European Insights

Share:

The power of branding

21 March, 2019

Insights banner

The power of branding is an aspect of the corporate world that often goes unnoticed. It has proved both a catalyst for growth and a ballast in times of decline for countless businesses navigating the ever-changing consumer environment. In an age of increasing product offerings and ever more agile ways of reaching consumers, its power is more essential than ever.

In the early 19th century, sweetening a cup of tea was surprisingly tiresome. Sugar was imported in enormous 'loaves' which would then be attacked by a grocer wielding a small axe or grater. This was then physically repeated on a smaller scale by the consumer at home with 'sugar nippers', which shaved them into smaller yet still uniformly irregular shapes. Such was the hassle that many consumers simply took to dunking large chunks into their drinks and then leaving them to dry out before reusing them at a later date (cue palpable horror from modern tea drinkers.)

It wasn't just sugar; before 1870, most groceries were predominately unpackaged, unprocessed and often adulterated. It took a former grocery assistant named Henry Tate to change this when in 1872, he bought and patented a sugar-cubing machine. An intensely simple concept, the uniformity of the sugar cubes thus allowed the customer to exercise product control and introduced an element of ease to what had become a rather messy affair. This combined with Tate's branding (and the inherent individuality and sophistication that came with it) gave rise not only to Henry Tate's colossal fortune, but to an entire industry.

There was no great invention, no new idea that pulled the rug from under competitor's feet, but instead a marked shift towards branding and consumer needs, rather than a focus on simply importing in bulk, marking up and then shifting product on. This creation of 'value from nothing' led to the newly merged Tate & Lyle's Thames Refinery becoming the largest in the world by 1939 and Henry Tate becoming one of the most prolific collectors of contemporary art in the UK (he would end up funding the construction of the Tate Britain art gallery in London.)

In some ways, Henry was at the forefront of what would become a branding revolution, as consumers moved away from generics into the modern age of pre-packaged and branded goods. Along with William Lever, who did the same for butter and soap that Tate did for sugar, he changed the landscape of consumer retail.

Not only was an advertising industry born, but the concept of brand value began to take hold. Today the concept is the basis for reams of business academia as well as the strategies of many of the world's largest companies. In the 2018 Interbrand Best Global Brands report, 46% of the top fifty global brands as measured by the consultancy are over 100 years old, a staggering number considering the cultural and technological changes that have occurred during this time. Longevity is seemingly accompanied by market performance as well: between 2000 and 2017 the top 100 brands outperformed the MSCI World Index by nearly 100%.[1]

The power of branding therefore appears self-evident. It is how companies can maintain margins and economic moats for such extended periods of time. It is why consumers will sometimes pay significantly more for identical products separated only by labelling, such as painkillers. And it is why in 2006 Lyles Golden Syrup set a new record as the longest unchanged brand in British history. Its longevity is symptomatic of its clout and this concept cannot be ignored by corporations or investors alike.


[1] Interbrand Best Global Brands 2017.

Back to articles

WANT TIMELY NEWS AND UPDATES STRAIGHT TO YOUR INBOX?

Subscribe to our newsletter here

European Equity Strategies

Learn more

This website and its contents (the “Site”) has been provided by RBC Global Asset Management (“RBC GAM”) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein.

In Canada, this Site is provided by RBC Global Asset Management Inc. (including PH&N Institutional) which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this Site is provided by RBC Global Asset Management (U.S.) Inc., a federally registered investment adviser. In Europe, this Site is provided by RBC Global Asset Management (UK) Limited, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this Site is provided by RBC Global Asset Management (Asia) Limited to professional, institutional investors and wholesale clients only and not to the retail public. RBC Global Asset Management (Asia) Limited is registered with the Securities and Futures Commission in Hong Kong.

RBC GAM is the asset management division of Royal Bank of Canada (“RBC”) which includes RBC Global Asset Management Inc., RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, RBC Global Asset Management (Asia) Limited, and BlueBay Asset Management LLP, which are separate, but affiliated subsidiaries of RBC.

Nothing contained in or on the Site should be construed as a solicitation of an offer to buy or offer, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction. This Site is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. RBC GAM takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when produced. The information, including layout, of this Site, may be wholly or partially suspended, withdrawn or changed at any time. We also reserve the right at any time to immediately suspend the provision of all or any part of this Site to you and/or block your access to this Site.

Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness, reliability or correctness. The views and opinions expressed herein are those of RBC GAM and are subject to change without notice.

Any investment processes described in this Site may change over time. The characteristics set forth in this Site are intended as a general illustration of some of the criteria considered in selecting securities for client portfolios. Not all investments in a client portfolio will meet such criteria.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index. Interest rates, exchange rates and market conditions are subject to change.

The Site may contain forward-looking statements about general economic factors which are not guarantees of future performance. Forward-looking statements involve inherent risk and uncertainties, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement. All opinions in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.

Certain names, words, titles, phrases, logos, icons, graphics or designs or other content in the pages of the Site are trade names or trade-marks owned by RBC or its subsidiaries, or trade names or trade-marks licensed to them. The trademarks are distinguished from one another and accompanied, at first-time use, with the appropriate trademark symbol: ®/TM. These symbols are keyed to their respective legend which describes the owner or licensee of the trade-mark. The display of trademarks and trade names on pages of the Site does not imply that a license of any kind has been granted to anyone else. The information is for your personal use only. Any unauthorized downloading, re-transmission, or other copying or modification of trademarks and/or the contents of the Site may be a violation of any federal or other law that may apply to trademarks and/or copyrights and could subject the copier to legal action. The information is protected under the copyright laws of Canada and other countries. Unless otherwise specified, no one has permission to copy, redistribute, reproduce, republish, store in any medium, re-transmit, modify or make public or commercial use of, in any form, the information.

Cookie Policy
What are Cookies?

A cookie is a small text file containing a unique identification number that a website sends to your computer's web browser. When you visit a website, a cookie may be used to track the activities of your browser as well as provide you with a consistent, more efficient experience. Cookies cannot view or retrieve data from other cookies, or capture files or information stored on your computer. Only the website that sends you cookies is able to read them.

How do we use Cookies on this website?
1. To Improve Functionality

This website uses cookies to monitor and improve operations and functionality. These cookies do not contain personal or financial information. They gather statistical data such as the average time spent on a particular page. This kind of information provides insight on how to improve the design, content and navigation of the website.

2. Site Personalization

This website uses cookies as a means of offering visitors a personalized experience for future visits. For example, a persistent cookie is used to record if you have accepted the use of cookies on the website. This cookie allows you to browse the website in future without being shown our cookie notice every time.

Declining Cookies

It is possible to still browse this website even if you decline cookies. However if you choose not to accept cookies, some aspects of the website may not function properly or optimally. Cookies are widely used and most web browsers are configured to accept cookies automatically. If you prefer not to accept cookies, you may adjust your browser settings to notify you when a cookie is about to be sent, or you may configure your browser to refuse cookies automatically. If you would like to learn more about your cookie options, please refer to your browser's documentation or online help for instructions. To learn more about cookies, including information on what cookies have been set on your computer and how cookies can be managed and deleted, visit www.allaboutcookies.org.