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  A Brand’s Worst Nightmare   A Brand’s Worst Nightmare  Barry Silverstein  
         
 
A Brand’s Worst Nightmare It’s nothing new. One of the more notorious product recalls involving a widely recognized consumable brand was the case of Tylenol. In 1982, several people died after taking Tylenol laced with cyanide. It was discovered that the Tylenol was tampered with—but as a result of the news, Tylenol, then Johnson & Johnson’s best selling pharmaceutical product, saw its market share drop from about 37 percent to seven percent.

But it wasn’t a fatal blow to the brand. Johnson & Johnson pulled all 31 million bottles of Tylenol from store shelves, created a new tamper-proof bottle, and even offered to replace for free consumers’ existing Tylenol with the safely packaged product. It cost Johnson & Johnson well over US$ 100 million, but the investment paid off. Consumer confidence recovered and, one year later, Tylenol’s market share rebounded to 30 percent.

Today, it’s toys and pet food. Mattel toys (subject of a Brandchannel Brand Debate) was forced to recall nearly 20 million toys manufactured in China because of lead paint that could be toxic and small magnets that could be dislodged.

Mattel did three things right, says Harvard Business School professor John Quelch in his marketing blog: The company’s CEO stepped in and took personal responsibility, Mattel aggressively got the word out about the recall, and the company’s recall website “is a model of excellence.” If the recalls are the only damage, Quelch says, “Mattel’s brand reputation should survive.”

But what happens when a product recall affects countless brands, all of which, it turns out, rely on the same distributor? Such a massive recall not only shakes a consumer’s confidence in a preferred brand, but in every brand in the tainted product category.

 
This seemingly unimaginable scenario actually happened in March 2007, when more than 100 brands of dog and cat food—some 60 million cans—were recalled because pet owners reported cases of kidney failure and sometimes death after their pets ate the packaged food. The recall was centered around a single Canada-based manufacturer, Menu Foods, Inc., that supplies dog and cat food to pet food companies marketing it under different brand names. We’ll get back to that intriguing fact in a moment.

The pet food was pulled from supermarket shelves, and Menu Foods and the Food and Drug Administration (FDA) published a comprehensive list of the products involved. According to the FDA, the adulterated food contained wheat gluten that was tainted with melamine, a plastic derivative used as fertilizer. Melamine, which can be toxic to cats and dogs, is not typically used in pet food manufacturing, but it was apparently utilized by a Chinese manufacturer who supplied Menu Foods with the wheat gluten.

Since the initial recall, other recalls of cat and dog food have been issued for a variety of reasons. In May 2007, for example, American Nutrition, another distributor in the US, recalled 28 products because of possible melamine contamination. In June, multiple brands of pet food tested positive for acetiminophen, a substance commonly found in Tylenol, that can be harmful to cats and dogs.

After the widespread panic started to subside, pet owners were left with a nagging question: What is the value of purchasing a particular brand, if virtually every brand is being manufactured by the same source?

Consider the size of the pet food market. According to the American Pet Product Manufacturers Association (APPMA), over 69 million US homes have a pet. Americans spend over US $16 billion per year feeding their pets, and one of the fastest growing segments of the pet food industry is gourmet and niche product offerings. Globally, cat and dog food sales are over US$ 42 billion, says Euromonitor International.

Now look at the top players in the pet food industry. According to Pet Food Industry magazine, the leader is Mars Inc. (Pedigree, Whiskas, Waltham, Cesar, Sheba, and other brands; in 2006, Mars acquired Doane, the world’s largest supplier of private label pet foods). Second is Nestlé SA (Purina, Friskies, Alpo, Beneful, Fancy Feast, Mighty Dog and other brands). Between them, Mars and Nestlé dominate the worldwide pet food market with almost 50 percent market share. Brand powerhouse Procter & Gamble (Iams and Eukanuba) is third, followed closely by Colgate-Palmolive (Hill’s). Del Monte (9 Lives, Cycle, Gravy Train, Kibbles ‘n Bits, Skippy, Meow Mix, Alley Cat, Milk-Bone and other brands) rounds out the top five.

 
These companies are all major players in consumer packaged goods. The Menu Foods recall list included many of the above-named brands (including premium brands) sold by the top five pet food manufacturers.

The recall revealed a dirty little secret of the pet food industry—a large number of dog and cat food brands, even premium brands, are essentially comprised of the same ingredients and produced by the same source. In fact, Menu Foods says it is a contract manufacturer for five of the top six branded pet food companies, and a private-label pet food manufacturer for 17 of the top 20 North American retailers.

Makers of premium cat and dog food brands caught in the recall had to defend their products and price points. According to a story in The Wall Street Journal, Procter & Gamble explained it this way: “ ‘A less-expensive brand can copy an ingredient list but might not have the same combination to the way the recipe is put together,’ says company spokesman Kurt Iverson. The quality of ingredients and the way they are combined affects how nutrients are absorbed by the animal, he says.”

The pet food industry is certainly not unique in its use of generic products, or the same ingredients from brand to brand. Generic versions of pharmaceuticals are commonplace. (Today, for example, acetiminophen and Tylenol are widely recognized as virtually interchangeable). Grocery shelves are loaded with generic versions of brand-name products, and consumers can choose whether to pay more for a recognized brand.

Yet the pet food and toy recalls are vivid reminders to consumers that the branded world in which we live is not always what it appears to be. When toy products put children at risk because of foreign outsourcing, consumers question the integrity of the brand. And when the ingredients and manufacturing source for pet food brands turn out to be the same, consumers question why one brand is better, or why a “premium” brand should cost more. It’s during these nightmare scenarios that brand marketers must be able to intervene in a crisis—and defend the value proposition of their brands.     

[10-Sep-2007]

 
  
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

     
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A Brand’s Worst Nightmare
 
 Author has highlighted the bitter truth about wellknown brands.however nowadays consumers are becoming more aware about everything so brand value will decrease of such brands 
Parth Parikh, Student - September 10, 2007
 
 hi parth,,
Author has highlighted the bitter truth about wellknown brands.however nowadays consumers are becoming more aware about everything so brand value will decrease of such brands
 
bhavesh vaghela, student - September 10, 2007
 
 Several companies, like WalMart, go to great lengths to hide the manufacturer of their store brands. Many times it is due to the contracts that are being renegotiated with suppliers. The ability to change suppliers to keep the price point low is vital to the discount. 
Matthew Jones, Lead Consultant, www.218Consulting.com - September 10, 2007
 
 I do not believe it to be a major problem that all products are essentially produced by the same factory and with the same ingredients. We all know people seldom buy something only for its functional benefits. Brands will live 4ever =) 
Per E Asberg, Key Account Manager, Nepa.se - September 11, 2007
 
 Retail companies like Wal-Mart are not supposed to make what they sell... given their huge product portfolio - often extending to several thousands - but I feel it's a shame for big names like P 
Rohan, a brand and marcomm design strategist based in India - September 13, 2007
 
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