Oreos Forever

The power of established brand names has always driven food industry profits during economic good times and provided protection and stability to weather the storm during downturns. But things are changing, and brand names are losing their clout.

A number of recent reports indicate the power of brand names is waning, with a number of traditionally strong branded products showing double-digit declines over the past couple of years, some as high as 20%! What is driving this shift?

The explosion of media outlets over the past decade has made it impossible for any manufacturer to dominate conversation with the American consumer. When you look at print, network television, cable, the Internet and other electronic outlets, it’s obvious that no company has a budget large enough to close out competitors’ messages in any product area.

The rise of superstores such as Costco, Wal- Mart/Sam’s Club and others has substantially increased both the buying power and product options available to consumers. It has also given consumers more reason to comparison shop on price, which has led to a decrease in brand loyalty and an increase in consumers’ likelihood to experiment.

The maturing private-label marketplace has created intense competition for traditional branded products, to the point that a number of private labels are fast becoming branded products themselves. When the private-label phenomenon first started, it was all about price, i.e., lower-cost alternatives to higher-priced branded products. While that marketing segment is still strong, it has been joined by higher quality, high-priced private-label products that compete head-to-head with traditional brands. They can get you coming and going.

Finally, the owners of traditional brands are sometimes their own worst enemies, succumbing to trends and diluting their brand identities by applying them to product extensions. This weakens the consumer public’s esteem for the brand’s identity.

I have found myself impacted by the above influences to the point that I really have only two strong brand loyalties left—the original Oreo® cookie and Fritos® corn chips.