I’ve never bought Typhoo tea, but as one of the leading tea brands in Britain it didn’t escape my attention when I read it had been purchased by India's Apeejay Surrendra Group (see this report on BBC News Online). This will be the second time SwelledHead has said “I told you so” on this subject, but it’s a point well worth repeating.
When writing a post earlier this year to review Thomas L. Friedman's book, 'The World Is Flat', I struggled to think of major British and American brands that had been snapped up by the ambitious Chinese and Indian conglomerates we keep being warned about. Then within weeks, Nanjing purchased the ailing UK car manufacturer, MG Rover, and American favourites IBM, Maytag and RCA were either newly sold or being bid for. Few would now doubt that the cash rich but brand-equity poor companies from the rapidly developing economies of China and India have realised that the fastest way to gain brand leadership is to buy it.
Launched in 1903, Typhoo is the third-biggest tea brand in Britain, behind PG Tips and Tetley. PG remains part of Anglo-Dutch Unilever, but Tetley was sold to India’s Tata Tea in 2000. Tetley is one of the biggest tea brands in the US as well, and as the same BBC report states, Tata has added to its portfolio there by acquiring Good Earth, a speciality tea brand with a 3.7% share of the US market.
That foreign companies want to buy our brands is not something I regard as surprising. Japan’s Toyota and South Korea’s Hyundai may now be leaders (in the US at least), but it’s taken them many years of sustained effort to get there. It’s only natural, and indeed sensible, to take a short cut if one is more easily available. I haven’t thought of it as something that America or Europe needs to be particularly afraid of either. After all, the exchange of brands is all part of the dynamic tapestry of international business.
Then today I read this article by BBC business reporter, Peter Day. In an interview with Sir Martin Sorrell, chief executive of marcoms giant WPP, he revealed that American short-termism (and I’d lay the same charge on most European economies, though perhaps to a slightly lesser extent) could well leave Western companies unprepared for the emerging new world order.
I think he may be onto something here. To control our own brands is, to a fair extent, to control our own destiny. They represent enormous value to our economy in terms of profits and jobs. This isn’t some protectionist, xenophobic notion; it’s the recognition that to compete effectively in a global economy which counts China and India as business equals we need to reassess our objectives. There’s no doubt that our Eastern competitors have set long terms goals for their success. Now, we need to unshackle ourselves from the single-mindedness of share price and engage in a more comprehensive view of where we want to be ten, twenty and even fifty years.
