What's in a name? Less and less as consumers spurn big brands

PARIS (AFP) - The world's best-known branded products, names that have powered the global economy for the past half-century including Coca-Cola, Colgate and Knorr, are facing fierce competition in Europe from anonymous cheaper rivals.
While young people remain attached to brand names, adults are increasingly drawn to substitute products which may be of slightly lesser quality than the market leaders but which are considerably easier on the pocket, market analysts told AFP.
No names are sacred. Generic cola and unbranded wines, pates or chocolate are all finding growing numbers of takers.
Multinationals such as Nestle, Coca-Cola and Colgate-Palmolive are finding that even logos are subject to the laws of growth and decline as their myriad subsidiaries, trading under a variety of names, report flagging profits or slumps in sales forecasts.
Amid ever-keener competition, leading companies since the 1960s have been forced to launch new brand names each year, a little cheaper than the market leaders.
This way of creating added value now appears to have peaked as consumers are saturated with quality.
Over the past two decades, Europe's supermarket chains have poached sales from the leading brands by turning out identical products under their own logos but selling from 30 to 50 percent more cheaply as their advertising and research costs are considerably less.
The brands have sought to counter the trend through innovation, but with little success: most of the new products last less than a year and their prices discourage buyers, distributors said.
"In 20 years the prices of the major brands have increased far too much relative to the modest improvements they have to offer. Rice that took 20 minutes to cook and now takes only 10, that's great. But five minutes instead of seven minutes, that's no big deal.
"And the difference with cut-price copies has risen from 40 percent to up to 200 percent. At this rate, brand products will become luxuries and 80 percent of sales will be for low-price or distributor brands," Alain Thieffry of the Carrefour supermarket chain said.
Already branded products (including small local brands) now account for only a third of sales in Europe by volume and only 22 percent by value, according to AC Nielsen. The slump has accelerated this year amid stagnating consumption.
The trend has been markedly less pronounced in the United States and is barely perceptible elsewhere.
Moreover, "distributors' brands are themselves branching into innovation," the food buyer for a leading French distributor noted.
"Consumers only go for more sophisticated products if they see real added value. They are perhaps less demanding than before. A few simple marketing gimmicks have been enough to wrong-foot the producers of branded goods," he said.
Brand producers are attempting to head off the danger by increasing their publicity budgets. Some have attempted to change tack completely, for example Procter and Gamble (Pampers, Tampax) which for the past four years has included pricing policy as an area for innovation, the company's spokesman for France said.
Procter France is also seeking inspiration from an opinion poll it commissioned on consumer attitudes to innovation.
"The reassuring thing is that 79 percent of those questioned said they think innovation is important, but almost half said their opinion wasn't sufficiently taken into account," the spokesman said.
Another finding was that consumers know "performance cannot be increased indefinitely."
To recover lost clients, brand producers "are going to have to ask themselves some serious questions," he said.
"But for a group like ours, the only solution is to launch new products every year."