Saturday, July 8, 2017

The Death Of Brands

Are brand names dead or just outdated?

A recent article in the Wall Street Journal posits that many traditional brands of pre-packaged foods are in serious decline because Americans are all eating fresher organic food and not packaged products.  I think this article reflects a personal prejudice by writers for the Wall Street Journal, who no doubt live in the New York City area and shop at Whole Foods.  While people who live in trendy upscale cities and are paid six-figure incomes might be having their fresh kale delivered by drone from Amazon, the rest of us have to make do with much, much less.

In fact, a lot less.  Where the name-brands are losing ground, is not to fresh kale but to generic and store brands.  I've written before how generic Walmart Great Value brand Woven Squares wheat crackers are much better bargain than Triscuit-brand wheat crackers.  Not only do they cost half as much, they actually taste better.  Nabisco has spent a lot of money and time buying shelf space to display dozens of varieties of their Triscuit brand crackers, most of which are covered with some sort of powdery flavoring which detracts, not adds, to the experience.  Many of these sell for over $4 a box whereas the store brand can be had for under $2.   The store brand is better - and cheaper.

With the decline of the middle class, people are more inclined to pinch pennies.  Moreover, even those who can afford to buy store brands have taken on the learned behavior of penny-pinching as a result of the recent recession, or not so recent recession, has it has been nearly a decade now since the stock market collapse.

We have seen this behavior pattern before, a kind of hysteresis factor in the economy both when it sinks and when it rises.  When we enter a period of recession or depression, people cut back on spending out of necessity.   People adopt frugal habits.  People like me start writing blogs called Living Stingy.

Then the economy improves, but people keep up with their old habits and it takes years, even a decade, for bad habits to slowly creep into our daily pattern of behavior.  Of course, then the economy collapses again, and we are all stuck with a high-dollar lifestyle which is very difficult to cut back on, as I found out the hard way.  Once you pad your lifestyle expenses, it is very difficult later on to drop back - a good reason not to pad them, to begin with.  Sort of the point of this blog.

What I learned personally from the last recession was that many of these store-brand and generic brands are of a good quality if not better than some national name brands.  Also I learned that shopping in tony grocery stores really didn't result in getting better food, just paying more money.  After some initial resistance, we explored shopping at Walmart, which is the largest grocer in the world.  We found that our prejudices about Walmart were not based in reality.  We expected to find dented cans of expired peas or some other poverty foods lining the shelves.  Such was not the case.  In fact we were surprised at the variety of goods they had.

Shopping at Dollar Tree took a little longer, but we realized there were many things at that store which were incredible bargains compared to even Walmart.  Basic necessities like cleaning agents and paper products were often half the price of what grocery stores would charge for store brands.  And often, these products were far more effective.  Once you find bargains like these, it is hard to "go back" to spending more money on things, even as you make more money.

I think another issue is that our generation is less brand-loyal than our parents' generation, and moreover perhaps we react negatively to our parents' choices.  My mother always had certain prejudices about brands.  She always bought Tide laundry detergent and Land O' Lakes lightly salted butter.  She preferred Miracle Whip to real mayonnaise, a culinary crime for which she could never be forgiven.  But then again she smoked True cigarettes so she couldn't taste anything anyway.  (By the way, my dentist tells me that smoking is one thing that does lead to periodontal disease, which she also suffered from.  Poor girl!).

I have learned over the years that store-brand butter is just as good as not better than Land O' Lakes brand, often for substantial savings in price.  My favorite laundry detergent today is a blue powdered Mexican kind called Foca which has a picture of some sort of polar bear cub on the bag. Yes a bag, they don't spend money on your damn highfalutin' cardboard fancy boxes.  We pour the bag into a 5 gallon pail and it lasts forever.  And the bag costs hardly anything.

But I'm hardly loyal even to these brands, if something else came along that was cheaper and just as effective.  Brand loyalty, is, to some extent, dead.

The narrative The Wall Street Journal sells is that we are all buying fresh produce instead of packaged products.  While it may be true that people say they are buying more fresh foods, I think the reality is otherwise.  In the last few decades, more and more people have been using restaurants as their kitchens.  And more more people have been saying they're eating healthier, but from what I can see in the shopping carts, refrigerators, pantries of people I know, is if they buy the same junk foods as before, just not what were popular brands.

And America's obesity epidemic also negates this "fresh foods" narrative.  No one ever got fat on kale! 

Noodles, Powder, Water, Meat!

And some brands are just for products that have fallen out of favor.  Hamburger Helper, for example was very popular in the 1970's.  It was basically a package of noodles and a powdered flavor packet. The Red State update boys parody that product very successfully with their "Noodles, Powder, Water, Meat" video (of course they use the generic "Hamburger Meal" brand!). You basically fried up ground beef in a pan and added the noodles and the flavor packet and some water and it made sort of a casserole.  It was very high in sodium, had no roughage whatsoever - nor vegetable content - and probably was horribly bad for you.  It was in a way, anti-cuisine.

Hamburger Helper - the original "meal kit"!
Years ago, we were in a antique mall in Atlanta and picked up a Campbell's Soup cookbook for a few pennies.  It was an interesting relic from the 1970s, providing a plethora of recipe ideas all of which would conveniently use products made by the Campbell Soup company or one of its affiliated brands.  As you might imagine, it contained an awful lot of casseroles and various meat dishes which used Campbell products as their base.

Some of these were probably pretty good, although I'm not sure that Frankfurter Casserole with Velveeta Cheese Sauce necessarily would be yummy.  Our tastes have someone improved since those dark days.  As I have noted before, our generation has taken everything to an expert level, sometimes going too far.  But on the other hand, we live in an era of inexpensive wine, inexpensive cheeses and great imported foods.  There's really no need to eat "pasteurized processed cheese food" when you can buy a brick of Cabot Vermont Sharp Cheddar for less money than Kraft-branded fake cheese. Why buy Lancer's Rose when you can buy a nice bottle of Chilean wine for $5?  Our generation is lucky.

And I confront this every time I go to the grocery store.  I bought stock in Kraft many years ago and it has gone up in value (by about 150% - and pays a dividend of 2.89%), but I find myself not buying their products very often.  Walmart has a selection of Great Value package cheeses including various types of sliced cheese, block cheese, and shredded cheese.  Next to this display is a nearly identical display of Kraft-branded cheese products as well as a Sargento-branded display. They all offer the same basic products, but the Walmart Great Value brand is usually cheaper by a considerable amount. I'm not sure why buying a Kraft- or Sargento- branded product would be advantageous to me.

If these brands are to revive themselves, they need to reinvent themselves for a new generation. People are all agog about Blue Apron "meal kits", but when you think about it, hamburger helper was really the original meal kit of its day.  Maybe they need to reinvent the brand and push it upscale.

Perhaps if Kraft offered artisanal cheeses, or at least branded them as artisanal, much as Anheuser-Busch does as with many of its so-called craft beers, they could push their brand upscale as well and generate new customers.  And no, we don't view "Cracker Barrel" brand cheese as artisanal.  They need to come up with a new angle to push product upscale.

Or maybe not.   In the past, I used to see the poorest people buying brand-name products.  And it is possible that maybe the reason why brand-names are dying isn't that rich folks are buying fresh kale as the WSJ presupposes, but that poor people are buying store brands and shopping at Dollar Tree.  In other words, the key demographic for "brand-names" wasn't the rich, but the poor, and they've lost that demographic due to wage stagnation.

This was my life when we had a maid.  Windex and Lemon Pledge, and no, you'd better not buy store-brand!

However, I think the entire prospect is doomed.  Our generation tends to view the Trademarks of our parents' generation with disdain.  The reason why we don't shop at Sears is not that there's nothing there we want to buy - there might actually be something at a reasonable price.  Rather, we associate Sears with the mediocrity and suburban blandness of our youth and refuse to set foot in the store. Similarly old line "brands" that we grew up with are now held in disregard.  Our generation doesn't eat Velveeta or drink Maxwell House coffee or buy Wonder Bread, even if these were staples of our youth - because they were staples of our youth.

As much as these companies have invested in brand equity, I think they made need to just junk their brands and start over again with new names for their products.  Going after the low-end of the market is never going to work, as Walmart or Dollar Tree will always beat you in that game.  Rather, push the brand upmarket introduce sub-brands, or come up with new brands entirely.

In any event, it is no great tragedy of Hamburger Helper dies the quiet death.