First Anchor buttery. Photo: Cambridge Museum.
The issue of brands has been in the news recently.
Anchor in the supermarket chiller.
Two signifcant New Zealand entities have taken a markedly different approach to the value of their brands. The Fonterra Board recommended to their farmer shareholders that they sell their brands, such as Anchor and Mainland, to a French company that is the largest dairy company in the world.
The Anchor brand has been with the New Zealand dairy industry for a long time – 139 years in fact. It was founded by Henry Reynolds at Pukekura, just outside Cambridge, in 1886.
Pukekura dairy farmer Garry How with a pound of Anchor butter at the commemoration stone laid to celebrate the creation of the brand in 1886. Photo: Mary Anne Gill.
The board said the consumer brand part of their business was making a lower return on capital than the other two main areas of their business, ingredients and foodservices, so they wanted to sell the consumer part of their busines and focus on the more profitable areas.
Peter Nicholl
There are some aspects of this deal I don’t understand. First, I find it surprising that a French dairy company believes it can extract more value out of these brands than Fonterra given that a large part of the value of the brands comes from New Zealand’s image of being a clean, green place. Second, Fonterra said they wanted to sell the brands and use the capital in the other more profitable parts of their business.
In fact, they are going to pay out a large chunk of the capital from the sale (around 75 per cent) to their farmer shareholders. The average payout could be around New Zealand $400,000. It’s not surprising that a majority of the shareholders voted yes.
Some commentators have been very sceptical and critical of the deal. Winston Peters for example described it as utter madness and economic self-sabotage. A former governor of the Reserve Bank of New Zealand, Allan Bollard, was a little more circumspect but he also doubted it’s wisdom. I share his doubts.
My doubts increased when I read a story about the All Blacks. You may wonder what links the All Blacks and Anchor dairy products. The link is that the New Zealand Rugby Union sees the All Blacks as a brand – and believe it is a valuable brand.
The All Blacks brand is based on two critical factors – the history, legacy and mystique of the team and its incredible test winning record (76.7 per cent). One of the reasons the All Blacks v Ireland test match last weekend was played in Chicago and not Dublin was it is part of the promotion of the All Blacks brand in the United States. The NZRFU establisghed New Zealand Rugby Commercial to grow and expand the brand.
It’s board member Richie McCaw said “what’s unique about New Zealand rugby, and the All Blacks at the top of it, is it is a team, a game that everyone feels like they’ve got a stake in”.
New Zealand rugby thrives on an egalitarian principle with people from all walks of life, all backgrounds and all cultures playing rugby – and being in the All Blacks. But for the brand to be successful, the All Blacks have to continue to be successful.
The Rugby Union seems to understand – and value – their brand.
See: Anchor’s away
Birthplace of Anchor butter: From left, dairy farmer Garry How, contractor Paul Garland and wife Lynne with Robbie Hughes who all live near the spot Henry Reynolds first produced Anchor butter. Photo: Mary Anne Gill.
