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Brands and the Evolution of Multinationals in Alcoholic Beverages


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Brands have played a critical role in the evolution of multinationals in alcoholic beverages. As this article shows, brands often determined the nature and scope of mergers and acquisitions in this industry and so help explain the successive merger waves that have transformed it since the 1960s. The firms that became truly global were primarily those that developed a portfolio of successful brands recognised in many countries. By acquiring and repositioning such brands, firms were able to respond to changes in consumption, competition and regulation, to move from familiar to geographically and culturally distant markets, and thereby to achieve continuous growth and long-term survival. Standard accounts of growth and internationalisation tend to give primacy to investments in science and technology. By looking at brands, this article shows how other kinds of knowledge - in this case the marketing knowledge inherent in brand management - are fundamental in explaining the evolution of firms in industries like alcoholic beverages where technology is not a major input.
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Business History
ISSN: 0007-6791 (Print) 1743-7938 (Online) Journal homepage:
Brands and the Evolution of Multinationals in
Alcoholic Beverages
Teresa da Silva Lopes
To cite this article: Teresa da Silva Lopes (2002) Brands and the Evolution of Multinationals in
Alcoholic Beverages, Business History, 44:3, 1-30, DOI: 10.1080/713999275
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Published online: 06 Sep 2010.
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Brands and the Evolution of Multinationals
in Alcoholic Beverages
University of Reading
Universidade Católica Portuguesa
This article discusses the role of brands in the evolution of large
international firms in the world alcoholic beverages industry since the
1960s. The vast literature on the growth of firms and their international
expansion has emphasised technology rather than marketing. This is
strongly present in the work of Chandler, in the concept of ‘ownership
advantage’ associated with Dunning and other theorists of the multinational
enterprise, and in the internalisation literature on the international growth of
Other researchers, however, have put greater emphasis on brands.
They feature prominently in the management literature, though business
historians such as Wilkins and, more recently, Koehn have drawn attention
to the importance of brands in the growth of modern business.
This article
builds on these insights in the context of the growth of multinationals in
alcoholic beverages. Alcoholic beverages provide an interesting case of an
industry in which firms have both survived a long time, as the longevity of
their products and brands testifies, and have grown internationally very
large, appearing among the world’s largest industrial multinationals
(MNEs). This is also an industry where brands can be expected to play a
greater role than science and technology in firm strategies.
This article considers the growth of large firms in alcoholic beverages
and their cross-border expansion. The focus is on the period since the 1960s.
It argues that brands and also marketing knowledge (that is, the capability
of firms to manage brands and distribution networks) provide fundamental
elements of the growth strategies of firms in foreign markets and of their
evolution as a whole. It draws on concepts from Penrose and Johanson and
Vahlne. The latters stages model of the internationalisation of the firm,
despite not directly addressing entry into foreign markets through
globalisation of brands, considers brands as important features in that
process of internationalisation.
Employing a new database on the evolution
of the world’s largest alcoholic beverages MNEs between 1960 and 2000,
the article analyses the growth of industry concentration as brands gained
increased strategic relevance and firms accumulated marketing knowledge
Business History, Vol.44, No.3 (July 2002), pp.1–30
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over time. A schematic representation shows the boundaries of firms
evolving in sequential stages, corresponding to a great extent to ‘waves’ of
international mergers and acquisitions in the industry.
This article is structured in seven sections. Following the introduction,
the second section identifies the nature of brands in alcoholic beverages,
defines the concept of ‘brand’, analyses the significance of brands as
opposed to technological innovation, and highlights the role of brands in the
international evolution of firms. The third section explains the selection
criteria of the sample of the world’s largest MNEs in alcoholic beverages
and shows the merger waves that they created. Sections four and five
establish which were the main determinants related to the evolution of the
industry and to the strategies of firms which most affected their evolution,
and also relate these determinants to the waves of mergers and acquisitions
that occurred in the industry in different periods, noting which firms were
involved in each one. Section six presents a schematic representation on the
role of successful brands and also marketing knowledge in the evolution of
a standard large multinational in alcoholic beverages, showing the increased
importance these firm specific determinants played in that process. Finally,
section seven provides the major conclusions.
There remains no consensus on the precise definition of a ‘brand’.
benchmark definition might be that a brand is a legally defensible
proprietary name, recognised by some categories of consumers as
signifying a product with added dimensions that differentiate it in some way
from other products designed to satisfy the same need.
Brands have tangible and intangible characteristics.
They simplify
decision making and provide security in consumer choice concerning the
quality of the product, value for money and consistency.
They also have
emotional characteristics which appeal to the self-image of consumers and
their aspirations and fantasies.
In alcoholic beverages, such intangible
elements are especially important in making the uniqueness of brands.
Brand ‘personalities’ accumulate over time, and are embedded in
particular cultures or associated with a particular set of values, such as
heritage or images associated with a certain region or country.
‘personality’ of brands is particularly important in the alcoholic beverages
industry, where products tend to have long life cycles, and brands have
very strong associations with tradition, heritage and country of origin.
While country of origin is highly significant in wines, beer and spirits
(being sometimes perceived as even more relevant than proprietary
the ability of a brand to indicate age and tradition is also very
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important. Consequently, it is not surprising to see some remarkably old
brands in this industry.
In many cases the personality of the brand and its longevity can also
reflect its position as a first mover in a particular market. This might enable
it to set the standard against which subsequent entrants in that market are
judged, and simultaneously raise the cost of entry for new firms.
in order to be able to sustain the value added by its brands in the face of
competition, and especially when the product to which they refer is in fact
similar (such as the case for whiskies with similar blends carrying different
brands), even first movers must invest in marketing to ensure that
consumers do not perceive rival brands as acceptable substitutes.
From the viewpoint of firms, brands add value by sustaining a
continuing revenue stream because of consumer propensity for long-term
brand loyalty.
Consequently, brands allow firms to take advantage of
premium prices, obtain efficiencies in distribution and accumulate
marketing knowledge. The value of these income-enhancing attributes,
although long implicitly recognised, began to be explicitly valued by
accountants in balance sheets in the 1980s.
In alcoholic beverages, brands – because they are a distinctive
combination of cultural characteristics and values – are much more
independent of the firm and of the ownership of production than in other
industries. Consequently, even if they depend on the location of production,
brands are often assets that can be easily traded. Indeed it will be argued
below that the acquisition of brands became a strong determinant of
concentration in the alcoholic beverages industry.
Although brands have exercised a major influence in the evolution of
firms in alcoholic beverages, inevitably they have also been affected by
technological innovation. Pasteurised keg beers profoundly changed the
evolution of the brewing industry from the end of the nineteenth century.
These gave brewers a product that lasted longer and so permitted wider
geographical distribution, as well as additional economies of scale which
had not been possible previously.
Particularly after the 1960s, a wide range
of technological innovations in the production of wines, spirits and beer
affected the growth of firms.
From the mid-1980s new vinification
techniques allowed New World wines to compete in markets formerly
dominated by Old World wines.
Unlike in the Old World, firms in the New
World developed technologies which allowed them to control the taste and
quality of wines, as well as offer very similar tastes for the same brands
every year irrespective of climatic conditions.
The significance of brands in alcoholic beverages has grown in the
recent past. During the 1980s firms, responding to forces of globalisation,
rationalised their portfolios of products by concentrating on a small number
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of successful brands holding international reputations for quality and
prestige. There have also been new strategies of brand extensions and line
Using an established brand name to enter a new product
category, brand extensions are seen as a more cost-efficient and lower risk
method of launching new products.
Line extensions use an established
brand name for a new offering in the same product category.
extensions have a higher probability of success when the original brand is
well established and has reached maturity.
Examples of brand extensions
include Hiram Walker ice cream and Bacardi rum cakes, while prominent
examples of line extensions include so-called ‘ready to drink’ products such
as Smirnoff Ice and Bacardi Breezer, two beverages that mix the branded
spirit with a fruit juice. Empirical evidence has suggested that these
extensions have yet to account for a significant proportion of the total sales
by firms. Their main purpose has been to take advantage of the reputation
of the brand, to keep the brand alive in the eyes of consumers (particularly
important in countries with high restrictions on advertising), and to target
new market segments, notably young people, who might later become
consumers of the main brand. Nevertheless, brands such as Smirnoff Ice
have proved capable of very fast sales growth.
Although there are some cases of brands launched only in the last
quarter of the twentieth century among the world’s top brands, such as
Malibu, Absolut and Bailey’s Irish Cream,
the costs and risks involved in
launching new brands have become huge. Consequently firms have often
chosen to grow and internationalise by focusing on long-established,
successful brands with the potential to become global, because their
positioning, advertising strategy, personality, look and feel are in most
respects the same from one country to another and are well established.
Nevertheless, the concept of a ‘global brand’ needs careful definition. As in
other consumer industries,
few brands of alcoholic drink had their sales
evenly distributed around the world even at the end of the twentieth century.
To give only one example, Ballantines Finest, one of the world’s most
popular spirits brands, was sold in 95 countries in 1997, but over three-
quarters of those sales were in ten countries.
In order to explore the evolution of large multinational firms in alcoholic
beverages, this article uses a sample of MNEs which ranked as the leading
industrial firms worldwide in this industry after 1960, employing five
benchmark dates: 1960, 1970, 1980, 1990 and 2000. It is based on the
Fortune lists of the world’s largest firms, supplemented by annual reports
and other data sources.
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Firms were selected according to different criteria: size of the firm
(measured by its total sales), and international activity of the firm (measured
by the percentage of sales generated in foreign markets to total sales). The
sample also considers the importance of brands in the activity of the firm
These selection criteria have a number of implications. Ideally
the value-added would have been the appropriate measure for the size and
performance of firms, as it would have illustrated, for example, the
differences in value-added between spirits and beer firms, associated with
the power of their brands and the production and inventory holding costs.
However, due to the lack of availability of information, value-added could
not be used as a selection criteria and instead sales, the most widely used
indicator of performance, was chosen to measure the performance and in
particular the evolution in the size of firms.
It needs to be stressed that the focus is on the international activity of
firms, and that this is not therefore a ranking of the ‘largest’ firms in the
industry per se. The sample does not include some very large companies
which primarily served their domestic markets. There is, in other words, a
bias against firms from large economies such as the United States and Japan
because they are likely to have disproportionally smaller international
businesses. Examples include Anheuser-Busch, the leading North American
producer of beer, owner of the famous brand Budweiser, and Kirin
Breweries, the Japanese firm founded in 1907 and leader in the domestic
beer market since 1954.
According to the selection criteria, the multinationals that emerged as
the largest within the alcoholic beverages industry during this period
included Allied Domecq, Distillers Company (Distillers hereafter), Diageo
(the result of a merger between Grand Metropolitan and Guinness), Hiram
Walker, Moët-Hennessy Louis Vuitton (hereafter Moët-Hennessy) and
Seagram. By 2001 only one of these firms – Allied Domecq – had not been
merged or acquired by other firms (although the acquisition of Pedro
Domecq in 1994 led the firm to change its name to include Domecq). The
remainder formed components of other firms. For example Seagram,
acquired by the French water and media firm Vivendi in 2000, had its
alcoholic beverages business sold to Diageo and Pernod Ricard, which
planned to split Seagram’s brands between themselves and, in the process,
sell some brands as well.
The skewed geographical origins of these MNEs is apparent. Most were
from the United Kingdom, together with France, the United States and
Canada. The United Kingdom, although not one of the countries with the
highest per capita consumption of alcohol, was the origin of many of the
world’s largest alcoholic beverages MNEs, including United Distillers,
Allied Domecq, Grand Metropolitan, International Distillers & Vintners
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(IDV), Showerings, Gilbeys and Harveys. Among the causes of prominence
of British firms are the country’s large domestic resource base in the
production of beer and spirits, its home to the whisky and gin industries
which turned out to be two of the most ‘globalised’ spirits,
the country’s
colonial heritage which means that many of its firms had early and extensive
experience with exporting and direct investment, and also the fact that the
UK has always been one of the major importers of wine in the world.
INDUSTRY, 1960–2000
(Amounts stated in millions of current pounds and constant (1990=100) pounds)
Notes: n/a – not applicable.
* Although Allied was acquired in 1994, it was included in the 1985–88 merger wave,
as the rationale for its acquisition – to acquire brands with the potential to become global
– was the same as other firms had for merging and acquiring firms in that period.
Source: The Times 1000 (various issues). For the UK price index (1990=100) – International
Monetary Fund, International Financial Statistics (Washington DC, 1988, 1998);
European Commission, European Economy, No.69 (Brussels, 1999).
Merger Amount Amount
wave Year Companies involved (current) (1990=100)
1958-62 1958 Watney Mann - merger between Watney
Combe Reid and Mann, Crossman & Paulin n/a n/a
1961 Allied Breweries - merger between Ind Coope
Tetley Walker and Ansells Brewery n/a n/a
1961 Showerings, Vine Products & Whiteways –
merger of three companies n/a n/a
1962 IDV - merger between Gilbey with United
Wine Traders n/a n/a
1968-72 1968 Allied Breweries acquires Showerings 100 763
1971 Grand Met acquires Truman 39 242
1971 Moët-Hennessy - merger between Moët &
Chandon with Hennessy n/a n/a
1972 Watney Mann acquires IDV 77 448
1972 Grand Met acquires Watney Mann 378 2,198
1985-88 1985 Guinness acquires Bell’s 332 443
1986 Guinness acquires United Distillers 1,464 1,887
1986 Allied Lyons acquires Hiram Walker 1,200 1,546
1987 Grand Metropolitan acquires Heublein 986 1,220
1987 Guinness acquires Schenley 480 450
(1994) Allied Lyons acquires Pedro Domecq* 825 722
1997-2000 1997 Diageo - merger between Guinness
and Grand Met n/a n/a
2000 Interbrew acquires Whitbread 400 297
2000 Interbrew acquires Bass 2,300 1,709
2000 Diageo and Pernod-Ricard acquire
Seagram’s alcoholic beverages business 5,500 4,086
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Firms from these four countries led the waves of mergers and
acquisitions which took place from the late 1950s, which broadly paralleled
more general merger waves in the world economy. The periodisation of
these merger waves is shown in Table 1, which highlights the main firms
that participated in them. The upshot was the transformation of an industry
traditionally dominated by a large number of individual family-owned,
small and medium sized firms, usually active in a single product and a small
portfolio of brands, and producing in a restricted geographical region, into
one with high levels of concentration, in which large multinational firms
accounted for an increasing share of world output.
Caution needs to be exercised regarding the financial data in Table 1.
The amounts given include the acquisitions of all the businesses in which
the companies were involved at the time. Nevertheless the increase in the
volume of the transactions in real terms (1990=100) provides a reasonable
indicator of concentration in the alcoholic beverages industry in the absence
of satisfactory quantitative means of measuring concentration.
The firms in this sample resulted from a series of mergers and acquisitions
which took place in waves. Each merger wave resulted from a combination
of several factors related to the evolution of the industry (consumption,
competition and institutional environment), and also to the strategy of firms
(in particular brands and marketing knowledge). Different determinants were
more important in some time periods than others. Moreover, distinct parts of
the alcoholic beverages industry were affected by concentration at different
times. The process began in brewing and processed wines (such as port wine,
sherry and champagne), was then followed by spirits, and by the end of the
century by still wines.
In this evolutionary process many firms disappeared,
replaced by a group of large MNEs managing a wide portfolio of brands from
different types of alcoholic beverages, and with a global spread of their
geographical operations, achieved through horizontal and vertical integration.
Before the 1960s habits of alcohol consumption were heavily culture-
specific. Each country consumed predominantly one type of alcoholic
beverage (wine, beer, or spirits), usually domestically produced. This was
particularly true in the wine-producing nations such as France, Italy and
Portugal, and in the beer-producing countries such as Germany and
Holland, where habits of alcohol consumption date back centuries.
the Second World War rising disposable incomes, the increase in the
number of young people with a higher level of education, and the changes
in the lifestyles of the population in the Western World affected the patterns
of alcohol consumption in several ways. As consumers became wealthier
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they turned to new areas of expenditure, thus leading to a relative decline in
some industries and a rapid growth in others.
Among other habits, they
valued leisure time, travel and alcohol consumption. During this period the
industry was still relatively fragmented, and competition was essentially
played at a domestic level. Under such circumstances the growth of firms
was mostly organic and the mergers and acquisitions they made aimed at
increasing their presence in new markets and also at widening the portfolio
of products to serve existing markets. An example is Seagram’s
acquisitions, during the late 1940s and early 1950s, in Britain (of Chivas
Brothers and Strathisla-Glenlivet Malt Distillers), France (of G.H. Mumm)
and in Latin America (of, for example, Captain Morgan and Myer’s rum),
which gave the firm a wider portfolio of products including Scotch and
Canadian whisky, champagne, tequila and rum, to be sold essentially in the
United States and Canadian markets.
The creation, or re-creation, of a global economy from the end of the
helped to boost consumption of alcoholic beverages in the Western
World by diversifying products available in each market, expanding sales to
new geographical markets and reaching different types of customers (with
different age, sex and level of income).
Two large merger waves of this era
– 1958–62 and 1968–72 – were heavily influenced by major changes in
consumption, institutional environment and competition structures.
The increase in the availability of different types of alcoholic beverages
led consumers to shift to new types of products, which they believed to be
more appropriate to their lifestyles, at least as projected in the advertising
and marketing strategies of the beverages firms. For example, in Britain, the
once very large imports of Guinness from the Irish Republic started slipping
steadily over time as imports of lager beer increased, especially Heineken
and Carlsberg lager, which were later brewed under licence at breweries in
the United Kingdom.
This shift in consumer tastes towards light ales
caused Guinness to introduce new types of beers and to diversify
geographically and into unrelated businesses.
The age profile of the population also changed, as the ‘baby boomers’
reached drinking age
and sought to sample new products, different from
what their parents had been drinking. An example was Harveys Bristol
Cream, a brand of sherry that already existed in 1882 (even if not in its
present form),
and which until the 1960s was drunk by adults in Britain
before meals on special occasions. After the acquisition of Harvey’s by
Showerings in 1966, a more aggressive marketing strategy successfully
positioned the brand as something to be drunk by younger generations in
This proved a temporary phenomenon, as the subsequent acquisition
of Showerings by Allied Breweries in 1968, which had competing products,
led to the collapse of the sales of this brand.
Yet its sherry (Harveys Bristol
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Cream) and port wine (Cockburn) brands, brought considerable cash flows
to Allied.
More significantly, in Britain supermarkets played a key role in
stimulating wine consumption by overcoming the elite image of wine, both
by providing cheaper wines to consumers, and more crucially by providing
information about wine and its appropriateness to particular types of food.
Later, specialist distributors such as Oddbins, acquired by Seagram in 1984,
weaned middle-class British consumers off consumption of French and
German wines by introducing them to New World and other wines.
The increase in consumption by women was also important. This
reflected social changes, notably the growing number of females in many
countries pursuing careers outside their homes, and consequently having
greater independent access to financial resources. While traditionally only
men (or at least, no respectable ‘ladies’) had gone to pubs or their
equivalents in many countries, from this period it became usual for women
to be seen in pubs socialising (although the type of drinks they had were
different from those of men) and also purchasing alcohol in greater
numbers, which was crucial for branding.
In Britain pubs retained a
predominately ‘macho’ image, but there was a spread of more female-
friendly ‘wine bars’ beginning in the wealthy Southeast region of the
country. A classic brand, Babycham, a cider made from pears, which was
created in 1953,
became the popular new drink of the 1950s due to its
television advertising and the way the product was positioned: ‘mill girls’
champagne’. It was distributed essentially within Britain and sold in pubs to
young women. For drinking Babycham, Showerings also provided special
glasses which looked like champagne glasses and made women feel very
distinctive. Its consumption decreased sharply from the 1970s due to the
changes in consumer fashions and to the widespread consumption of other
drinks by women, such as Martini and lager and lime.
There were also significant developments in technologies that improved
the capturing of scale economies which translated into more effective
distribution of some alcoholic beverages,
in information systems (which
enhanced communications and decision taking by firms), in basic
infrastructures such as highways (which helped reduce transport costs), and
in logistics associated with the distribution of products and their availability
to consumers. The main inhibitors were the changes in legislation and the
fiscal policies in most Western countries.
Logistics and distribution were the factors which changed most radically
during the period of analysis. At the heart of these changes were the
concentration in distribution and the revolution in wholesaling. In many
countries, the major intermediary between the producer and the retailer was
traditionally the wholesaler, who made bulk purchases from producers and
distributed them to retailers. From the 1960s, the wholesaling sector became
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progressively more concentrated at a regional or state level in some
countries such as the United States, while in Europe the role of the
wholesaler was increasingly bypassed by the retailer, who entered into
direct marketing relationships with producers. A small group of large
retailers, such as Sainsburys (United Kingdom) and Carrefour (France),
developed very fast, selling a wide range of consumer products straight
from the racks, and frequently used their own private labels, operating
directly with the producers (thus eliminating the role of the wholesaler), and
selling products at large discounts.
Beyond supermarkets, another development which occurred at the retail
level during this period was the widespread growth of specialist outlets
selling only alcoholic beverages (such as Britain’s ‘off-licences’ and their
counterparts elsewhere), either owned by local entrepreneurs, state mono-
polies (as in the case of the Scandinavian countries) or multinational
producers of alcoholic beverages that wanted an outlet for their own brands.
In Britain the revolution in distribution was in part related to the decrease in
importance of pubs as means of distribution of alcoholic beverages, due to
the Licensing Act of 1961, which enabled off-licence shops to open during
normal shop hours (not just during ‘permitted hours’ determined by local
justices), and to the end of resale price maintenance, which in 1965
increased competition between the different retail outlets.
In France, the
concentration of retailing which also took place from the 1960s greatly
reduced the number of participants in the industry, which had been until
then very fragmented.
Competition, a third major determinant of the merger and acquisition
waves, essentially remained in the 1960s and 1970s at a domestic level or
between countries that were culturally and geographically close. The
merger and acquisition waves that occurred were characterised by the
creation of large companies competing in the domestic market and
producing a single type of product (beer, wine or spirits) but with a portfolio
of successful brands. Concentration was closely associated with a search for
access to a greater number of markets by formerly domestic-oriented firms,
which in the process of doing so accumulated marketing knowledge and
portfolios of successful brands with the potential to be sold in new markets.
Looking in more detail at the first merger wave in 1958–62, this was almost
entirely concerned with the British brewing industry and also some wine
firms, although there were echoes in other countries such as the
Netherlands, involving smaller firms.
The most important creations of this
period included Allied Breweries, a holding company formed in 1961 as a
result of the amalgamation of three brewers – Ind Coope, Tetley Walker and
Ansells Brewery – to produce three brands of beer (Double Diamond, Skol
and Long Life), and distribute them as well as wines and spirits, thus
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becoming Britain’s second largest brewer, with its major competitors being
other British breweries like Bass, Scottish & Newcastle, Whitbread and
Watney Mann.
In addition, in 1962, a merger of spirits and wine merchants
(United Wine Traders Ltd) with a vodka and gin distiller (Gilbey’s Ltd)
formed International Distillers and Vintners (hereafter IDV), a major UK-
based wines and spirits producer and distributor of brands with long history
such as the famous Gilbey’s gin, J&B Rare Scotch Whisky and Croft Port.
Apart from their strategic reasons of wanting to own successful brands
with potential to be sold in different markets, the other key influences on
mergers between British brewers from 1958 to 1962 were country-specific
and external to the firms; they included the stagnation in per capita
consumption of beer in Britain, technological developments in brewing
which facilitated distribution across the different regions, the threat to the
security of brewing firms from outside interests, and the fact that some
small firms lacked the resources to re-equip their plants and refurbish their
outlets. IDV’s creation had a different rationale, which basically was to
provide and strengthen organisation for the distribution of the long
established and successful brands of its predecessor firms.
In the
Netherlands, concentration was also due to rising production costs, resulting
from (among other things) increases in wages, and the desire among a
variety of firms to diversify their activities.
The second period of consolidation followed in 1968–72, and by then
firms beyond Britain were involved. Influences which affected mergers and
acquisitions in this era included the worldwide growth in spirits
consumption, and liberalisation of retail prices in a number of countries. In
Britain, Allied Breweries acquired a number of spirits firms which owned
successful brands, including Showerings (owner of Babycham, Cockburn’s
Port and Harveys Bristol Cream), while Grand Metropolitan, formerly a
hotel and leisure services firm, acquired a small regional brewer – Truman
– in 1971 followed one year later by Watney Mann, which had just acquired
IDV. These acquisitions, which had targeted the real estate and catering
business associated with the management of pubs in the case of Truman,
and the expansion of the retail and distribution networks in the case of
Watney Mann, changed the nature of Grand Metropolitan’s business
although the original intention with the acquisition of Watney
Mann had been the disposal of IDV since it was not part of Grand
Metropolitan’s strategy at that time to be involved in the brands business.
However, several circumstances led to a change of strategy. The promising
prospects that the wines and spirits businesses were showing at the
beginning of the 1970s compared to beer, the collapse of the property
market and the hotel industry, and the stagnation of tourism in the beginning
of the 1970s, changed Grand Metropolitan’s main business activities, from
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hotels into wines and spirits.
However, Grand Metropolitan always
remained, until its merger with Guinness in 1997, a highly diversified MNE
with activities in different businesses, ranging from consumer services, to
foods and even betting and gaming.
In France, the previously mentioned merger between Moët & Chandon (a
champagne house, owner of a brand with the same name as well as two other
champagne brands, Mercier and Ruinart) with Hennessy (a cognac house) in
1971, united France’s biggest exporters of champagne and cognac respec-
tively, allowing the two companies to take advantage of their similarities in
terms of the ‘personalities’ of their successful brands and their geographical
scope of operations, as well as to spread costs in distribution.
They had as
their main competitors other champagne houses like Perrier Jouët or G.H.
Mumm and cognac houses like Martell and Courvoisier.
A striking merger attempt was between Allied Breweries and Unilever,
Europe’s largest consumer goods company, in 1968. Unilever, which
already had investments in brewing through its United Africa Company
joint venture in Nigeria with Heineken since 1945,
at that time undertook
several projects to develop branded wine products, and also responded
positively when Allied Breweries – seeking access to its wide international
distribution network – approached Unilever about a merger. The merger
proposal, which would have created a major international beverages
conglomerate, was unexpectedly referred to Britain’s Monopolies
Commission because of its size and potential impact on industrial
concentration. By the time regulatory approval was gained, Unilevers share
price had fallen sufficiently for the merger to be no longer considered
commercially viable.
There were new considerations involved in the subsequent merger waves in
1985–87 and 1997–2000. These were also related to changes in
consumption patterns, as well as in the institutional environment and level
of competition.
The stagnation of consumption of alcoholic beverages in the Western
World from the 1980s
was in part related to the higher levels of education
by consumers, who became more concerned with the quality of wines and
health issues. However, along with this maturing of consumption in the
Western World, there was a dispersion in the consumption of alcohol into
the emerging markets of Southeast Asia, Africa and Latin America. For
example, in Thailand, where either water or beer was normally consumed
with meals, the economic boom of the early 1990s led to a very fast growth
of wine consumption, although this fell away following the financial crisis
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beginning in 1997. The spread of Western-style alcohol consumption
patterns was greatly facilitated by firm strategies designed to compensate
for the low growth in the maturing markets of the West.
This period from the 1980s was also characterised by a growing
homogenisation in terms of the mix of alcoholic beverages consumed
worldwide of wine, beer and spirits. In wine-producing countries
consumption of beer increased and in beer-producing countries
consumption of wine increased.
Such shifts in the patterns of consumption
appear to be related to changes in consumer purchase behaviour (which
became more discerning, preferring higher quality wines), and in
distribution (which concentrated both at the wholesale and retail level), as
well as the growth of concentration and inter-firm alliances, and to changes
in government and taxation.
The most important changes in legislation which inhibited alcohol
consumption were those related to drinking and driving, and the fiscal
policies established to restrict alcohol consumption in order to minimise its
harmful effects and to shift consumption away from higher to lower alcohol
content beverages.
However, there are exceptions which explain the
increase in consumption of certain types of beverages in some markets. For
example, the sales of the famous Swedish vodka brand Absolut rose in the
United States by an annual rate of 8.4 per cent between 1990 and 1999.
The European Union and its increased membership in 1995 was an
important counter-trend, as it particularly contributed to the harmonisation
of consumption, narrowing the differences in prices and taxes on home-
produced and imported alcoholic beverages between member states,
had the effect of dramatically reducing the prices of wines, bringing
countries in northern Europe into line with the lower priced south. Again
this harmonisation of taxes was not uniformly introduced in all countries in
the European Union. In Scandinavian countries like Norway and Finland,
by the end of the century, governments still intervened to restrict alcohol
With the stagnation of consumption in the Western World and the
increase in global competition from the 1980s, in order to grow and survive,
firms felt the pressure to merge and acquire other large firms which owned
successful brands. The resulting merger wave, which lasted from 1985 until
1987, reversed the earlier trend of the 1970s, when firms had diversified
beyond alcoholic beverages, and was related to the general tendency in all
industries to build scale in ‘core’ businesses. The larger firms tried to reach
markets culturally, politically and geographically distant and to appropriate
more value-added by acquiring firms which owned successful brands that
would increase the availability and diversity of their portfolio of drinks.
The emphasis was on the creation of brands with the potential to be sold
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globally and to have a wider portfolio of brands that provided access to
multiple market segments, allowing the firm to respond to the increasing
power of channels of distribution and to take advantage of scale and scope
economies in marketing and physical distribution, along with other
economies that improved the efficiency in the operations of the firm.
Mergers and acquisitions had the advantage of giving the firm fast market
access and increasing the probability of success as the risk of damaging the
original brand by adding new, unknown brands was high.
Mergers and acquisitions also provided a platform for future growth via
the globalisation of the brands, as the firm obtained a wider and stronger
brand portfolio (and a brand may be worth more as part of a wider portfolio
than standing alone), rather than through extending a single brand. In this
respect, brands with the potential to become global made the firms that
owned them attractive targets for mergers and acquisitions and were thus
the cause of the survival of some firms and the death of many others.
Guinness, Grand Metropolitan, Moët-Hennessy and Allied-Domecq
were among the greatest acquirers in the alcoholic beverages industry
during the period from the 1980s. The smaller firms, which neither merged
nor were acquired by other firms, but were able to grow and survive,
specialised in niche markets with usually a single brand, relying on other
companies to distribute their products. Absolut, produced since 1879 in
Sweden by Vin & Sprit, is a classic example of that strategy. The
introduction of Absolut in the United States in 1979 by its distributor
Carillon Importers Ltd, changed the fate of this brand, originally from a
country lacking in perceived vodka heritage,
and which had previously
only been sold in its home country.
This success can be attributed
especially to a strong marketing campaign by its United States distributor,
as well as to the political context of the Cold War between the United States
and the Soviet Union, which limited the potential sales of Russian vodka.
By 1986 Absolut was the top seller in the imported vodka category in the
United States.
In 1985 Guinness, a specialist brewer, having disposed of all its non-
related businesses, acquired Arthur Bell’s, a leading Scotch whisky
company, followed by the Distillers Company (the world’s largest Scotch
Whisky and gin company, owner of various successful brands such as
Johnnie Walker, Dewars, White Label and White Horse), resulting in a
celebrated corporate scandal in 1986.
With these acquisitions Guinness
gained the dimension necessary to compete with the largest alcoholic
beverages firms such as Seagram, Grand Metropolitan and Allied Lyons.
Also in 1986 Allied Lyons, the successor to Allied Breweries following
the acquisition of the foods and retailing company J. Lyons in 1972,
acquired Hiram Walker, a major Canadian spirits firm which was the owner
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of several successful brands such as Canadian Club, Ballantines,
Courvoisier and Kahlua, and was well networked in terms of distribution in
the North American market. Subsequently, in 1994, the Lyons business was
sold and the proceeds used to buy Pedro Domecq, a Spanish sherry, brandy
and tequila family firm which had a long-standing joint venture with Hiram
Walker, had a large market share in Latin America and owned the brands
Don Pedro, Presidente, Fundador and Sauza. The rationale for this
acquisition was the interest Allied had in Domecq’s brandy and tequila
brands and business in South America, and the need to appropriate the rest
of the joint-venture network in Spain as a result of tax inefficiencies, which
did not allow the proceeds of their activities to come to Britain.
This deal,
which the Domecq family resisted for some time, was finally agreed by the
widely dispersed shareholders.
In 1987 Grand Metropolitan acquired Heublein, the US-based spirits
firm. The main purpose for that acquisition was to get hold of the rights to
the United States for the very successful vodka brand Smirnoff.
In the
same year, Seagram, which after its many acquisitions of small firms before
1960 had largely stood aside from major acquisitions of producers, acquired
Martell, the French cognac firm, which had a significant market share in the
Far East. With this acquisition Seagram was able to globalise some of its
successful brands which until then had only been sold in North America and
The merger wave that occurred between 1997 and 2000 aimed
essentially at rationalising costs and obtaining other efficiencies at the
different levels of firms’ activities. By then the threat of new entries into the
industry had diminished as a result of its high concentration. Firms realised
that the internalisation of intermediate product markets, such as distribution,
implied higher transaction costs than using the external market.
So firms
continued to merge and acquire close competitors but started to disintegrate
vertically, even in markets culturally and geographically close. In 1997
Diageo was created by the merger of Guinness and Grand Metropolitan to
form the world’s biggest drinks company. The key factors here were not
only the ownership of successful brands, but also the rationalisation of costs
in the context of maturing markets.
In 2000 and 2001 Interbrew of Belgium acquired the brewing interests of
the two British brewing firms – Whitbread and Bass – which together held 32
per cent of the British beer market, and emerged as the second largest brewer
in the world after Anheuser-Busch. However, because of anti-trust concerns,
Interbrew was told by the Office of Fair Trade that it was only able to keep
Bass Brewers if it disposed of Carling, Britain’s best-selling lager. The
British firms, under the relentless pressure of the British capital markets,
preferred the higher returns available from hotels and leisure, leaving the
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family-owned Belgian firm to consolidate its position as Europe’s largest
brewer. In 2001 Interbrew continued its strategy of international growth by
acquiring Becks, the third largest brewer in Germany, for 1.76 billion Euros.
There was a simultaneous movement towards alliance formation, which
also had a parallel development in other industries. This trend was visible in
the increasing number of joint ventures and licence agreements created to
spread distribution costs in some markets. These alliances had existed
throughout the twentieth century, and they provided the only feasible means
for small companies to be represented in global markets.
However, from
the mid-1980s they also involved big multinationals such as Seagram and
Allied Domecq, taking local companies as partners, respectively Kirin
(Japan’s largest brewer) and Suntory (Japan’s largest spirits and wines firm).
One of the first joint venture alliances formed in Asia, which lasted until the
twenty-first century, was between Kirin and Seagram. This was formed in
1972 by Kirin (50 per cent), Seagram (45 per cent) and Chivas Brothers
(five per cent), and involved the construction of a plant to produce whiskey
(at the foot of Mount Fuji, which was famous for its fresh water and clean
air – ideal for the location of a distillery). Seagram brought manufacturing
techniques into the alliance and Kirin brought its sales network and
knowledge about the market. Apart from selling whiskey produced locally,
Kirin also sold Seagram’s brands, Robert Brown, Dunbar, Emblem and
Burnett’s Gin and Nikolai vodka in Japan.
The joint venture alliance between Allied and Suntory brought together
Allied’s reputation and profitability and Suntory’s knowledge of the
Japanese market and its strong distribution networks in a period when
demand for imported brands was expanding very fast. Simultaneously, it
brought Suntory access to a wide distribution network of alcoholic
beverages in Europe and North America. Suntory took Allied’s brands in
Japan, and Hiram Walker took Suntory’s brands in the United States. This
agreement also involved a 2.5 per cent share swap.
Apart from alliance formation between MNEs and local partners,
alliances between competing MNEs also developed.
Guinness and Moët-
Hennessy made a landmark arrangement with the joint venture they formed
in 1986, which covered multiple markets such as Japan (jointly with Jardine
Wines & Spirits), Hong Kong, Singapore, Malaysia, Thailand, France,
Ireland (with Irish Distillers) and the United States. This alliance between
two leading MNEs of alcoholic beverages became a model in the industry.
It permitted a careful marketing of limited volumes of deluxe and premium
quality brands for high margin and status positioning, of complementary
brands (champagne, cognac, Scotch whisky and gin) sold in the same
markets, using a single sales force, with the complete sharing of costs. In the
United States, this joint venture between Guinness and Moët-Hennessy
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brought together Schieffelin Importers (acquired by Moët-Hennessy) and
Somerset Importers (acquired by Guinness). Through this new channel,
these two large MNEs sold some of the leading imported brands of wines
and spirits in the United States, such as Johnnie Walker and Tanqueray
(brands from Guinness) as well as Moët & Chandon and Hennessy (brands
from LVMH), being thus able to obtain economies of scale and scope and,
simultaneously, flexibility in distribution. Additionally it gave Moët-
Hennessy access to an operation with superior marketing skills, and
Guinness/Distillers access to a very good sales team.
Apart from the aforementioned merger between Guinness and Grand
Metropolitan, which among other purposes aimed at rationalising costs, the
spread of alliances in distribution led many large MNEs to disinvest from
some wholly owned distribution channels. Seagram’s sales of its wholly
owned distribution channels in Austria, Scandinavia and Australia in,
respectively, 1997, 1998 and 1999, which were replaced by alliances with
local partners, confirm the trend towards vertical disintegration in the
Drawing on the empirical evidence presented above, this section presents a
schematic representation of the evolution of the largest MNEs of alcoholic
beverages before 2000. Figure 1 illustrates how brands influenced the
evolution of MNEs by constantly changing their boundaries, in a series of
different stages. It analyses how the world’s largest alcoholic beverages
firms first grew through geographical expansion using their existing brands,
and then through mergers and acquisitions and also alliances. Figure 1 also
highlights the increasing importance of marketing knowledge for firms. In
this schematic representation, the evolution of a standard MNE of alcoholic
beverages P
appears in several stages. For this reason, the schematic
representation does not suggest or show that the industry evolved over time
into a monopoly, but rather that P
grew from being the leader in its
domestic market to being a globalised multinational.
This schematic representation focuses in particular on three types of
growth strategies of firms – exports, mergers/acquisitions and alliances. As
in other industries in developed economies,
these were the predominant
forms of international expansion of alcoholic beverages firms from the
1960s. However, mergers are not included in the schematic representation, to
avoid similar patterns of ownership in the evolution of firms as acquisitions.
Figure 1, which spreads across two pages, employs the conventions
introduced and refined by Buckley and Casson, theoretical economists who
have studied the multinational firm.
There are four columns, each one
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Stage 0 (i=2)
Stage 1 (i=2)
Stage 2 (i=2)
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Stage 3 (i=3)
Stage 4 (i=4)
Stage 5 (i=5)
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representing a different market. The two middle columns change with the
evolution of firm P
(in stages). There are n markets, each one dominated
by an alcoholic beverages firm. Markets from 1 to i+1 are culturally and
politically similar, and geographically close, with i corresponding to
different markets ranging from 2 to n-1. Market 1 is the country of origin.
Market n is culturally and geographically distant from the other markets.
Production and retailing operations are symbolised by squares, general
marketing knowledge by a circle, and specific marketing knowledge by a
triangle. Ownership of production or retailing is indicated by shading,
otherwise these activities appear unshaded or with stripes. When ownership
is shared in an alliance the square appears half-shaded.
Flows of marketing knowledge are represented by single arrows and
refer to two different types of knowledge: general marketing knowledge and
specific marketing knowledge. General marketing knowledge is defined as
the firms’ superior capacity in terms of marketing methods, management of
brands and distribution channels, irrespective of their geographical region.
Specific marketing knowledge is defined as knowledge about the
characteristics of a specific brand and national market, including its
business climate, cultural patterns, structure of the market system and
characteristics of the individual customer. Specific marketing knowledge is
assumed to be related to the type of knowledge defined by Penrose as
‘objective knowledge’, which can be taught and accessed by the firm in the
short run through acquisitions, and general marketing knowledge is
assumed to be related to ‘experimental knowledge’, which can only be
learned through personal experience.
When the arrows connect the unit in the firm which accumulates general
marketing knowledge (M) with the unit which centralises the specific
market knowledge about the brands and markets (b), they represent flows of
general marketing knowledge. When the arrows connect the unit with
specific market expertise (b) with production operations (P) and with retail
distribution units (R) (wholly or partially owned), they relate to flows of
specific marketing knowledge.
Flows of products are represented by double arrows and connect
production with retail distribution, which can either be wholly owned
(represented by a shaded square), partially owned through an alliance
(represented by a half shaded square) or owned by a third party (represented
by a square with stripes). The direction of the double arrows represents the
flow of products. The direction of the single arrows represents the direction
of the flows of accumulation and transfer of knowledge.
The construction of Figure 1 relies on eight sets of assumptions, based
on the evidence provided by the evolution of the world’s largest MNEs in
alcoholic beverages analysed in sections IV and V. First the long-term goal
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of the largest firms in alcoholic beverages is survival and maximisation of
shareholders’ wealth, or at least the maintenance of a level of market
capitalisation which prevents them from becoming targets for takeovers,
within a context of modern global capital markets.
Despite some short-
term moves to outmanoeuvre competitors, this long-term goal is assumed to
be achieved through one long-term strategy, which is to merge and acquire
firms that owned successful brands with the potential to become global, and
through forming alliances in distribution. To that end, firms follow several
stages in their evolution: first by selling in markets culturally, politically and
geographically close, then acquiring production firms and distribution
channels in those markets, and only subsequently entering markets with a
high cultural and geographic distance (especially by forming alliances).
Second, there is one large firm P
, producer of brand 1 (b
), which from
1960 until 2000 grew in evolutionary stages (correlated with the waves of
mergers and acquisitions that occurred in the industry), by merging and
acquiring other large firms in distinct markets, and constantly changing its
boundaries. In its international strategy P
first acquires firms in those
markets to which it was already exporting and which are culturally,
politically and geographically closer, and only later enters markets
geographically, politically and culturally distant. Third, all the firms from P
to P
rank among the largest firms worldwide, but only P
s growth and
survival is analysed. Firms P
to P
are close followers of P
Fourth, P
has firm-specific advantages over its competitors,
and ranks
among the world’s largest firms. These firm-specific advantages, which are
endogenous to the firm and differentiate it from its competitors, promoting
its success, include the economies of scale and scope, superior management
of brands and marketing knowledge, technology and distribution
Fifth, with each acquisition P
accumulates ‘general marketing
knowledge’ and ‘specific marketing knowledge’.
Sixth, all the firms acquired own successful brands; brands can only be
acquired with the firms that own them; the search for brands is rational and
there are no costs associated with information asymmetry and opportunism
in their acquisition. In the real world, the process of growth involves both
decisions to develop a handful of local and regional brands into global
brands, and also to eliminate the majority of other brands considered
lacking in growth potential. However, as the aim of the schematic
representation is to explain how successful brands contribute to the
evolution of MNEs in alcoholic beverages, these are issues not discussed in
this article.
It is assumed that all brands are successful and remain as such
during the period of analysis. The schematic representation also does not
discuss whether and how the definition of a ‘successful brand’ changes over
time and does not concern itself with the decision to divest brands.
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Seventh, only one single level of distribution is considered in the
distribution phase. This links production to final demand and includes
distribution subsidiaries (which have their own sales force) and also retail
outlets such as pubs/inns and speciality shops. In alcoholic beverages, as in
most consumer products where the management of brands is crucial for the
success of firms, the control of retailing distribution becomes more
important than wholesaling.
From stages 0 to 3 the environment is assumed to be benign (no wars or
major crises) and the relevant level of competition to be local. In stages 4
and 5, competition becomes global. Figure 1 considers that the evolution of
the largest firms in alcoholic beverages takes place in several stages. Stages
0 and 1 do not relate to the empirical evidence offered in previous sections,
but help the understanding of the evolution of P
in the subsequent stages.
These preliminary stages correspond to the evolution of MNEs of alcoholic
beverages and their predecessors before the 1960s. Stages 2 to 5 rely on the
empirical evidence presented in previous sections, and relate to the period
from 1960 until 2000.
Stages 0 and 1 illustrate that, before the 1960s, when the world alcoholic
beverages industry was still fragmented, the largest alcoholic beverages
firms had a restricted regional scope, relying on organic growth to expand
geographically and using the existing brands. At this stage, very few firms
got involved in international mergers and acquisitions. Stage 0 shows the
starting point for P
, a standard leading firm, from market 1, which
developed into one of the world’s largest multinationals in the industry. At
this stage it is assumed there is one leading firm in each market and no trade
takes place between markets, as P
levels of general and specific marketing
knowledge are very low, and as the firm owns only one single successful
brand (b
In stage 1, P
creates firm-specific advantages and decides to start
selling/exporting to market 2 using an independent distributor, also
developing firm-specific advantages over the local competitor P
. In this
stage, P
obtains the necessary information about the market and the level
of competition, accumulating general and specific marketing knowledge
which facilitates the acquisition of P
in the subsequent stage.
In stage 2, with the acquisition of P
, P
is able to obtain economies of
scale and scope in distribution, and also to import brand b
into its home
market. In this process, P
accumulates additional general market
knowledge. In stage 3 (which corresponds to the period from the 1960s to
the 1980s), P
acquires P
, a close competitor, owner of b
, which also has
an established international activity. The purpose of this acquisition of a
firm which owns an already successful brand (b
) is to transform that into a
global brand.
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In stages 4 and 5 (which correspond to the period from the 1980s), entry
into markets culturally, politically and geographically distant becomes
possible because P
has accumulated extensive general marketing
knowledge which provides the ability to value a brand and see its potential,
apart from having specific marketing knowledge related to its experience in
entering international markets, and having a wide portfolio of
complementary brands. In stage 4 (corresponding to the merger wave
between 1985 and 1988), P
continues to acquire firms that own successful
brands and distribute those brands through wholly owned distribution
channels in markets culturally, politically and geographically close, but it
also enters markets culturally, politically and geographically distant, by
using wholly owned distribution channels, and also by forming alliances
with local partners or other large competitors.
In stage 5 (which corresponds essentially to the 1980s), P
vertically and alternatively forms alliances in distribution with another
, covering with that alliance multiple markets worldwide. P
is not
only able to obtain economies of scale and scope, as illustrated by the wider
number of complementary brands 1, 2 n-1, and n, but is also able to control
the management of its brands and transfer as well as accumulate further
marketing knowledge.
This model provides a more formal explanation of the growth process
of large international firms based in alcoholic beverages since the 1960s. It
has shown the impact of brands and marketing knowledge on the pattern
and pace of growth of firms, and how their interaction constantly changed
the boundaries of firms. Over time, successful brands became increasingly
a major determinant for mergers, acquisitions and alliances (with
distributors or competitors other producers of alcoholic beverages) in the
industry, and also had an indirect role in the accumulation of marketing
knowledge by firms which accelerated their process of multinational
This article has examined how between the 1960s and the present day the
world alcoholic beverages industry became concentrated in the hands of a
small number of large MNEs. The approach has not been comprehensive,
but has instead highlighted the role of brands and also marketing knowledge
in that process. It has been shown that although there was significant
technological innovation in the industry, brands have been a major source
of value-added. This was an industry in which brands, with their powerful
associations of heritage, tradition and locality, were prime assets which
came to be increasingly traded as the century progressed.
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It has been shown that the largest MNEs in alcoholic beverages
worldwide evolved in small steps, reacting to problems and changing
circumstances in the short run, as in the Johanson and Vahlne model. Each
step was part of a sequence of moves which, in the long run, led firms to
become multinationals, and owners of portfolios of successful brands.
These stages have been analysed and explained here using new empirical
evidence on a group of large firms and also through a schematic
representation showing the path-dependent changes in the boundaries of
firms. There were waves of consolidation in the industry which were
associated with periods of intense merger and acquisition activity. Four
main merger waves have been identified: 1958–62, 1968–72, 1985–88 and
1997–2000. The merger waves of these years have been shown to have been
determined in part by changes in consumption patterns, competition and in
the institutional environment.
The different stages of growth of multinationals in alcoholic beverages
were related to the strategy of firms and also to the general changes in the
industry, which varied in their level of importance over time, defining the
path of growth of large firms and their cross-border activity. While
consumption was fragmented, and the level of competition and institutional
environment relevant in firms’ operations was local/regional, they only
entered into markets that were culturally, politically and geographically
close. Firms acquired brands to serve local markets and also to supply their
home markets, and the levels of specific marketing knowledge and general
marketing knowledge were relatively low. Once the levels of general
marketing knowledge about the management of brands and markets, and
specific marketing knowledge accumulated by firms grew, firms entered
into markets which were more culturally, politically and geographically
distant, and acquired brands that had the potential to be sold globally.
There remains enormous potential for examining the role of brands in
the historical evolution of firm strategies. This study has shown how their
position changed over time, as numerous local brands gave way to fewer
‘global’ brands supported by massive marketing expenditure. There remains
a daunting research agenda to explain why some alcoholic beverage brands
became ‘globalised’ and others did not, and to identify the characteristics of
successful brands. Moreover, the approach taken here can well be applied to
understanding the evolution of other industries. While the characteristics of
alcoholic beverages makes the role of brands explicit, it is evident that their
importance has not been limited to this or other consumer goods industries,
and that even industries such as consumer electronics, where technological
innovation is usually considered to be the prime driver, brands appear to
have played a significant role.
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I would like to thank Mark Casson, Paul Duguid, Geoffrey Jones and Judy Slinn, an anonymous
referee of the Annual European International Business Academy Conference (2000) and two
anonymous referees of this journal for their helpful comments on earlier drafts of this article. This
article has also benefited from discussion of earlier versions at conferences in Bordeaux,
September 2000, and Maastricht, December 2000. The interviews given by José de Isasi-
Isasmendy y Adaro, Tim Ambler, Colin Campbell, James Espey, Michael Jackaman, Valerie
Jackaman and George Sandeman greatly contributed for the understanding of the evolution of the
alcoholic beverages industry. Mrs Bellamy from Companies House, Gillian Bouzy from Moët et
Chandon, Roger Horowitz, Michael Nash and Ellen Morfei from Hagley Museum and Library,
Christine Jones from United Distillers and Vintners, and Michael Hallows and Lyne Ouget from
Seagram, also assisted my research.
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individual Scotch whisky brands, see H.C. Craig, The Scotch Whisky Industry Record
(Dumbarton, 1994); on other alcoholic beverages brands see for example J. Jorgensen (ed.),
Encyclopaedia of Consumer Brands, Vol.1 (London, 1994). For an analysis of brands in the
evolution of firms in the context of alcoholic beverages, see T.S. Lopes, Internacionalização
e Concentração no Vinho do Porto, 1945–1995 (Porto, 1998).
4. E. Penrose, The Theory of the Growth of the Firm (London, 1959); J. Johanson and J.E.
Vahlne, ‘The Internationalisation Process of the Firm: A Model of Knowledge Development
and Increasing Market Commitment’, Journal of International Business Studies, Vol.8
(1977), pp.23–32.
5. See, for example, M. Bishop and J. Kay (eds.), European Mergers and Merger Policy
(Oxford, 1993).
6. L. de Chernatony and G. McWilliam, ‘The Varying Nature of Brands as Assets’,
International Journal of Advertising, Vol.8 (1989), pp.339–49; L. de Chernatony and F.D’O.
Riley, ‘Defining a Brand: Beyond the Literature with Experts’ Interpretations’, Journal of
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Marketing Management, Vol.14 No.5 (1998), p.428; idem, ‘Brand Consultants’ Perspectives
and the Concept of the Brand’, Marketing and Research Today, Vol.25 No.1 (1997),
pp.45–52; G. Michel and T. Ambler, ‘Establishing Brand Essence Across Borders’, Journal
of Brand Management, Vol.6 No.5 (1999), pp.333–45; K.L. Keller, ‘The Brand Report
Card’, Harvard Business Review (Jan.–Feb. 2000), pp.147–57; S. Hart and J. Murphy,
Brands: The New Wealth Creators (London, 1998).
7. K.L. Keller, Strategic Brand Management (London, 1998), p.4; L. de Chernatony and M.
McDonald, Creating Powerful Brands (Oxford, 1998).
8. For a review of the existing models, see L. de Chernatony and F.D’O. Riley, ‘Modelling the
Components of the Brand’, European Journal of Marketing, Vol.32 No.11/12 (1998),
9. D.A. Aaker, Building Strong Brands (New York, 1996); P. Doyle, ‘Building Successful
Brands: The Strategic Options’, Journal of Marketing Management, Vol.5 No.11 (1989),
p.78; P. Barwise and T. Robertson, ‘Brand Portfolios’, European Management Journal,
Vol.10 No.3 (1992), pp.277–85; M.C. Casson, ‘Brands: Economic Ideology and Consumer
Society’, in Jones and Morgan (eds.), Adding Value, pp.41–58.
10. L. de Chernatony, Brand Management (Hants, 1998); Chernatony and Riley, ‘Defining a
Brand’; S. King, Developing New Brands (Bath, 1973); Doyle, ‘Building Successful
Brands’, p.80.
11. Aaker, Building Strong Brands; V.N. Balasubramanyan and M.A. Salisu, ‘Brands and the
Alcoholic Drinks Industry’, and Casson, ‘Brands: Economic Ideologies’, both in Jones and
Morgan (eds.), Adding Value; B. Wernerfelt, ‘A Resource-Based View of the Firm’, Strategic
Management Journal, Vol.5 (1984), pp.171–80.
12. J. Kay, Foundations of Corporate Success (Oxford, 1993), p.299; P. Feldwick, ‘Defining a
Brand’, in D. Cowley (ed.), Understanding Brands (London, 1991), p.19; W.J. Bilkey and E.
Nes, ‘Country-of-Origin Effects on Products Evaluations’, Journal of International Business
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13. G. Erickson, R. Jacobson and J. Johansson, ‘Competition for Market Share in the Presence
of Strategic Invisible Assets’, International Journal of Research in Marketing, Vol.9 No.1
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Economic Review, Vol.72 No.3 (1982), p.360.
15. T. Watkins, The Economics of the Brand (Whitstable, 1986), p.3.
16. Barwise and Robertson, ‘Brand Portfolios’, p.277.
17. C. Napier, ‘Brand Accounting in the United Kingdom’, in Jones and Morgan (eds.), Adding
Value, pp.76–100; J. Murphy, ‘Assessing the Value of Brands’, in J. Murphy (ed.), Branding
a Key Marketing Tool (Basingstoke, 1992), pp.194–7; Doyle, ‘Building Successful Brands’;
Casson, ‘Brands: Economic Ideology’. Note that Casson argues that brands may also accrue
rents and distort markets, and that the enormously positive effects of brands reflect
‘economic ideology’ rather than empirical analysis.
18. Penrose, The Theory, p.254.
19. T.R. Gourvish and R.G. Wilson, The British Brewing Industry 1830–1980 (Cambridge,
1994), pp.58–60; W.J. Reader and J. Slinn, ‘Grand Metropolitan’ (unpublished ms, 1992).
20. T. Unwin, Wine and the Vine (London, 1991).
21. D. Merrett and G. Whitwell, ‘The Empire Strikes Back: Marketing Australian Beer and Wine
in the United Kingdom’, in Jones and Morgan (eds.), Adding Value.
22. J.H. Dunning, ‘Globalization, Technological Change and the Spatial Organization of
Economic Activity’, in A.D. Chandler Jr., P. Hasgtröm and Örjan Sölvell (eds.), The
Dynamic Firm (Oxford, 1998).
23. Barwise and Robertson, ‘Brand Portfolios’, p.278; D.A. Aaker and K.L. Keller, ‘Consumer
Evaluations of Brand Extensions’, Journal of Marketing, Vol.54 (Jan. 1990), pp.27–41.
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24. Aaker and Keller, ‘Consumer Evaluations’, p.27.
25. S.K. Reddy, S.L. Holak and S. Bhat, ‘To Extend or not to Extend: Success Determinants of
Line Extensions’, Journal of Marketing Research, Vol.31 (May, 1994), pp.243–62.
26. Aaker and Keller, ‘Consumer Evaluations of Brand Extensions’.
27. ‘Smirnoff Ice Powers Gains at Diageo’, Financial Times, 7 Sept. 2001.
28. J. Espey; ‘A Multinational Approach to New Product Development’, European Journal of
Marketing, Vol.19 No.3 (1985), pp.5–18; interview with James Espey, a former Chairman of
Seagram Distillers and former Chairman of IDV-UK, Wimbledon, 23 Feb. 2000; interview
with Michael Jackaman, former Chairman of Allied Domecq, Somerset, Nov. 1998; C.
Hamilton, Absolut: Biography of a Bottle (London, 2000).
29. D.A. Aaker and E. Joachimsthaler, ‘The Lure of Global Branding’, Harvard Business Review
(Nov.–Dec. 1999), p.137.
30. B. Rosen, J. Boddewyn and E. Louis, ‘US Brands Abroad: An Empirical Study of Global
Branding’, International Marketing Review, Vol.6 No.1 (1989), pp.7–19; T. Levitt, ‘The
Globalization of Markets’, Harvard Business Review (May–June 1983), pp.92–102; J.
Quelch and E. Hoff, ‘Customizing Global Marketing’, Harvard Business Review (May–June
1986), pp.59–68.
31. Allied Domecq’s Internal Database (1998), with special acknowledgements to Phil Taylor,
Insight and Analytics Director at Allied Domecq.
32. T.S. Lopes, ‘Growth and Survival in the Global Alcoholic Beverages Industry, 1960–2001’,
Fifth European Business History Association Conference – Business and Knowledge (Oslo,
Norway, 31 Aug.–1 Sept. 2001, mimeo).
33. These criteria relies on Fortune magazine rankings of the world’s largest industrials (July
1961, Aug. 1961, May 1971, Aug. 1971, May 1981, Aug. 1981, July 1991, April 2000, July
2000); the Annual Reports and Accounts of the companies being analysed (1960–2000); and
Drinks International Bulletin (various issues).
34. For a discussion of the alternative indicators of performance, see L. Hannah and J.A. Kay,
Concentration in Modern Industry (London, 1977), pp.42–3; J. Kay, Foundations of
Corporate Success (Oxford, 1993), chapter 13.
35. Kirin, Annual Reports and Accounts (1966, 1999).
36. ‘“Happy Guys” Sleep Off $8bn Seagram Spirits Binge’, Financial Times, 21 Dec. 2000.
37. P. Brazier, Global Drink Trends (Hants, 1999).
38. On wine imports, see P. Spahni, The International Wine Trade (Cambridge, 1995), pp.104,
189–200. On imports of spirits and beer, see Brewers’ Association of Canada, Alcoholic
Beverages Taxation and Control Policies (Ottawa, 1997), pp.536-42.
39. Concentration in this study is defined as the degree to which a relatively small number of
firms account for a significant proportion of output in the alcoholic beverages industry.
40. T.S. Lopes, ‘The Impact of Multinational Investment on Alcohol Consumption Since the
1960s’, Business and Economic History, Vol.28 No.2 (Winter 1999), pp.109–22.
41. See, for example, for the acquisition of Showerings: Allied Breweries Ltd, Annual Report
and Accounts (1968), p.7; for the acquisition of Martell: Seagram, Annual Report and
Accounts (1987); and for the acquisition of Hiram Walker, Allied Lyons, Annual Report and
Accounts (1986); ‘Domecq adds Spanish winemaker to its stock’, Financial Times, 8/9 Sept.
42. Unwin, The Wine and the Vine.
43. D.F. Channon, The Strategy and Structure of British Enterprise (London, 1973), p.23.
44. The Distillers Corporation, Seagram, Annual Report and Accounts (1971); ‘Corporate
Documentation by Company’, Records of the Seagram Collection, Accession 2126 (Box 20).
45. Jones, Evolution.
46. M. Wilkins, ‘When and Why Brand Names in Food and Drink?’, in Jones and Morgan (eds.),
Adding Value, p.33; Gourvish and Wilson, The British Brewing Industry, p.455.
47. Gourvish and Wilson, The British Brewing Industry, pp.453–4.
48. Ibid., p.458; Guinness, Annual Reports and Accounts (1961 to 1970).
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49. Gourvish and Wilson, The British Brewing Industry, p.455.
50. T. Henry, Harveys of Bristol (London, 1986), p.10; Unwin, The Wine and the Vine, p.330.
51. Unwin, The Wine and the Vine, p.330; Briggs, Wine for Sale, pp.130–32.
52. Interview with Michael Jackaman, former Chairman of Allied Domecq, Sussex, 19 June
53. Allied Breweries, Annual Report and Accounts (1968, 1969).
54. Espey, ‘A Multinational Approach’, p.12.
55. Briggs, Wine for Sale, pp.130–31.
56. Interview with Michael Jackaman, former Chairman of Allied Domecq, Sussex, 19 June
57. T.R. Gourvish, ‘Economics of Brewing, Theory and Practice: Concentration and
Technological Change in the USA, UK and West Germany Since 1945’, Business and
Economic History, Vol.23 No.1 (1994), p.255.
58. Briggs, Wine for Sale, p.160.
59. F. Clairmonte and J. Cavanagh, Merchants of Drink: Transnational Control of World
Beverages (Penang, 1988), p.176.
60. Channon, Strategy and Structure; L. Hannah, The Rise of the Corporate Economy (London,
1983); G. Jones and F. Bostock, ‘US Multinationals in British Manufacturing Before 1962’,
Business History Review, Vol.70 (Summer 1996), pp.207–56; K.E. Sluyterman and H.H.
Vleesenbeek, Three Centuries of De Kuyper, 1695–1995 (Shiedam, 1995), p.63.
61. Ind. Coope Tetley Ansell Ltd, Annual Report and Accounts (1961).
62. International Distillers & Vintners Ltd, Annual Report and Accounts (1962).
63. Ibid.
64. Sluyterman and Vleesenbeek, Three Centuries, p.63.
65. Reader and Slinn, ‘Grand Metropolitan’, pp.51, 62.
66. Ibid., p.62.
67. Ibid., pp.73, 76.
68. Grand Metropolitan, Annual Reports and Accounts (1960–95).
69. Moët et Chandon Archive, 1971; Moët-Hennessy, Annual Report and Accounts (1971); M.
Refait, Moët Chandon: De Claude Moët à Bernard Arnault (Saints Geosmes, 1998), p.172.
70. G. Jones, Merchants to Multinationals (Oxford, 2000), p.316; M.G.P.A. Jacobs and W.H.G.
Mass, Heineken History (Amsterdam, 1992), pp.231–42.
71. Monopolies Commission, Unilever Ltd. and Allied Breweries Ltd: A Report on the Proposed
Merger, PP (1968–69, LX, HC297) (9 June 1969).
72. D.E. Smith and H.S. Soolgaard, ‘The Dynamics of Shifts in European Alcoholic Drinks
Consumption’, Journal of International Consumer Marketing, Vol.12 No.3 (2000),
73. Lopes, ‘The Impact of Multinational Investment’.
74. T.S. Lopes, ‘Global Drink: The Evolution of Multinationals in Alcoholic Beverages’
(forthcoming Ph.D. thesis, University of Reading, 2002).
75. T. Spawton, ‘Development in the Global Alcoholic Drinks Industry and its Implications for
the Future Marketing of Wine’, European Journal of Marketing, Vol.24 No.4 (1990),
pp.47–54; D.E. Smith and H.S. Solgaard, ‘The Dynamics of Shifts in European Alcoholic
Drinks Consumption’, Journal of International Consumer Marketing, Vol.12 No.3 (2000),
76. M. Dewar and H. Collins (eds.), Alcoholic Beverage, Taxation and Control Policies (Ottowa,
8th edn. 1992).
77. Canadean Ltd, The Spirits & Wine Service: Global Spirits Trends, 1999 (Basingstoke, 1999).
78. Smith and Solgaard, ‘The Dynamics’, p.107.
79. Spahni, The International Wine Trade, pp.204–14; Brewers’ Association of Canada,
Alcoholic Beverage Taxation: Drinks International Bulletin, ‘Swedish Government Ready to
Relax Alcohol Restrictions’ (6 March 2000).
80. Barwise and Robertson, ‘Brand Portfolios’, pp.278–9.
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81. Aaker and Joachimsthaler, ‘The Lure of Global Branding’, p.137.
82. Barwise and Robertson, ‘Brand Portfolios’, p.278.
83. S. Hart and J. Murphy, Brands: The New Wealth Creators (London, 1998), p.129.
84. M. Troester, ‘Absolut Vodka’, in Jorgensen (ed.), Encyclopedia of Consumer Brands;
Hamilton, Absolut: Biography of a Bottle.
85. Interview with James Espey, former Chairman of Seagram Distillers and former Chairman
of IDV-UK, Wimbledon, 3 Dec. 1999.
86. Troester, ‘Absolut Vodka’, pp.4–7.
87. ‘Letter from the Chief Executive of Guinness Ernest Saunders to the stockholders of
Guinness and Distillers’ (25 Feb. 1986) Records of the Distillers Company; S.R. Jones,
‘Brand Building and Attempts to Revive the Scotch Whisky Industry Since 1980’,
European Business History Association Annual Conference (Bordeaux, 14–16 Sept. 2000);
R.B. Weir, ‘Managing Decline: Brands and Marketing in Two Mergers, “The Big
Amalgamation” 1925 and Guinness – DCL 1986’, in Jones and Morgan (eds.), Adding
Value, p.154.
88. Interview with Michael Jackaman, former Chairman of Allied Domecq, Sussex, 19 June
89. Interview with José Isasi-Isasmendi y Adario, former President of Pedro Domecq and also
a family member, Madrid, 18 July 2000.
90. Reader and Slinn, ‘Grand Metropolitan’; interview with Tim Ambler, former consultant of
Grand Metropolitan, London, 12 July 2000.
91. P. Buckley and M.C. Casson, The Future of the Multinational Enterprise (London, 1976).
92. A. Smith, ‘Analysing the Impact of the UD/IDV Merger’, Spiritcscan, Vol.10 (Nov. 1997),
93. World Reporter, 17 Aug. 2001; 4 Sept. 2001.
94. T.S. Lopes, ‘Governance Structures in the International Distribution of Alcoholic
Beverages’, Services and the Global Economy: Business History Conference Annual
Meeting (Miami, 20–22 April 2001).
95. Kirin, Annual Reports and Accounts (1973), p.13; Seagram, Annual Reports and Accounts
96. Interview with Mr. Yoshi Kunimoto, Executive Vice President of Suntory-Allied, and Mr.
Kunimasa Himeno, Manager of the International Division of Suntory, Tokyo, 16 Sept.
97. Lopes, ‘Governance Structures in the International Distribution of Alcoholic Beverages’.
98. Interview with Colin Campbell, Top Manager at Moët-Hennessy, Paris, 22 Nov. 1999;
Barclays de Zoete Wedd report (Moët et Chandon Archive, 1988), p.21.
99. J.M. Stopford and L.T. Wells, Managing the Multinational Enterprise (London, 1972);
B.D. Wilson, ‘The Propensity of Multinational Firms to Expand Through Acquisitions’,
Journal of International Business Studies, Vol.11 No.2 (1980), pp.59–65.
100. P.J. Buckley and M.C. Casson, ‘A Theory of Co-operation in International Business’, in
F.J. Contractor and P. Lorange (eds.), Co-operative Strategies in International Business
(Lexington, MA, 1988); M.C. Casson, The Organisation of International Business
(Aldershot, 1995); M.C. Casson, Information and Organisation: A New Perspective on the
Theory of the Firm (Oxford, 1996); P.J. Buckley and M.C. Casson, ‘Analysing Foreign
Market Entry Strategies: Extending the Internalisation Approach’, Journal of International
Business Studies, Vol.29 No.3 (1998), pp.539–61.
101. Penrose, Theory, p.53.
102. M. Bishop and J. Kay (eds.), European Mergers and Merger Policy (Oxford, 1993).
103. Dunning, ‘Reappraising the Eclectic Paradigm’, pp.461–91. The definition of firm-specific
advantages is based on ‘ownership advantages’ in Dunning, ‘Trade’; Hymer, ‘On
Multinational Corporations and Foreign Direct Investment’ selected by John Dunning from
‘The International Operations of National Firms: A Study of Foreign Direct Investment’
(Ph.D. thesis, MIT, 1960), in C.N. Pitelis and R. Sugden (eds.), The Nature of the
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Transnational Firm (London, 1991), pp.23–43; R. Nelson, ‘Why do Firms Differ and How
Does it Matter’, Strategic Management Journal, Vol.14 (1991), pp.61–74.
104. Lopes, ‘Growth and Survival’.
105. For a discussion of this topic see Lopes, thesis.
106. Jones and Morgan (eds.), Adding Value; R. Tedlow and G. Jones (eds.), The Rise and Fall
of Mass Marketing (London, 1993); S. Ward, L. Light and J. Goldstine, ‘What High-Tech
Managers Need to Know About Brands’, Harvard Business Review (July–Aug. 1999),
pp.85–95; Wilkins, ‘The Neglected Intangible Asset’.
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... Multinational corporations (MNCs) are the lead global actors of the broader alcoholic spirits GVC, owning top spirit brands and using sophisticated distribution networks to market them across the world (da Silva Lopes, 2007). Further, through mergers and acquisitions, the alcoholic beverage industry has concentrated into a few powerful MNCsseven of which currently account for nearly 60% of the United States' market share (da Silva Lopes, 2007;Euromonitor, 2014). ...
... Multinational corporations (MNCs) are the lead global actors of the broader alcoholic spirits GVC, owning top spirit brands and using sophisticated distribution networks to market them across the world (da Silva Lopes, 2007). Further, through mergers and acquisitions, the alcoholic beverage industry has concentrated into a few powerful MNCsseven of which currently account for nearly 60% of the United States' market share (da Silva Lopes, 2007;Euromonitor, 2014). These MNCs represent a locus of control in the global alcoholic spirits GVC, one that we posit requires deeper consideration of how high-profit leverage points in such chains operate, particularly as barriers to entry. ...
Place-centred branding is increasingly perceived as a mode of product differentiation and a rural development strategy that emphasizes the singularities of production regions and methods to meet global market demands for quality and authenticity. We use a global value chain (GVC) analysis to compare the trajectories of Peruvian and Chilean pisco – a distilled spirit like brandy – finding that each country’s efforts to claim its authenticity are grounded in different cultural–economic imperatives as well as vexed historical bilateral relations. Our analysis suggests that antagonism can compromise the authenticity premium. A GVC lens offers important analytic leverage for locating pisco producers’ market strategies as nested within the larger GVC for alcoholic spirits, and we suggest this perspective would benefit from more robust considerations of local–global trade-offs therein.
... Looking at global beverage companies, building a portfolio of locally strong brands through M&A is a way to expand internationally. 100 However, ITO EN's M&A strategy is more characterized by the takeover of Japanese brands like Tully's. ...
Full-text available
Although traditional industries are commonly dominated by numerous SMEs focused on their respective domestic markets, the Japanese tea industry experienced the emergence and rapid growth of large enterprises in the 1990s. This article analyzes the strategy that enabled such a change, focusing on the most important Japanese tea producer, ITO EN, which developed bottled green tea in 1985. Based on an approach of business history and industry studies, the article argues that the shift in the 1990s was made possible by the transformation of the true nature of the tea industry in going from a commodity business to a branded consumer-goods business.
... Guinness started this by merging its various spirits holdings to create united Distillers with a new focus on branding, marketing, and distribution of Scotch whisky, in some respects mimicking trends more generally across the alcoholic beverages industry. 89 A number of appointments were made to kickstart the new premiumisation strategy. James Espey, formerly Marketing Director under Tennant at International Distillers and Vintners (Grand Met's spirits division) was appointed as chairman of united Distillers 90 and worked closely with Tony Greener as Managing Director on the new strategy. ...
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In this article we examine the development of the Scotch whisky industry since 1945 through the lens of dynamic capabilities. We explain how sui generis acts—novel initiatives outwith the established repertoire of practices of a firm or industry—by external actors joining the industry helped unlock dynamic capabilities at the firm level in the industry which in turn drove change across the sector after a series of takeovers. We detail the key structural changes in the Scotch whisky industry and demonstrate how important external actors can be in effecting sector level change by extending and connecting our analysis to existing debates in business history and strategy research.
... To accommodate large and multinational corporations, Lopes (2007) extended the work of Jenkinson and Mayer (1992) by classifying business systems into "outsider" and "insider" systems. In the "outsider" system, shares are held either by a small number of other firms, financial institutions and family members, while in the "insider" system, ownership is held by a large number of individual and institutional investors. ...
Full-text available
The Federal government has put in place several measures aimed at reducing the bottle necks associated with doing business in Nigeria. In spite of these measures, family businesses in South Eastern Nigeria are still characterized by organizational and administrative inefficiencies. These inefficiencies are associated with their organizational work procedures and practices. Therefore, this study is premised on the mitigating effect of institutionalization on such inefficiencies and the commonplaceness of business network in South Eastern Nigeria. The study seeks to examine the effect of business network on the institutionalization of family businesses in South Eastern Nigeria. Survey design and proportionate stratified and simple random sampling techniques were adopted. The generated data through questionnaire were subjected to Z-test. The result shows that business network has significant effect on the institutionalization of family businesses in South Eastern Nigeria. The study brings to the fore the contribution of business network to family business institutionalization. It recommends more awareness creation and training for founder/CEOs and further researches into other causes of the inefficiencies.
... It was not conducive to identify the role of national-specific factors, such as country-of-origin effects and brands. Both directly affect prices and consumption (Arias-Bolzmann et al., 2003;Da Silva Lopes, 2007;Higgins, 2018). Incorporating such factors into our conceptual model would require the use of specific data, such as from regional associations or wine companies, instead of foreign trade statistics. ...
Purpose The purpose of this study is to explore the relationship between income inequality and the demand for high-end luxury wine. The consumption of luxury goods has experienced dramatic growth since 2000 but inequality has been neglected by scholars working on luxury consumption. The exploratory research focuses on wine demand between 2000 and 2019 and analyzes the impact of income inequality among other factors, including gross domestic product (GDP) per capita and GDP growth. The authors want to discern whether highly unequal countries import more expensive wine when compared to countries with lower inequality. Design/methodology/approach The authors prepared different data sets based on the year and the trade value of each country to compare the differences and commonalities. The regression models incorporate particular foreign trade statistics (average unit price of wine) as an objective variable and the Gini coefficients to measure the relation between the demand for high-end luxury wines and inequality as an explanatory variable. The models also incorporate other control variables such as economic and institutional conditions. Findings The analysis demonstrates a positive relationship between the unit price of imported wine and the level of income inequality of the importers. This research suggests that conspicuous consumption, as a means of social distinction, is a major driver of the luxury wine market. Other significant factors include GDP per capita and geographic proximity. However, countries with a high power distance and bad governance do not purchase more luxury wines than others. Hence, rather than the social acceptation of wealth and corruption, the consumption of luxury wines is driven by the levels of economic development and inequality. Originality/value This paper is exploratory research that discusses an underexplored issue: the impact of income inequality on the consumption of luxury goods such as high-end luxury wines. It contributes to the literature on wine consumption, luxury business and income and wealth inequalities. These fields are rarely approached together and the research emphasizes the potential offered by such a perspective.
... In addition, it represents consumers' sensitivity and emotional attachment to the product itself (da Silva Lopes, 2002;da Silva Lopes and Casson, 2007). With the additional characteristics and the added values the customer is going to reward the company by being __________ loyal and satisfied to reward the company for its product (De Chernatony and Segal-Horn, 2003;Keller and Lehmann, 2003). ...
The trend over several decades towards the creation of global brand alliances in the highly competitive airline industry is likely to persist. However, few academic studies consider how such horizontal brand alliances have been achieved and even fewer analyse their creation and maintenance from an individual company’s perspective. Furthermore, current studies are largely derived from a western management perspective: little work has been done in the Arab world or the Arabian airlines apart from recent studies of Gulf carriers. This thesis adds to this small body of work by examining Royal Jordanian Airlines’ role within the Oneworld Alliance. In particular, it analyses how the entry of a small airline into a large, well-established global organization affected the airline’s branding practices. The thesis also explores in lesser detail the branding and marketing strategies within the global alliances. A qualitative approach was used; purposive and snowball-sampling techniques were adopted to analyse 61 semi-structured interviews with senior managers and other actors within the airline industry. Two main themes have emerged: the first theme, the Airlines Industry’s Attitude towards Brand Alliances, examines the major challenges in the airlines industry, demonstrates the main motivations behind forming strategic airline alliances and explores the relationship between globalisation and the initiatives to formulate more strategic airline alliances. The second theme, the key branding and marketing strategies, investigates the alliances’ brand practices and marketing strategies and explains how a small national airline company has responded to this trend and offers a set of potential choices for future. Also this study provides compelling evidences of how the Oneworld Alliance creates branding value for the small airlines member and contributes toward understanding the case of the Arab world and the interplay between global alliance brands and national airlines companies. Finally, it demonstrates a number of issues that the alliance members need to address in order to avoid any brand dilution or negative spillover effect.
... From the early 1900s to the present, the cosmetics industry changed due to innovation, technology, and globalisation (Jones, 2011). Further, the innovation in this industry relies on branding and marketing knowledge rather than technology (Lopes, 2002). This is because the role of brands and marketing knowledge provided fundamental elements of the growth strategies of cosmetics firms, which later expanded in the foreign market and reflected their evolution as a whole in the industry, where they become well known to customers. ...
This chapter proposes an important study of the cosmetics industry in relation to green marketing and sustainability concerns from the historical context and its evolution to the present day. The aim of this chapter is to explain the significant impact of green marketing on the cosmetics industry as a new future prospect that benefits all parties and what can be learned from history. This chapter intends to address the existence of sustainability concepts through history, which have become an interesting phenomenon in the present day. The aspects to be discussed include (1) new prospects and opportunities from green marketing for the cosmetics industry; (2) the evolution of the cosmetics industry; and (3) green marketing and green concepts in the cosmetics industry.
Conventional viewpoints on global branding for design-focused consumer goods presuppose national identities as a given and prerequisite to market expansion, the key examples being Danish design furniture, Swiss watches, and Parisian fashion. Through the case study of Royal Selangor—a Malaysian family firm specializing in manufacturing pewter tableware and gifts—this study analyzes how businesses in former colonies adapt their branding strategies to transitioning ideas on national identities and economic development in the postcolonial era by drawing upon cosmopolitan worldviews of malleable identities and utilizing ties with former colonizers to gain cultural capital domestically and abroad. This study engages with theoretical frameworks of business history, organizational studies, and nationalism to explore how companies in developing countries in Southeast Asia that are also former colonies interact with colonial histories and participate in postcolonial nation-building through branding and entrepreneurship.
Full-text available
We examine the Scotch Whisky Association’s (SWA) role in protecting “Scotch whisky” between c. 1945 and c. 1990. Using new archival evidence, we demonstrate that the SWA intensively lobbied the UK government to achieve coordination between domestic and European regulations governing Scotch whisky and whisky. The SWA’s nonmarket activities were consonant with some trade associations but in other respects they were atypical. The SWA extended its activities to supranational bodies and engaged in extensive domestic and foreign litigation. The key message from this article is that the SWA built the world-renowned appellation “Scotch whisky” even though this marque was not registered as an appellation until the late twentieth century.
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This is the second special issue resulting from the symposium titled ‘The Brand and Its History’. This issue aims at deepening the knowledge of the historical and cultural roots of the origin, uses, and meanings of modern branding. This editorial summarises previous contributions from economic, marketing, and historical literature; presents the main findings of the seven articles included in this issue; and reflects on possible further research.
The authors study the determinants of line extension success using data on 75 line extensions of 34 cigarette brands over a 20-year period to investigate the relative effects of brand, extension, and firm characteristics on the incremental market share of brand line extensions. The econometric model also captures the extent of cannibalization of parent brand sales that may have occurred due to the line extension's introduction. The authors also explore the role of a brand's symbolic value as a factor in line extension success. Results indicate that parent brand strength and its symbolic value, early entry timing, a firm's size, and distinctive marketing competencies, as well as the advertising support allocated to line extensions, contribute positively to the success of line extensions. Their findings suggest that, in this industry, cannibalization effects of line extension activity may have been limited and line extensions into earlier subcategories actually may have helped the parent brand. Even with cannibalization, the incremental sales generated by the extension seem to be reason enough to make a line extension strategy viable.
To what extent are cooperative ventures really cooperative? What exactly is meant by cooperation in this context? In international business the term cooperative venture is often used merely to signify some alternative to 100 per cent equity ownership of a foreign affiliate; it may indicate a joint venture (JV), an industrial collaboration agreement, licensing, franchising, subcontracting, or even a management contract or countertrade agreement. It is quite possible, of course, to regard such arrangements as cooperative by definition, but this fudges the substantive issue of just how cooperative these arrangements really are.
This essay examines the fate of the 100 largest industrial firms in the world in 1912 over the period to 1995. Disappearance and decline were the most common outcomes, but a few outstanding performs - firms like Burmah/BP and Procter and Gamble - left descendants eight or nine times their initial size, in 'real stock exchange price' terms. There were no significant differences between the performance of giant German, British and American firms, other than a slightly greater tendency to disappear among Americans firms. The convergence of national performance of giant firms is probably related to converging strategies and structures of such firms in advanced industrial countries. Long-run differences in national economic performance in the 20th century, at least among industrial leaders, are rooted in non-industrial sectors of the economy or smaller industrial firms. The analysis of the long run evolution of giant firms also suggests that, while firms in 'old' industries on average performed worse than those in 'new' ones, the 1912 population included equal numbers of each and there was, in any case, great variability of outcomes within industries. No simple formula enables us to discriminate ex ante between long-run corporate success and failure, for reasons inherent in the nature of modern corporate capitalism's success as an economic system.
For most of its early history, business history evolved as an isolated American subdiscipline, separated by a wide gulf from the strong intellectual currents reshaping the larger discipline of history in the United States. It was not the only subdiscipline that was isolated in this way during the period between 1930 and 1960. As Charles Neu has pointed out, diplomatic history had a somewhat similar phase of insular historiographical development that did not end in the United States until the volatile 1960s. But the isolation of business history was particularly extreme. Its origins in a business school setting made it suspect to many historians, as did the ideology of its founder and the first generation of his followers. N. S. B. Gras left no doubt as to where he stood on the contributions business had made to American society (they were positive) or the damage the New Deal had done to a once vibrant U.S. political economy (it was negative). At a time when most American historians were moderate reformers aligned with the U.S. brand of modern liberalism, this style of conservatism was scorned if it was noticed at all. For the most part, it was just ignored. In 1939, Gras published the first general synthesis in the subdiscipline, Business and Capitalism, which he modestly subtitled An Introduction to Business History.
What determines the growth of an economy? How does a society share among its members the costs of generating economic growth and the benefits that are derived from it? These fundamental questions of growth and distribution are as old as the discipline of economics. But modern economics has not been very successful in providing cogent answers. The main problem is that the conventional theory of the market economy lacks a theory of economic development. This intellectual deficiency is neither inevitable nor accidental. During the nineteenth century, the elaboration of a theory of economic development was the central project of what came to be called “classical” economics. But during the twentieth century, the economics discipline displayed an ever-growing commitment to the individualistic ideology and ahistorical methodology of “neoclassical” economics. Given these ideological and methodological orientations, adherents to the neoclassical perspective neglected to build a theory of economic development that can comprehend the historical experiences of economic growth and income distribution in the world's most advanced national economies. Indeed, the neoclassical research agenda by its very definition — the study of the allocation of scarce resources among competing uses — places the process of economic development beyond its analytical scope. Using this definition, conventional economic analysis assumes that, in the determination of economic performance, technological and market conditions can be taken as exogenous.