Global brands force ethical issue

Profound scepticism about the benefits that global consumer brands bring to developing countries has surfaced in a survey commissioned by SABMiller, the world’s second largest brewer.

Nearly 80% of those questioned think global brands have an unfair advantage over local brands, and that the introduction of multinational marques has a negative impact on local cultures.

Similar numbers believe local heritage brands are damaged by the launch of global rivals in their home markets. Over two-thirds said that entering new markets and driving out local brands was becoming less ethically acceptable for multinational brands.

Interestingly, these respondents are not just members of the general public whose views can be dismissed as ill-informed. Nor are they concerned ethical shoppers with a moral axe to grind. In fact, the survey was conducted among some of the world’s most influential figures from business, politics, the media and public services. They make up research group YouGovStone’s “ThinkTank” network of almost 4,000 influential “leaders in their field”.

Interestingly, YouGovStone says of these movers and shakers: “Many of the views expressed seem somewhat idealistic and, at times, even a little muddled.” But it believes that brands are judged against the beliefs of this influential set of respondents.

Given that half of the respondents are senior business managers and chief executives, it is striking that they have such deep misgivings about how far global consumer brands can make the world a better place. The findings are a setback for those who promote global brands as a force for good.

Clearly, they have much work to do to persuade the most influential business and political figures.

However, their attitudes are not completely negative. Two-thirds believe the brands can help developing countries benefit from increased availability of products, higher standards of quality and greater opportunities for distributors and retailers.

SABMiller commissioned the survey in association with Henley Management College to contribute to a series of debates it is running about globalisation. The latest was held in London last week under the title, “In a globalising world, are global consumer brands a force for good?”

Coca-Cola chairman and former chief executive Neville Isdell spoke at the debate of the efforts his company has made to ensure the brand is seen as a force for good. He gave the example of Coca-Cola’s commitment to become “water neutral” so it returns “into nature” the water it draws out to make its drinks. “Milton Friedman [the monetarist economic guru] said the only purpose of business was to make a profit,” said Isdell. “My view is that has changed in the 21st century.”

He believes people expect brands to become an “integral” part of their communities. “You need sustainable communities to have a sustainable business. Are we there yet? No. But we are trying to do the right thing,” he said.

Among the major concerns unearthed by the SABMiller survey were the effects of launching consumer brands in developing countries where many people would struggle to afford them.

The survey asked which practices are becoming less ethically acceptable for multinational consumer brands. Over half identified “elevating consumer expectations to unrealistic levels”, “creating needs which don’t already exist” and “the marketing of continual product innovation which has no significant consumer benefit, but enhances product price” as unacceptable.

But Isdell defended Coca-Cola from criticisms that it is unethical to promote the brand as status-enhancing to people who cannot afford to buy it.

“I’m back again to consumer choice. We are an affordable luxury and life is also about psychological reaffirmation and feeling good about what you do and what you consume. That is why people go out and buy expensive watches they can’t afford. I don’t think there is any conflict between advertising Coca-Cola and the needs of consumers in the developing world,” he said.

But survey respondents were sceptical. Some 80% agreed that brands try to create needs which don’t already exist. The survey authors believe this is a negative interpretation because 87% of respondents then agreed that “growing consumer aspirations often lead to consumer debt” and it is the creation of new needs that is driving these aspirations.

However, on the positive side, two-thirds of people felt that “consumer power across the world is growing”, while only one in five disagree.

YouGovStone says this is a positive development in the eyes of respondents because in a previous survey by the company, 62% felt consumers ­didn’t have enough power. But despite the growth in consumer power, almost half (47%) agreed or tended to agree that governments should educate and protect consumers from the power of brands, while 34% disagreed.

The findings of the survey drew a sharp response from the chief executive of SABMiller, Graham Mackay. “The research has turned up some findings with which we disagree,” says Mackay. “We would challenge the research findings that global consumer brands are perceived to have an unfair advantage over local brands. This is clearly not the case in the brewing industry”, he adds.

“In fact, we would strongly disagree with the conclusions of the research that there is a conflict between the demands of consumers for ethics and sustainability, and the demands of shareholders. We believe that those companies that understand and respond to the needs of their consumers will invariably deliver greater value to their shareholders.”

The survey asked which factors would be the hallmarks of successful global consumer brands over the next ten years. Top place goes to ethics and sustainability, which is chosen by 68%. Next comes competitive pricing, but right down at the bottom is impactful marketing, with just 32% citing it as an important factor. Product innovation gets just 52% and authentic brand personality only 37%. Clearly, the respondents do not give much credit to marketing and advertising in terms of building global success.

But the overall feeling of these high-flying respondents is that global brands do little to bring benefits to emerging markets. As one respondent says: “I can still clearly remember the first McDonald’s opening in Moscow with a queue of many hundreds stretching down the street. I also recall Coca-Cola being re-introduced into the People’s Republic of China in the early Eighties. Neither event was a benefit to either society.”

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