Name theory
Ferrero buying Kellogg isn't just a business story
Last year, Indians abroad sent home $129bn, a record. And on Thursday, Italian candymaker Ferrero announced it would buy US cereal giant WK Kellogg for $3.1bn, which is not a record – not even close – for the acquisition of a brand. Brit firm Vodafone's $190bn acquisition of German firm Mannesmann in 2000 remains on the podium after 25 long years. And America Online's ill-advised $182bn acquisition of Time Warner the same year remains equally gasp-worthy. Both outstrip Indian remittances by an enormous margin, without factoring in inflation, or involving 35mn-plus emigrants.
That is the power of brands, and a country that creates conditions for them to thrive is well on its way to becoming a winner. In the Cold War, US and USSR were evenly matched nukes-wise, but US had a phalanx of brands, from Coke to Boeing, while the Soviets said nyet to their own Lada.
Let's be clear – brands aren't things. There were scooters, and there was Vespa; razors, and Gillette; denims, and Levi's. Brands have an X factor that makes them desirable beyond borders. Jaguar and Land Rover were British cars, but so desirable that American Ford bought them. And when Ford fell on hard times, India's Tata Group took over. So, a brand's value transcends not only the physical product but also the balance sheet. India has brands, of course, but they are national-level players, inter-district champions. We need some Olympians.
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This piece appeared as an editorial opinion in the print edition of The Times of India.
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