Crossposted from the GIPC blog.
At a recent gathering, I joined a group of friends in blind taste-testing a variety of chocolates and wine. The purpose was to throw away our preconceived notions of certain brands in order to taste—and judge—the product for what it truly was. In some cases, the cheaper products won favor, but in others, the proof was really in the well-branded JELL-O® pudding.
While tying taste to brands is an interesting subject in its own right, little experiments like this show that brands are incredibly integral to consumer experience. This got me thinking about the recent reports coming out of New Zealand (and to some extent, California) about potential new restrictions on the use of trademarks for many of our favorite snacks and sodas due to health concerns.
The theory is that plain packaging—denying brand owners the use of their trademarks on their products and in some cases replacing those trademarks with large graphic warning labels—can deter consumers from consuming “unhealthy” products. The measures considered by New Zealand take a page from Australian regulations against the use of trademarks on tobacco packaging, enacted over a year ago to mixed, if not skeptical, results.
Generic packaging for Oreos®, Coca-Cola®, and Tostitos® (or the like) could render our grocery store shelves into an unnerving art gallery of morbid graphic images, or even the opposite—a brandless Orwellian muddle of boxes and bottles. Trademarks aren’t just for our visual appetites; they actually serve an important economic purpose. This intellectual property is necessary to distinguish a brand from its competition. Plain packaging not only takes that right away, but this homogenization also increases the risk of counterfeiting, which is especially dangerous when a person is consuming the product.
But the real travesty here is that plain packaging takes away choice from consumers. Regulations like these beg the question: is it up to us or the government to decide what we should consume?
In its annual survey of global brands, Millward Brown found that not only are consumers independently vying for healthier options, but brands are responding to demand, giving us a market-driven (not regulations-based) solution. (If only Mayor Bloomberg took a page from Adam Smith’s book before his assault on the menacing Big Gulp®!)
Denying the use of trademarks stymies brand innovation and creates consumer confusion. It also has the potential to hit companies hard, essentially wiping numbers 5, 6, 31, 35, 43, 83, 88, and 92 off of the Millward Brown top 100 brands list.
The bottom line is that while the health objectives are admirable, restricting the use of trademarks and restrict consumer choice is not only bad economics, it’s bad governance.