Living in a capitalistic society, we like to think that we have a great deal of consumer choice. You walk down the cookie aisle at the local supermarket and you’re inundated with countless different brands and varieties, all of which are competing for your hard-earned money. That’s what we like to think, but there is a certain sense of false competition at work here.
Care for a Beer?
When I was in Las Vegas last December, I got to chatting with some fellow from Texas. He said that he used to drink Budweiser, but since it was sold to a foreign company a few years back, he’s decided to boycott the brand. I remember I was quite shocked to hear that Stella Artois bought Budweiser in 2008, because I thought Budweiser was a much bigger company than Stella. As it turns out, there was a lot more at play here.
AB InBev is responsible for a huge range of beer brands from all around the world. We think that Corona is Mexican, but it’s an AB InBev brand. We think Beck’s is German, but that’s a part of the AB InBev family too. The same is true of Budweiser, Hoegaarden, Leffe, Alexander Keith’s, Kokanee, Labatt, Michelob, O’Doul’s, and more. And it’s not just beer either; AB InBev also has the distribution rights to Monster Energy drinks and Bacardi. There may be a certain level of independence, but the money ultimately funnels back to Leuven, Belgium in some way.
Hundreds of Coke Beverages
Most of us know that there’s more to the Coca-Cola Company than the main cola beverage, but did you know that it has over 500 brands being sold in over 200 countries or territories around the world? You’ve probably seen Coke, Coke Zero, Diet Coke, and Cherry Coke. You might remember when they experimented with the coffee-infused Coke BlaK.
Beyond that, the Coca-Cola Company also owns Barq’s root beer, Pibb Xtra, Fanta, Fresca, Five Alive, Nestea, Schweppes and Sprite. They also have some “healthy” alternatives like Dasani water, Minute Maid juices, and Powerade sports drinks. When you go down the drink aisle, the vast majority of what you’re seeing is either Coke or Pepsi.
Buying from the Other Guy
Here in Canada, two of the biggest electronics retailers are Best Buy and Future Shop. The thing is that they’re both really the same company. I recall hearing people complain about how the sales staff at Future Shop would always try to push the extended warranty on you and that’s why they decided to shop at Best Buy instead. It’s a valid reason, unless your rationale is that you want to “stick it” to Future Shop, because you’re really not.
You see a similar phenomenon with many retailers, actually. The Gap, Banana Republic and Old Navy are all the same company. Reitmans also owns Smart Set, Penningtons, Thyme Maternity, Addition Elle and RW & Co. The list goes on and on and on.
In effect, what we are seeing is the Pareto principle at work once again: 80% of the brands and products are really owned by 20% of the companies. It’s probably an even bigger discrepancy than that when you start looking at mega-sized multinational corporations like Proctor & Gamble.
Under the P&G portfolio, you’ll find Braun razors, Crest toothpaste, Downy fabric softener, Duracell batteries, Head & Shoulders shampoo, Scope mouthwash, Tide laundry detergent, Pampers diapers, Pringles chips, Pepto-Bismol, and Secret antiperspirant. You know Warren Buffett and Berkshire Hathaway? They’ve got everything from GEICO to Dairy Queen, Fruit of the Loom to Jordan’s Furniture. And just to bring everything full circle, they’ve also got a stake in both Coke and Anheuser-Busch.
It’s a Small World After All
The point of this post wasn’t really to vilify all of these multinational corporations and their increasingly giant brand portfolios. Instead, I just wanted to illustrate the illusion that many of these companies have painted. Prior to looking into the Budweiser deal a little further, I had not realized that the same corporation was fundamentally responsible for so many beer brands that I normally associate with one country or another.
That’s really at the core of so much of this too. The concept of national boundaries means far less on the stage of international commerce. Your “Swedish” IKEA stuff is likely made in China. Your “German” Volkswagen Golf is probably from Mexico. And that “Japanese” Asahi you’re drinking? It may have been brewed in Thailand.
So, what does all of this mean? Unless you’re buying directly from local producers, there’s a significant chance that your money is ending up in all sorts of other hands that you didn’t know about.