A Brand’s Worst Nightmare

by Barry Silverstein
September 10, 2007 issue

It’s nothing new. One of the more notorious product recalls

involving a widely recognized consumable brand was the
case of Tylenol. In 1982, several people died after taking
Tylenol laced with cyanide. It was discovered that the
Tylenol was tampered with—but as a result of the news,
Tylenol, then Johnson & Johnson’s best selling
pharmaceutical product, saw its market share drop from about
37 percent to seven percent.

But it wasn’t a fatal blow to the brand. Johnson & Johnson

pulled all 31 million bottles of Tylenol from store shelves,
created a new tamper-proof bottle, and even offered to replace for free consumers’
existing Tylenol with the safely packaged product. It cost Johnson & Johnson well over
US$ 100 million, but the investment paid off. Consumer confidence recovered and, one
year later, Tylenol’s market share rebounded to 30 percent.

Today, it’s toys and pet food. Mattel toys (subject of a Brandchannel Brand Debate) was
forced to recall nearly 20 million toys manufactured in China because of lead paint that
could be toxic and small magnets that could be dislodged.

Mattel did three things right, says Harvard Business School professor John Quelch in his
marketing blog: The company’s CEO stepped in and took personal responsibility, Mattel
aggressively got the word out about the recall, and the company’s recall website “is a
model of excellence.” If the recalls are the only damage, Quelch says, “Mattel’s brand
reputation should survive.”

But what happens when a product recall affects countless brands, all of which, it turns
out, rely on the same distributor? Such a massive recall not only shakes a consumer’s
confidence in a preferred brand, but in every brand in the tainted product category.

This seemingly unimaginable scenario actually happened in March 2007, when more than
100 brands of dog and cat food—some 60 million cans—were recalled because pet
owners reported cases of kidney failure and sometimes death after their pets ate the
packaged food. The recall was centered around a single Canada-based manufacturer,
Menu Foods, Inc., that supplies dog and cat food to pet food companies marketing it
under different brand names. We’ll get back to that intriguing fact in a moment.

The pet food was pulled from supermarket shelves, and Menu Foods and the Food and
Drug Administration (FDA) published a comprehensive list of the products involved.
According to the FDA, the adulterated food contained wheat gluten that was tainted with
melamine, a plastic derivative used as fertilizer. Melamine, which can be toxic to cats and
dogs, is not typically used in pet food manufacturing, but it was apparently utilized by a
Chinese manufacturer who supplied Menu Foods with the wheat gluten.

Since the initial recall, other recalls of cat and dog food have been issued for a variety of
reasons. In May 2007, for example, American Nutrition, another distributor in the US,
recalled 28 products because of possible melamine contamination. In June, multiple
brands of pet food tested positive for acetiminophen, a substance commonly found in
Tylenol, that can be harmful to cats and dogs.

After the widespread panic started to subside, pet owners were left with a nagging
question: What is the value of purchasing a particular brand, if virtually every brand is
being manufactured by the same source?

Consider the size of the pet food market. According to the American Pet Product
Manufacturers Association (APPMA), over 69 million US homes have a pet. Americans
spend over US $16 billion per year feeding their pets, and one of the fastest growing
segments of the pet food industry is gourmet and niche product offerings. Globally, cat
and dog food sales are over US$ 42 billion, says Euromonitor International.

Now look at the top players in the pet food industry. According to Pet Food Industry
magazine, the leader is Mars Inc. (Pedigree, Whiskas, Waltham, Cesar, Sheba, and other
brands; in 2006, Mars acquired Doane, the world’s largest supplier of private label pet
foods). Second is Nestlé SA (Purina, Friskies, Alpo, Beneful, Fancy Feast, Mighty Dog
and other brands). Between them, Mars and Nestlé dominate the worldwide pet food
market with almost 50 percent market share. Brand powerhouse Procter & Gamble (Iams
and Eukanuba) is third, followed closely by Colgate-Palmolive (Hill’s). Del Monte (9
Lives, Cycle, Gravy Train, Kibbles ‘n Bits, Skippy, Meow Mix, Alley Cat, Milk-Bone
and other brands) rounds out the top five.
These companies are all major players in consumer packaged goods. The Menu Foods
recall list included many of the above-named brands (including premium brands) sold by
the top five pet food manufacturers.

The recall revealed a dirty little secret of the pet food industry—a large number of dog
and cat food brands, even premium brands, are essentially comprised of the same
ingredients and produced by the same source. In fact, Menu Foods says it is a contract
manufacturer for five of the top six branded pet food companies, and a private-label pet
food manufacturer for 17 of the top 20 North American retailers.

Makers of premium cat and dog food brands caught in the recall had to defend their
products and price points. According to a story in The Wall Street Journal, Procter &
Gamble explained it this way: “ ‘A less-expensive brand can copy an ingredient list but
might not have the same combination to the way the recipe is put together,’ says
company spokesman Kurt Iverson. The quality of ingredients and the way they are
combined affects how nutrients are absorbed by the animal, he says.”

The pet food industry is certainly not unique in its use of generic products, or the same
ingredients from brand to brand. Generic versions of pharmaceuticals are commonplace.
(Today, for example, acetiminophen and Tylenol are widely recognized as virtually
interchangeable). Grocery shelves are loaded with generic versions of brand-name
products, and consumers can choose whether to pay more for a recognized brand.

Yet the pet food and toy recalls are vivid reminders to consumers that the branded world
in which we live is not always what it appears to be. When toy products put children at
risk because of foreign outsourcing, consumers question the integrity of the brand. And
when the ingredients and manufacturing source for pet food brands turn out to be the
same, consumers question why one brand is better, or why a “premium” brand should
cost more. It’s during these nightmare scenarios that brand marketers must be able to
intervene in a crisis—and defend the value proposition of their brands.

Barry Silverstein is a 25-year advertising and marketing veteran and co-author of The
Breakaway Brand (McGraw Hill, 2005).