Invisible Brand

With so many brands changing hands these days, Lucian Camp looks at whether changes in ownership makes that much difference to consumers, or whether they’re really that bothered to begin with.

Ever since the private equity houses fell in love with the packaged goods sector, many grocery brands have gone through more parents more quickly than even the most difficult fostered teenager. Does anyone know, for example, who owns HP Sauce these days? Or Smash? Or even Marmite?

On the whole, changes of ownership make little, if any, real difference to the groceries themselves. Even if they’re made in different plants in different countries (these days HP Sauce is imported from the Netherlands) they tend to look and taste much the same. And as for what they stand for as brands, well, that was pretty much what the new owner was paying for in the first place, so – give or take the odd repositioning and relaunch – they’re likely to leave well alone.

In financial services, we tend to feel pretty uneasy with the idea of tradable brands like these. It’s more or less OK in credit cards, where brands like Goldfish and Marbles are the FS equivalents of HP Sauce and Marmite: are you sure you know who owns them these days, or even whether they still exist? But beyond this, things become much more uncomfortable.

The basic problem, I think, is that when financial services businesses change ownership, the new owner is very rarely buying the brand. Much more likely, they’re buying the assets and the customer base, ideally on the cheap and very often because the business is in trouble. And when that’s the case, the attitude of the new owner towards the brand is likely to be indifference at best, and outright hostility at worst.

Citibank’s acquisition of Egg from Prudential is a case in point. Egg was in trouble, largely as a result of a disastrous failed attempt to expand into the French market. Prudential was desperate to get rid of it. Citibank liked the look of various bits of it, particularly its large and loyal credit card user base. But Citi had no time at all for Egg’s quirky, contrarian, somewhat exhibitionist brand: within months, dreary new DRTV advertising revealed a new Egg without a trace of its former attitude. I don’t know what happened to Egg’s Prudential-era staff, but if any have been retained I’m sure they will bitterly regret the loss of a culture which, for all the business’s mistakes, was one of the strongest and most passionate I’ve ever seen in financial services.

You could see signs of a rather more cynical and in some way troubling approach in the recent wave of acquisitions of closed life funds by the so-called “vulture” businesses, principally Pearl Group and Resolution. Here, in a situation where everything about the closed funds in question was changed by the acquisition, one of the acquirers’ key objectives was to avoid a situation in which the change of ownership and strategy generated a surge in transfers out of the funds. Maintenance of the existing brands played an important part in reassuring customers and creating an impression of stability and continuity – an impression, of course, completely at odds with the reality.

Much more often – again in sharp contrast to the packaged goods market – acquired FS businesses are merged into the acquirer’s business. Needless to say, this approach indicated pretty unambiguously that the brand is not highly valued by the acquirer. Many of the biggest global FS corporations – HSBC, AXA, JPMorgan and ING, to name a small selection – believe strongly in the master brand, and have rolled literally scores or even hundreds of acquired brands into it. (That said, even businesses as committed to a master brand as these have been ready to make an exception when faced with a situation that’s sufficiently, well, exceptional – the First Direct brand still exists within HSBC, and AXA still haven’t quite found the courage to administer the coup de grace to PPP Healthcare.)

This whole issue of the attitudes of acquirers towards acquired brands is, of course, given a new dimension by the new wave of acquisitions and assimilations resulting from the credit crunch. Acquirers unexpectedly adding major new brands – and in some cases very large portfolios of brands – to their businesses will have some serious and urgent thinking to do.

When an acquirer like Lloyds TSB which already maintains a small portfolio of brands (Scottish Widows, Cheltenham & Gloucester) buys a business like HBOS which includes an unusually large portfolio of brands (Halifax, Bank of Scotland, Clerical Medical, Intelligent Finance, eSure, Birmingham Midshires etc etc) it seems likely, on the basis of its track record, to preserve most of the new brands it has acquired. Other situations are very different. Given that the master-branding Spaniards at Santander were already well on the way to phasing out the Abbey brand, it’s difficult to believe they’ll show any more enthusiasm for Alliance & Leicester. And looking across the Atlantic to two global giants, JPMorgan and Citibank, which have historically preserved only the very biggest and most valuable brand assets (Chase, for example, is still alive and well within JPMorgan) I think I’d be surprised if some of the deeply-tainted US retail banking brands which they now own, such as Washington Mutual and Wachovia, are still around in three years’ time.

In today’s fast-changing market, where the whole question of brand ownership and management within financial services is becoming ever-more fluid, I see greater and greater opportunities for a little business opportunity which has intrigued me for many years – a brand brokerage which aims to match owners of disused and abandoned brands with businesses willing to pay good money for them. What would a start-up savings business pay, for example, to be able to use the Save & Prosper brand, currently gathering dust on a shelf at JPMorgan? What would a direct insurance business offer Zurich for the Eagle Star brand? If you were establishing any kind of corporate, private equity or investment banking business, how much would you pay UBS for SGWarburg?

Purists may argue that totally detached from their original ownership, bought and sold as commodities, brands acquired in this kind of way mean nothing and should be treated by their target groups with the contempt they deserve. Owned by the latest in a long succession of owners, made by different people in a different plant in another country, a grocery brand like HP Sauce provides such purists with fruitily-flavoured food for thought.