have put a lot of effort into marketing the US, but “under Bush, America has decided it doesn’t need to bother.”
It is a decision that the US could regret. In his book, Anholt points to the unscrupulous actions of companies like Enron and WorldCom, which through their own disgraceful behaviour have helped to damage America’s brands. He warns that if America slips too far in people’s esteem, its brands will have to work ever harder to downplay negative associations with the country of origin, At worst, he warns that these brands might be forced to disguise their true country of origin – currently a practice common with Chinese brands.
Evidence of a backlash against the US is growing, although it has yet to manifest itself in disastrous sales. And if George Bush’s foreign policies continue to put the rest of the world’s back up, it is only a matter of time before US brands feel the brunt.
Additional reporting by John Stones