. 1
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Global Brands

Brands help explain why, in a world focused on science and new technology, sev-
eral of the world™s largest multinational corporations have little to do with either.
Rather they are old ¬rms with little critical investment in patents or copyrights.
For these ¬rms, the critical intellectual property is trademarks. Global Brands
explains how the world™s largest multinationals in alcoholic beverages achieved
global leadership; the predominant corporate governance structures for ¬rms™
marketing-based industries; and why these ¬rms form alliances with direct com-
petitors. Brands also determine the waves of mergers and acquisitions in the
beverage industry. Not only do they have personalities of their own, but brands
also have the capacity to have independent and eternal lives.
Global Brands contrasts with existing studies by providing a new dimension
to the literature on the growth of multinationals through the focus on brands,
using an institutional and evolutionary approach based on original and published
sources about the industry and the ¬rms.

Teresa da Silva Lopes is a Reader in the School of Business and Management at
Queen Mary, University of London. She has previously taught at the University
of Oxford and Universidade Catolica Portuguesa. She is the author of numerous
publications on international business and business history and other topics in
journals such as Business History, Business History Review, and Enterprise and
Society. She is currently co-director of the Centre for Globalization Research
at Queen Mary, University of London; reviews editor for the journal Business
History; council member of the Association of Business Historians; and trustee
of the American Business History Conference. Lopes has held visiting research
fellowships at the University of California, Berkeley, and Ecole Polytechnique
in Paris. Currently she is a Fellow of Dynamics of Institutions and Markets in
Europe Network, a Research Fellow at Universidade Catolica Portuguesa, and
a Research Associate of the Centre for International Business History and the
Centre for Institutional Performance, both at the University of Reading.

Louis Galambos, The Johns Hopkins University
Geoffrey Jones, Harvard Business School

Other books in the series
National Cultures and International Competition: The Experience of
Schering AG, 1851“1950, by Christopher Kobrak, ESCP-EAP, European
School of Management
Knowledge and Competitive Advantage: The Coevolution of Firms,
Technology, and National Institutions, by Johann Peter Murmann,
Australian Graduate School of Management
The World™s Newest Profession: Management Consulting in the
Twentieth Century, by Christopher D. McKenna, Sa¨d Business
School and Brasenose College, University of Oxford
Global Brands
The Evolution of Multinationals
in Alcoholic Beverages

Queen Mary, University of London
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press
The Edinburgh Building, Cambridge CB2 8RU, UK
Published in the United States of America by Cambridge University Press, New York

Information on this title: www.cambridge.org/9780521833974
© Teresa da Silva Lopes 2007

This publication is in copyright. Subject to statutory exception and to the
provision of relevant collective licensing agreements, no reproduction of any part
may take place without the written permission of Cambridge University Press.
First published in print format 2007

ISBN-13 978-0-511-50804-2 eBook (NetLibrary)

ISBN-13 978-0-521-83397-4 hardback

Cambridge University Press has no responsibility for the persistence or accuracy
of urls for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
To My Father, Jos´ da Silva Lopes

List of Illustrations page xi
List of Figures xii
List of Tables xiii
Series Editors™ Preface xv
Preface xvii
List of Abbreviations xxi
1. 1
Brands and the Evolution of Multinationals
2. 23
Leading Firms “ The Historical Legacy
3. 43
Growth and Survival
4. 67
Family Ownership and Managerial Control
5. 87
Channel Management
6. 107
Diversi¬cation Strategies
7. 129
Acquiring Brands
8. 148
The Life of Brands
9. 180
Appendix 1. Value-Added Chain in Alcoholic Beverages
Appendix 2. Brands Owned by the Leading Multinationals
in 2005
Appendix 3. Annual Sales for Each Firm in Alcoholic Beverages
Appendix 4. Selection of the Sample
Appendix 5. Biographies of the World™s Largest Multinationals
in Alcoholic Beverages
Appendix 6. Types of Governance Structures in Distribution,
Appendix 7. Schematic Representation: Alliances as Dynamic
Processes for Acquiring Marketing Knowledge

x Contents

Appendix 8. Diversi¬cation Strategies
Appendix 9. Patterns of Diversi¬cation within Alcoholic
Appendix 10. Schematic Representation: Brands and Marketing
Knowledge in Mergers and Acquisitions
Appendix 11. Evolution of Sales of the World™s Leading Brands
by Beverage Type
List of Illustrations

Illustrations follow page 170.

1 Amstel, international advert, 1970s
2 Artois ˜Le Bon Bock™ advert, 1930s
3 Bacardi ˜Uncle Sam goes to Cuba™ advert, 1919“1933
4 Bass Pale Ale label, designed in 1855
5 Brahma ˜No Curve™ advert, 2005
6 Captain Morgan advert, North America, late 1950s
7 Carlsberg Pilsner advert, 1952
8 Foster™s, Paul Hogan campaign, Continental Europe, UK, and
USA, 1981
9 ˜GLOBAL™ illustration from Diageo annual report 2003
10 Guinness ˜After Work™ advert, United Kingdom 1961
11 Heineken ˜Most Served at the Bar™ advert, 1960s
12 Hennessy cognac international advert, 1959
13 J&B Scotch Whisky, ˜Pours More Pleasure™ advert, USA, 1971
14 Johnnie Walker ˜Time Marches On™ advert, USA, 1948
15 Martini ˜Sleek and Stylish™ advert, 1950s
16 Mo¨ t & Chandon ˜Giant Strides™ advert, USA, 1903
17 Pernod ˜C™est la Vie!™ advert, 1981
18 Ricard ˜Bientot la Caravane™, advert 1956
19 The original Sandeman ˜Don™ poster, 1928
20 Smirnoff ˜A New Cocktail Epoch™ recipe booklet, 1930s
21 Suntory Whiskey Red avert, fund raising for Tokyo Olympics,
Japan 1964
22 Tuborg ˜The Thirsty Man™ advert, 1900

List of Figures

2.1 Percentage of sales of the world™s largest multinationals by
page 28
country/continent of origin
3.1 The determinants of growth and survival of ¬rms in
alcoholic beverages
3.2 Cumulative sales of ¬rms from different systems of
corporate governance
3.3 Main mergers and acquisitions by the world™s largest
multinationals in alcoholic beverages
3.4 Evolution of alcohol consumption worldwide 50
3.5 Average annual per capita consumption of alcoholic
beverages in Europe and the United States, 1960“1979 and
1980“2003 52
3.6 Indexes of growth in consumption of alcoholic beverages
and in sales by the world™s largest multinationals in 1960 58
3.7 Evolution of sales by the leading multinationals in alcoholic
4.1 Industry systems of corporate governance 76
6.1 Cycles of diversi¬cation in alcoholic beverages 119
A1.1 The value-added chain in alcoholic beverages
A5.1 Allied Domecq and its major predecessors
A5.2 Diageo and its major predecessors
A5.3 Inbev and its major predecessors
A5.4 Mo¨ t Hennessy Louis Vuitton and its major predecessors
A5.5 Pernod Ricard and its major predecessors
A5.6 Seagram and its major predecessors
A6.1 Governance structures in the distribution of alcoholic
beverages, 1900“2005 234
A7.1 Types of alliances in the distribution of alcoholic beverages
A10.1 The role of brands in the evolution of multinationals in
alcoholic beverages

List of Tables

2.1 The world™s largest multinationals in alcoholic beverages and
their predecessors, 1960, 1970, 1980, 1990, 2000, and
2005 page 24
3.1 International evolution of Diageo and its major
predecessors, 1960“2000 55
3.2 Number of alliances formed by Diageo and its predecessors,
1960“2000 57
3.3 Patterns of growth and survival of ¬rms in the alcoholic
beverages industry
4.1 Average annual sales by decade for the world™s leading ¬rms
in alcoholic beverages, 1960“2005 68
4.2 Economic and ¬nancial performance ratios of the world™s
largest multinationals
6.1 Value-added chain relatedness between the businesses of the
world™s largest multinationals in alcoholic beverages
7.1 Major mergers and acquisitions in the alcoholic beverages
industry, 1958“2005 131
8.1 Leading multinationals™ share of the world™s top 100 spirits
in 1990, 1997, 2002, and 2005 155
8.2 Portfolio of wholly owned brands of LVMH and its
predecessors in 1977, 1989, 1997, and 2002 161
8.3 Portfolios of top alcoholic beverages brands for some
leading multinationals in spirits in 2002 167
A2.1 Brands owned by the leading multinationals in 2005 199
A3.1 Annual sales by ¬rm in alcoholic beverages from 1960 to
2005 202
A6.1 Evolution of governance structures in the distribution of
alcoholic beverages
A8.1 Percentage of sales in alcoholic beverages to total sales,
1960“2005 242
A8.2 Percentages of sales generated outside the continent of origin
of the ¬rm, 1960“2005 244

xiv List of Tables
A8.3 Diversi¬cation by the largest multinationals in alcoholic
beverages in 2000 246
A9.1 Patterns of diversi¬cation within alcoholic beverages
A11.1 Leading brands in wines, champagne, and low-alcohol
A11.2 Leading brands in premium spirits
A11.3 Leading brands in beer
Series Editors™ Preface

During recent decades brands have rapidly increased their signi¬cance at the
center of the competitive advantage of global ¬rms. Brands once recognizable
only within one country have been taken global. The pursuit of desirable
brands has become a prime driver of cross-border mergers and acquisitions.
Single brands can now be valued at billions of dollars. Yet the basis of their
worth has an elusive quality. Many brands have disappeared over time, while
some have gone from strength to strength. As a result, the understanding of
the role of brands in the dynamics of global business has proved enormously
challenging for researchers in international business and business history.
Teresa da Silva Lopes™ Global Brands: The Evolution of Multinationals
in Alcoholic Beverages represents a radical breakthrough in the literature
on brands and the evolution of global business. In the alcoholic beverages
industry, whose global market is currently in excess of $800 billion, this
study shows that brands and marketing have been key factors in corporate
success and failure over recent decades. This book traces their role over half
a century in creating today™s global giants. It is based on unique access to
corporate archives located on three continents and interviews with leading
practitioners. The author provides readers with a rich and nuanced interna-
tional and comparative account of how the world™s leading global businesses
in alcoholic beverages grew from the 1960s. In the process she delivers com-
pelling insights on the continuing importance of family ownership in many
¬rms, and powerful testimony to the legacy of the past on corporate strate-
gies. This is a book that both academic researchers and industry executives
need to read.

Geoffrey Jones
Harvard Business School
Louis Galambos
The Johns Hopkins University


My interest in global business history and the alcoholic beverages industry
antedates my time in the United Kingdom. Growing up in Portugal, where
wine was for so long a major ¬eld of economic activity and a principal
source of foreign trade, I found myself wanting to know why Portugal never
created major leading multinationals of alcoholic beverages. For my MPhil
(Mestre) degree at Universidade Catolica Portuguesa, I studied the evolution
of the wine industry, giving particular attention to the most internationalized
sector, port wine. In so doing, I found that from the 1960s great changes had
taken place in the industry that had led to the fast development of leading
multinationals (though none, unfortunately, were Portuguese). These came
to dominate the global alcoholic beverages industry by the early twenty-¬rst
century. It was from this research that the ideas for this book, based on my
PhD dissertation emerged.
Writing this book was a pleasure for multiple reasons. Apart from unique
wine, spirits, and beer tasting experiences and lots of traveling, I met a diverse
array of generous and helpful people and made many very good friendships,
which I am sure will be long lasting.
The two people who most profoundly shaped both my intellectual devel-
opment and this book are Mark Casson and Geoffrey Jones. They certainly
in¬‚uenced my search for patterns and meaning in the immense amount of
empirical data that I had collected. My knowledge of the ¬elds of interna-
tional business, entrepreneurship, and global business history relies heavily
on their work, in more ways than even my copious references in the bibli-
ography can show.
I always had the privilege of having the constant support and guidance of
Paul Duguid, an outstanding scholar with interests in the history of brands
and alcoholic beverages, as well as an expert in information and knowledge.
Having been an important in¬‚uence on my previous research on port wine,
and on the history of the alcoholic beverages industry, Paul extended his
support to this book in multiple ways. He read the “thousands” of drafts
of chapters and papers I wrote, always providing insightful comments and
suggestions, and also encouragement. For all this I am and will always be
greatly indebted to Paul.

xviii Preface
David Merrett, a distinguished scholar who combines exceptional his-
torical scholarship with a deep understanding of theory, read the penulti-
mate version of this manuscript from beginning to end, providing numerous
insightful as well as supportive comments.
Many other academics were important in the collection of information
and in the understanding of the industry. I received very useful comments
from Alfredo Coelho, Alvaro Aguiar, Roy Church, Anthony Courakis, Joost
Dankers, John Dunning, Walter Friedman, Per Hansen, Steve Jones, Bill
Lazonick, Bill Mass, Colin Mayer, Christopher McKenna, Avner Offer, Bob
Pearce, Gaspar Martins Pereira, Paloma Fernandez Perez, Mary Rose, Mari
Sako, Judy Slinn, Keetie Sluyterman, Steen Thomsen, Steven Tolliday, Ronald
Weir, Mira Wilkins, and John Wilson.
Early rendering of this research has been presented at conferences and
seminars between May 1999 and May 2006 in Aarhus, Athens, Barcelona,
Berkeley, Bordeaux, Budapest, Cambridge, Chapel Hill, Copenhagen, Glas-
gow, Hagley, Helsinki, Kobe, London, Lowell, Maastricht, Macau, Miami,
Nottingham, Oslo, Oxford, Porto, Palo Alto, Portsmouth, Reading, Tokyo,
and Wilmington. I am particularly grateful for the invitations from Kurt
Petersen, Jesper Strandskov, and Peter Sorensen to give a keynote speech
at a conference in international business history at Aarhus Business School
while I was still a PhD student. I should also thank Paul Duguid and Shawn
Parkhurst for inviting me as a visiting scholar to Berkeley in the spring of
2001, where also I gave a seminar, and Martin Iversen for inviting me to
give a keynote speech at the annual European Business History Association
in Copenhagen, whose location at the Carlsberg Brewery allowed a long-
standing dream of giving a presentation with inescapable empirical evidence
to come true. The comments, criticisms, and patience of participants at these
events were greatly appreciated.
Financial support for this research came from the Portuguese Fundacao
para a Ciˆ ncia e a Tecnologia. This made possible the PhD at the Univer-
sity of Reading and my postdoctoral position at Sa¨d Business School and
Brasenose College at the University of Oxford, and also the travel to archives
and interviews of managers in different countries. The manuscript was com-
pleted after I joined Queen Mary, University of London. I owe a great debt
of gratitude to these three very different academic institutions and also Uni-
versidade Catolica Portuguesa, where I started my academic career.
Many professionals in alcoholic beverages and academics helped me in my
research. Interviews provided a particularly important source of informa-
tion. Jack Keenan from Diageo and Michael Jackaman from Allied Domecq
spent hours teaching me about the evolution of the industry in general and
the strategies they pursued as CEOs of the ¬rms. They also introduced me
to almost everybody I met in the alcoholic beverages industry and greatly
helped my access to the archives and libraries of ¬rms. James Espey from
Preface xix
International Distillers and Vintners, Chris Nadin from Diageo, Charles
Adriassen from Inbev, Tony Frogatt from Scottish & Newcastle, Jan
Beijerink from Heineken, George Sandeman from Seagram, Salvador Guedes
from Sogrape, and Kunimasa Himeno and Yoshi Kunimoto both from Sun-
tory, were especially important not only for the interviews they gave but also
for putting me in touch with so many other people within their own ¬rms.
The access to archives, private libraries, databases, and information de-
partments of ¬rms was another important source of information. Christine
Jones from Diageo was particularly helpful and understanding at different
stages of my research, providing crucial primary information even when I
was away in London, distant from the archives. I also am indebted to the
Hagley Museum and Library, and in particular Roger Horowitz, Michael
Nash, and Ellen Morfei, for giving me a grant and support to access the
Seagram collection in Wilmington, Delaware. Kasia Odgers and Anthony
Duggan from Diageo, Lyne Ouget of Seagram, Gillian Bouzy from Mo¨ t & e
Chandon, Ulla Nymann of Carlsberg, Mary Hall from International Drinks
Bulletin, Pat Brazier of Canadean, and Laura Linlard and Barbara Esty from
Baker Library at the Harvard Business School also helped me ¬nd hundreds
of reports and historical annual reports of ¬rms from around the world.
Lou Galambos, as editor of this book series “Cambridge Studies in the
Emergence of the Global Enterprise,” provided invaluable insights and com-
ments in his thorough reading of the whole manuscript, constantly highlight-
ing that I should “toot my horn a bit louder.” Frank Smith was the most
understanding and supportive of editors at Cambridge University Press, as
deadlines came and went. Jill Friedman, Navdeep Singh, and Kate Queram
played an indispensable role in editing the manuscript and getting it ready
for publication, making the long publication process a pleasant experience.
Finally, Thomas (born while the manuscript was being revised) and
Matthew have by now had enough of this manuscript, but it certainly
would not have been ¬nished without their support in countless ways. My
father™s in¬‚uence on my life “ both professionally and personally “ make the
dedication of this book just a brief gesture of the enormous gratitude and
admiration I have for him.

London Teresa da Silva Lopes
List of Abbreviations

AU Austria
AUS Australia
BEL Belgium
BER Bermuda
BRA Brazil
CAN Canada
CB Cuba
CEO Chief Executive Of¬cer
CHI China
COL Colombia
CZR Czech Republic
DCL Distillers Company Ltd
DC-SL Distillers Corporation “ Seagram Ltd.
DEN Denmark
EEC European Economic Community
FDI Foreign Direct Investment
FR France
GER Germany
GRE Greece
IDV International Distillers and Vintners
IMF International Monetary Fund
IND India
IRE Ireland
IT Italy
JAM Jamaica
JPN Japan
LVMH Louis Vuitton Mo¨ t-Hennessy
M&A Mergers and Acquisitions
MEX Mexico
MNE Multinational Enterprise
NL The Netherlands
NOR Norway
NZ New Zealand
PER Peru

xxii List of Abbreviations
PHIL Philippines
POL Poland
POR Portugal
PTO RICO Puerto Rico
R&D Research and Development
ROE Return on Equity
RUS Russia
SA South Africa
SAB South African Breweries
SIC Standard Industrial Classi¬cation
SKOR South Korea
SPN Spain
SWE Sweden
UDV United Distillers and Vintners
UK United Kingdom
US United States of America

Brands and the Evolution of Multinationals

This book is concerned with the growth of multinational ¬rms in the global
alcoholic beverages industry since 1960.1 This is a period when the indus-
try underwent several major changes, the most signi¬cant of which was a
profound concentration as leading local and regional ¬rms made multiple
international mergers and acquisitions, becoming large multinationals. This
concentration accompanied rapid internationalization, diversi¬cation, and
ultimately globalization. Until the 1960s, production and consumption were
essentially country and culture speci¬c. Each country consumed predomi-
nantly one type of alcoholic beverage, usually domestically produced, and
this pattern determined the kind of ¬rms that developed faster.2
This story of multinational growth within the alcoholic beverages industry
highlights the role of brands in the dynamic evolution of ¬rms and indus-
tries. The focus in this book is on developing the understanding of the role of
brands in the growth strategies of internationally competing ¬rms.3 Brands
can affect the life of ¬rms in many subtle ways: they can enhance total
turnover, bulk up the ¬nancial statements, and cause changes in organiza-
tional structures. Brands allow ¬rms to take advantage of premium prices,
obtain ef¬ciencies in distribution, and accumulate marketing knowledge.
These income-enhancing attributes led in the 1980s to important changes in
accounting practices by ¬rms that started to include brands in their balance

1 Multinationals are enterprises that have crossed borders, engage in foreign direct investment,
and own or control value-adding activities in different regions of the world, even if most
of the sales are concentrated in a small number of markets. They operate in distinct insti-
tutional environments, not being entirely within the jurisdiction of any single government.
Multinationals tend to dominate major international industries, such as alcoholic beverages.
John H. Dunning, “The Globalization of Firms and the Competitiveness of Countries,” in
John H. Dunning, Bruce Kogut, and Magnus Blomstrom (eds.), Globalization of Firms and
the Competitiveness of Nations (Lund: Institute of Economic Research, 1990): 9“57; Alan
Rugman and Alan Verbeke, “Towards a Theory of Regional Multinationals: A Transac-
tions Cost Economics Approach,” Management International Review, Vol. 44, No. 4 (2004):
2 See Appendix 1, “Value-Added Chain in Alcoholic Beverages.”
3 See Appendix 2, “Brands Owned by the Leading Multinationals in 2005.”

2 Global Brands
sheets.4 Since ¬nancial analysts tend to favor companies with strong brands,
¬rms ¬nd their competitive positions strengthened.
Apart from looking at the role of brands in the growth of ¬rms, I also
invert conventional wisdom and examine the role of ¬rms in the life of
brands. In particular, I focus on the capacity of some brands to outlive ¬rms
and develop independent and eternal lives. This means I look not only at
brands traded together with the ¬rms that own them, but also at brands
traded independently of ¬rms, more or less as pieces of intellectual property.
Brands have recently become the subject of a vast body of research. How-
ever, most of the research is in the management literature and tends to focus
on the relationship between brands and consumption, on problems such as
adaptation versus standardization in different cultures, the social aspects of
brands, and brand identity. Indeed, these represent the most pressing issues
initially facing the growing number of ¬rms learning how to compete inter-
nationally. There is less research using a business historical perspective. Mira
Wilkins in 1992 highlighted that problem.5
I also explore the importance of other critical determinants, including
the role of marketing knowledge, alliances in distribution, and, in particular,
different forms of corporate governance in the growth of ¬rms. These factors
tend to be neglected by management literature, which focuses essentially
on explaining the behavior of large capital-intensive and technology-driven
¬rms. This study of the role of brands in the growth of multinationals in
the alcoholic beverages industry is timely for several reasons. First, because
it shows the power of brands in determining such growth, and in shaping
the structure of industries. Second, because my subject is an industry that,
over time, created more homogenous consumption patterns among a large
number of consumers from different parts of the world. And third, because
I can analyze the process by which industries can move from being national
and locally focused to being dominated by a small number of large ¬rms
active globally.6 In addition, the industry offers useful illustrations about

4 C. Napier, “Brand Accounting in the United Kingdom,” in Geoffrey Jones and Nicholas
Morgan (eds.), Adding Value: Brands and Marketing in Food and Drink (London: Routledge,
1994): 76“100; John M. Murphy, “Assessing the Value of Brands,” in John M. Murphy (ed.),
Branding a Key Marketing Tool (London: Macmillan, 1992): 194“97; Peter Doyle, “Building
Successful Brands: The Strategic Options,” Journal of Marketing Management, Vol. 5, No.
11 (1989): 77“95; Mark Casson, “Brands: Economic Ideology and Consumer Society,” in
Jones and Morgan (eds.), Adding Value: 41“58. Note Casson argues that brands may also
accrue rents and distort markets, and that the enormously positive effects of brands re¬‚ect
“economic ideology” rather than empirical analysis.
5 Mira Wilkins, “The Neglected Intangible Asset: The In¬‚uence of the Trademark on the Rise
of the Modern Corporation,” Business History, Vol. 34, No. 1 (1992): 66“99.
6 Ronald Coase in his work on the nature of the ¬rm also recognizes the importance of studying
industries. Ronald H. Coase, “The Nature of the Firm: In¬‚uence?” in Oliver E. Williamson
and Sidney G. Winter (eds.), The Nature of the Firm: Origins, Evolution and Development
(Oxford: Oxford University Press, 1993).
Brands and the Evolution of Multinationals
the longevity of ¬rms and the role of families in the successful development
of brands.
The chapters are thematic rather than providing a comprehensive history
of each ¬rm. The ¬rst theme concerns the general patterns that might explain
growth and independent survival of multinational ¬rms in alcoholic bever-
ages. Edith Penrose is probably one of the best-known researchers to have
written on this topic. Penrose argued that growth was strongly associated
with a number of competitive advantages, among which were branding and
advertising.7 In the context of international business, John Dunning cre-
ated the “eclectic paradigm” to explain international production, but his
model has also been applied to services. Dunning suggests that for ¬rms
to succeed in international markets they need to have ownership advantages
(e.g., brands and superior technology), as well as location and internalization
advantages.8 I present a large amount of evidence to explain which deter-
minants were important for the development of multinationals in alcoholic
Brands are, nonetheless, considered to be the most important determinant
in the growth of ¬rms. Brands explain to a considerable extent the evolution
of industry structures. Business historians such as Mira Wilkins and, more
recently, Nancy Koehn have drawn attention to these issues in the growth of
modern business.9 The role of brands is even more striking when looking at
the number of cases where ¬rms have disappeared but their brands survived,
having multiple ownerships and enjoying eternal lives.
A second theme pursued here is why most of the leading multination-
als of alcoholic beverages are family owned. The Chandlerian model, based

7 Edith Penrose, The Theory of the Growth of the Firm (Oxford: Blackwell, 1959/1995): 254.
8 John H. Dunning, “Trade, Location of Economic Activity and the MNE: A Search for an
Eclectic Approach,” in B. Ohlin, P. O. Hesselborn, and P. M. Wijkman (eds.), The Interna-
tional Allocation of Economic Activity (London: Macmillan, 1977): 395“418.
9 Mira Wilkins, The Emergence of Multinational Enterprise (Cambridge, Mass.: Harvard Uni-
versity Press, 1970); idem, The Maturing of Multinational Enterprise (Cambridge, Mass.:
Harvard University Press, 1974); idem, The History of Foreign Investment in the United
States to 1914 (Cambridge, Mass: Harvard University Press, 1989); idem, The History of
Foreign Investment in the United States 1914“1945 (Cambridge, Mass: Harvard University
Press, 2004); Nancy F. Koehn, Brand New (Boston, Mass.: Harvard Business School Press,
2001); Geoffrey Jones, Renewing Unilever: Transformation and Tradition (Oxford: Oxford
University Press, 2005): chapter 5; idem, Multinationals and Global Capitalism (Oxford:
Oxford University Press, 2005); Roy Church and Christine Clark, “The Origins of Com-
petitive Advantage in the Marketing of Branded Packaged Consumer Goods: Colman™s and
Reckitt™s in Early Victorian Britain,” Journal of Industrial History, Vol. 3, No. 2 (2000):
98“199. For an analysis of brands in the evolution of ¬rms in the context of alcoholic bev-
¸˜ ¸˜
erages, see Teresa da Silva Lopes, Internacionalizacao e Concentracao no Vinho do Porto,
1945“1995 (Porto: GEHVID/ICEP, 1998); Paul Duguid, “Developing the Brand: The Case
of Alcohol, 1800“1880,” Enterprise and Society, Vol. 4, No. 3 (2003): 405“41. See also Paul
Duguid (ed.), “Networks in the Trade of Alcohol,” Business History Review, Vol. 79, No. 3
(2005); “Why Brands Are Good For You,” The Economist (6 Sept. 2001).
4 Global Brands
essentially on the world™s leading high-tech and capital-intensive ¬rms, sug-
gests that widespread ownership predominates and families can hinder the
growth of ¬rms.10 I offer a case study of the evolution of a global industry,
covering different countries and challenging Chandlerian assumptions.
A third theme is concerned with channel management. Transaction cost
economists study the motivations for internalization or, alternatively, the
conditions that allow cooperation to be the better option.11 I offer a dynamic
story about the changing relationship between producers, wholesalers, and
retailers, where competition and cooperation are very common. Again, I
challenge Chandlerian studies on the largest U.S. enterprises that claim that
beverages such as coffee and soft drinks are better distributed through ver-
tically integrated channels.12 In the alcoholic beverages industry, alliances
between direct competitors in distribution appear to have been very signif-
icant in the international expansion strategies of the leading multinational
The fourth theme pursued is the diversi¬cation strategies used by the lead-
ing multinationals in alcoholic beverages in the face of changing environ-
mental circumstances. I look at why these changes took place, what kind of
knowledge the leading multinationals acquired and developed over time that
allowed them to follow distinct strategies and yet achieve similar leadership
positions by the twenty-¬rst century.13
A ¬fth theme, again a Penrosian topic, looks at the growth of ¬rms through
mergers and acquisitions. It focuses, however, on the role of brands and
marketing knowledge in that process. In industries like alcoholic beverages,
brands are distinctive combinations of cultural characteristics and values.
Consequently, they are much more independent of the ¬rms and of the own-
ership of production than in other industries. Even when 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.14
A ¬nal theme pursued is the impact of ¬rms in the life of brands. The alco-
holic beverages industry has provided some of the oldest and best-known
brands in the world. It is not surprising, then, that some of these brands, like
the ¬rms that created them, go far back in time. In some cases brands have
remained under the same family ownership throughout their lives; in others,

10 Alfred D. Chandler Jr., Scale and Scope (Cambridge, Mass: Harvard University Press, 1990).
11 Ronald H. Coase, “The Nature of the Firm: In¬‚uence?” in Oliver E. Williamson and Sidney
G. Winter (eds.), The Nature of the Firm: Origins, Evolution and Development (Oxford:
Oxford University Press, 1993); Oliver E. Williamson, “The Modern Corporation: Origins,
Evolution, Attributes,” Journal of Economic Literature, Vol. 19 (1981): 1537“68.
12 Chandler, Scale and Scope.
13 On the theory of multiproduct ¬rms, see David Teece, “Towards an Economic Theory of
the Multiproduct Firm,” Journal of Economic Behaviour and Organization, Vol. 3 (1982):
14 Penrose, The Theory: 254.
Brands and the Evolution of Multinationals
they outlived the entrepreneurs and ¬rms that created them, having multiple
ownerships during their lives. Even though these changes in ownership are
often more apparent than real, with licensing deals or alliances transferring
effective control to another institution while ownership stays with the orig-
inal ¬rm, different owners seem to develop brands in different ways. This
chapter looks at the evolution of global brands, the distinct roles played by
the entrepreneurs and managers who created and developed those brands.

A brand is de¬ned as a legally defensible proprietary name, recognized by
some categories of consumers as signifying a product with dimensions that
differentiate it in some way from other products designed to satisfy the same
need. A common characteristic of global brands is that even if their sales orig-
inate from a small number of markets, they are available in many markets.15
Brands may add value to the consumer in multiple ways. They may pro-
mote not only the tangible characteristics of a product, but also intangible
characteristics, which can either be functional and objective (such as qual-
ity, value for money, and consistency) or abstract and emotional (re¬‚ecting
psychological and social values such as prestige associated with products
from a certain region or country and heritage).16 They may convey informa-
tion and help simplify decision making for the consumer by giving a sense
of security and consistency, and supporting his “fantasies.”17 Furthermore,
brands are an important way for ¬rms to communicate with consumers and
cultivate their loyalty. They also add value to the ¬rm by sustaining a con-
tinuing revenue stream because of the consumer propensity for long-term
brand loyalty.18

15 For alternative de¬nitions of brands, see Kevin Lane Keller, Strategic Brand Management
(London: Prentice Hall, 1998): 4; Leslie de Chernatony and Malcom McDonald, Creating
Powerful Brands (Oxford: Butterworth-Heinemann, 1998); Leslie de Chernatony and G.
McWilliam, “The Varying Nature of Brands as Assets,” International Journal of Advertis-
ing, Vol. 8 (1989): 339“49; idem, “Brand Consultants™ Perspectives and the Concept of the
Brand,” Marketing and Research Today, Vol. 25, No. 1 (1997): 45“52; G. Michel and Tim
Ambler, “Establishing Brand Essence Across Borders,” The Journal of Brand Management,
Vol. 6, No. 5 (1999): 333“45; Kevin Lane Keller, “The Brand Report Card,” Harvard Busi-
ness Review (Jan.“Feb., 2000): 147“57; Susannah Hart and John Murphy, Brands: The New
Wealth Creators (London: Macmillan, 1998).
16 Leslie de Chernatony, Brand Management (Aldershot: Ashgate, 1998); Leslie Chernatony
and Francesca Dall™Olmo Riley, “De¬ning a Brand: Beyond the Literature with Experts™
Interpretations,” Journal of Marketing Management, Vol. 14, No. 5 (1998): 417“43; Steven
King, Developing New Brands (Bath: Wiley, 1973).
17 David A. Aaker, Building Strong Brands (New York: Free Press, 1996); Peter Doyle, “Building
Successful Brands: The Strategic Options,” Journal of Marketing Management, Vol. 5, No.
11 (1989): 78.
18 P. Barwise and T. Robertson, “Brand Portfolios,” European Management Journal, Vol. 10,
No. 3 (1992): 277“85.
6 Global Brands
Several studies have proposed models to analyze the nature of brands,
although authors differ in the amount of emphasis they give to the tangible
and intangible elements of brands and also to their other aspects.19 This
book focuses on the intangible elements of brands and the value they add to
¬rms. Such intangible elements include the uniqueness of the brand and its
“personality,” built over time, embedded in a particular culture or associ-
ated with a particular set of values (such as heritage or country image), and
with an economic value associated with the investments made to build its
The “personality” of brands in alcoholic beverages is associated with the
characteristics of the industry where products tend to have long life-cycles,
and brands acquire associations with tradition, heritage, and country of ori-
gin.21 While country of origin is particularly important in wines and spirits
(being sometimes perceived as even more than with conventional brands),22
the ability of the brand to indicate age and tradition is also relevant. Con-
sequently, it is not surprising to see some remarkably old brands in this
In many cases the personality of brands and their longevity also re¬‚ect the
signi¬cance of having been ¬rst movers in a particular market. In such cases
brands may set the standard against which subsequent entrants in that mar-
ket are judged and may simultaneously raise the cost of entry for new brands
and ¬rms.23 To be able to sustain the value added by its brands in the face of
competition, however, 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 ¬rst movers must invest in marketing to ensure that
consumers do not perceive rival brands as acceptable substitutes.24
In wines, a different type of branding has been developing in recent years.
While old world wines have, to a signi¬cant degree, been branded by region,

19 For a review of the existing models, see Leslie de Chernatony and Francesca Dall™Olmo Riley,
“Modelling the Components of the Brand,” European Journal of Marketing, Vol. 32, No.
11/12 (1998): 1077“90.
20 V. N. Balasubramanyam and M. A. Salisu, “Brands and the Alcoholic Drinks Industry,” in
Jones and Morgan (eds.), Adding Value; Birger Wernerfelt, “A Resource-based View of the
Firm,” Strategic Management Journal, Vol. 5 (1984): 171“80.
21 John Kay, Foundations of Corporate Success (Oxford: Oxford University Press, 1993): 299;
P. Feldwick, “De¬ning a Brand,” in D. Cowley (ed.), Understanding Brands (London: Kogan
Page, 1991): 19; W. J. Bilkey and E. Nes, “Country-of-Origin Effects on Product Evalua-
tions,” Journal of International Business Studies, Vol. 13, No. 1 (1982): 89“99.
22 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
(1992): 23“37; C. K. Kim and J. Y. Chung, “Brand Popularity, Country Image and Market
Share: An Empirical Study,” Journal of International Business Studies, Vol. 28, No. 2 (1997):
23 R. Schmalensee, “Product Differentiation Advantages of Pioneering Brands,” The American
Economic Review, Vol. 72, No. 3 (1982): 360.
24 Trevor Watkins, The Economics of the Brand (Whitstable: McGraw-Hill, 1986): 3.
Brands and the Evolution of Multinationals
de novo wines are branded by individual ¬rms. The former are subject to
problems of free riding by low-quality producers who can damage the status
of the region as a whole. The latter, by contrast, have more control over
the perception of their brand. New branded wines tend to be produced in
“new world” countries such as the United States, Chile, Argentina, Australia,
and New Zealand. The brands emphasize the grape variety above the region
or the date, giving the consumer an alternative (and easier) way of sort-
ing through the wide variety of brands from the old world wines where
terroir and date are highly important, but highly variable. Private brands
are thus the most important part of the strategy used in the marketing of
new world wines. These branded wines offer an accessible starting point
for new drinkers, providing some sort of guarantee that they will get what
they are paying for from one outlet and from one year to the next. For
the companies they offer the prospect of creating consumer loyalty and
hence higher sales volumes, pro¬t margins, and lower risks from asset

Marketing Knowledge and Entrepreneurship
Marketing knowledge is considered here to comprise the “intelligence” and
the skills that are deployed in the management of ¬rms™ activities. This de¬-
nition draws on evolutionary and neo-Schumpeterian concepts of the role of
the entrepreneur.25 I draw on Penrose™s concept of knowledge, which con-
siders the ¬rm to be an evolving collection of resources: the optimal growth
of the ¬rm involves a balance between exploitation of existing resources and
development of new ones. Following this view, Kogut and Zander contend
that the multinational corporation arises out of superior ef¬ciency as an
organizational vehicle by which ¬rms transfer knowledge across borders.26
According to these authors, ¬rms grow on the basis of their ability to cre-
ate new knowledge and to replicate this knowledge so as to expand their
markets. Their advantage lies in being able to understand and carry out this
transfer more effectively than other ¬rms. Entrepreneurs discussed in this
book coordinate scarce resources in new ways and thus disturb the mar-
kets, technologies, and organizational methods. They have the capacity to

25 Richard R. Nelson and Signey G. Winter, An Evolutionary Theory of Economic Change
(Cambridge, Mass: Harvard University Press, 1982).
26 Penrose, The Theory; Bruce Kogut and Udo Zander, “Knowledge of the Firm and the Evolu-
tionary Theory of the Multinational Corporation,” Journal of International Business Studies,
24 (1993): 625“45. For an early recognition of Edith Penrose™s work in Business History, see
Louis Galambos, “Business History and the Theory of the Growth of the Firm,” Explorations
in Entrepreneurial History, Vol. 4, No. 1 (1966): 3“14; William Lazonick, “Understanding
Innovative Enterprise “ Toward the Integration of Economic Theory and Business History,”
in Franco Amatori and Geoffrey Jones (eds.), Business History Around the World (Cam-
bridge: Cambridge University Press, 2003).
8 Global Brands
innovate, turning opportunities into new products and services, and are not
concerned with the risk of incurring major sunk costs.27
Taking into account the above de¬nitions of marketing knowledge and
entrepreneur, I argue here that ¬rms have two types of marketing knowledge.
One type is “sticky” to the ¬rm, and is path-dependent (being accumulated
within the ¬rm over time).28 This type of knowledge involves the routines
and procedures within the ¬rm designed to harmonize decision taking and
to carry out organizational action.29 It can only be learned through per-
sonal experience, in the long term. It is embedded in the ¬rm™s routines and
structure, and is comparable to Penrose™s and Polanyi™s de¬nition of implied
knowledge, that is, “tacit” and acquired through operating in the market.30
The other type of knowledge is “smooth,” and is of broader application as
it can be applied to the management of different brands and ¬rms in distinct
industries. It can be accessed by the ¬rm in the short run, either directly
through acquisitions, alliances, and the hiring of consultants or through
the appointment of managers with professional experience, training, and
marketing skills. These managers focus on enhancing the pro¬tability of the
¬rm by, for example, rejuvenating brands, turning local brands into global
brands, and forming alliances in distribution. Indirectly, published studies
and academic courses, especially in more recent times, may also provide
some of this knowledge about speci¬c countries and the industry.31 Smooth
knowledge is comparable to Penrose™s concept of “objective” knowledge.

27 J. A. Schumpeter, Capitalism, Socialism and Democracy (London: Unwin University
Books, 1943); Mark Casson, The Entrepreneur (Oxford: Martin Robertson, 1982); idem,
“Entrepreneurship and the Dynamics of Foreign Direct Investment,” in P. J. Buckley and M.
Casson, The Economic Theory of the Multinational Enterprise (London: Macmillan, 1985).
28 The point of departure for the analysis of stickiness of technical knowledge is Kenneth
J. Arrow, “Classi¬cation Notes on the Production and Transmission of Technical Knowl-
edge,” American Economic Review, No. 52 (1969): 29“35. John Seely Brown and Paul
Duguid, “Knowledge and Organization: A Social-Practice Perspective,” Organization Sci-
ence, Vol. 12, No. 2 (2001): 198“213, explore the issue of sticky and smooth or “leaky”
knowledge both within and between ¬rms.
29 Richard R. Nelson and Sidney G. Winter, An Evolutionary Theory of Economic Change
(Cambridge, Mass: Harvard University Press, 1982): 4, 14; Sydney G. Winter, “On Coase,
Competence and Corporation,” in Oliver E. Williamson, Sidney G. Winter (eds.), The Nature
of the Firm: Origins, Evolution and Development (Oxford: Oxford University Press, 1991):
10, 30, 187; Jos C. N. Raadschelders, “Evolution, Institutional Analysis and Path Depen-
dency: An Administrative-History Perspective on Fashionable Approaches and Concepts,”
International Review of Administrative Sciences, Vol. 64 (1998): 565“82; Kent Eriksson,
Anders Majkgard, and D. Deo Sharma, “Path Dependence and Knowledge Development in
the Internationalisation Process,” Management International Review, Vol. 40, No. 4 (2000):
30 Penrose, The Theory; Michael Polanyi, The Tacit Dimension (London: Routledge, 1966).
31 About international marketing knowledge, see also S. Tamer Cavusgil, “Perspectives: Knowl-
edge Development in International Marketing,” Journal of International Marketing, Vol. 6,
No. 2 (1998): 103“12.
Brands and the Evolution of Multinationals
Marketing knowledge may either have the characteristics of a public good,
such as knowledge about the preferred type of distribution channels to serve
a particular market (alliances, wholly owned channels, or simply exports),
or of an intangible and legally protected asset, such as the capacity to create
and manage successful brands. This concept is used throughout the book to
explain, for instance, why some ¬rms are able to merge and acquire other
¬rms and other brands, and also why some ¬rms have the capacity to create
and manage successful portfolios of global brands.
The processes by which ¬rms create and acquire sticky and smooth mar-
keting knowledge are not mutually exclusive. On the contrary, by acquiring
smooth marketing knowledge, ¬rms are at the same time acquiring sticky
marketing knowledge. However, while smooth marketing knowledge may
be suf¬cient to enable ¬rms to grow and survive in domestic or geograph-
ically limited and other benign environments, they need to have acquired
high levels of sticky marketing knowledge to become leading multinationals
and still grow and survive in adverse environments.

Ownership and Corporate Control
Discussion of the separation of ownership and control of ¬rms started early
in the twentieth century with the work of Berle and Means (1932).32 How-
ever, comparative analysis of national systems of corporate governance did
not gain signi¬cance until the 1970s and 1980s, when studies focused on the
largest ¬rms in the industrialized countries and used the nation-state as the
central reference for making comparative analysis on the evolution of their
systems of corporate governance.33 National systems of corporate gover-
nance, in a broad way, include the particular arrangements of hierarchy and
market relations that have become institutionalized and relatively successful
in particular national contexts. Systems that developed within a particular
country re¬‚ect not only the formal relations both within ¬rms and between
¬rms and the market, but also the distinctive culture, law, and polity of the

32 Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (New
York: Harcourt Brace & World, 1932).
33 Alfred D. Chandler Jr., The Visible Hand (Cambridge, Mass: Harvard University Press,
1977); idem, Scale and Scope; William Lazonick, Business Organization and the Myth
of the Market Economy (Cambridge, Mass: Harvard University Press, 1991); Geoffrey
Jones, British Multinational Banking 1830“1990 (Oxford: Clarendon, 1993); John Scott
and Catherine Griff, Directors of Industry: The British Corporate Network 1904“76 (Cam-
bridge: Polity, 1984).
34 Richard Whitley (ed.), European Business Systems: Firms and Markets in Their National
Contexts (London: Sage, 1992): 6; Richard Whitley, Business Systems in East Asia: Firms,
Markets and Societies (London: Sage, 1992); idem, “Eastern Asian Enterprise Structures
and the Comparative Analysis of Forms of Business Organization,” Organization Studies,
10 Global Brands
In Scale and Scope, Chandler looked at the business history of the United
States, the United Kingdom, and Germany, setting out an interpretation of
the dynamics of industrial capitalism. On the basis of the evolution of the
predominantly technology-based leading ¬rms in each country, Chandler dis-
tinguished some key characteristics of capitalism, such as the extent to which
leading ¬rms established large managerial bureaucracies to coordinate a wide
variety of activities and transactions, and the separation of owners from
managers. Chandler created two categories for comparing corporate control,
which refer to the mechanisms of decision taking by ¬rms between countries.
He believed that corporate control can be “personal” or “managerial.”35 It
is “personal” when the ¬rm is owner controlled. Chandler emphasized the
importance of ¬rms managed by their founders or by members of the found-
ing families. In the absence of a precise de¬nition of “family ¬rms,”36 this
book includes not only ¬rms owned, controlled, and managed by families,
but also ¬rms owned by families who run the corporate board, but which
are managed entirely by professional managers.37 In general, such ¬rms lack
extensive management hierarchies, but there are exceptions as some “man-
agerial” ¬rms, such as General Electric under Jack Welch, undoubtedly re¬‚ect
the personality of powerful managers.38
In “managerial” enterprises, decisions about current production and dis-
tribution and those involving investments in facilities and personnel for
future production and distribution are made by a hierarchy of lower-,
middle-, and top-level managers governed by a board of directors. There-
fore, there is a separation of stock ownership from operating and investment
decisions. The United States is characterized by competitive managerial capi-
talism, the United Kingdom by personal managerial capitalism, and Germany
by cooperative managerial capitalism, which combines aspects of US man-
agerial capitalism with concentrated ownership and inter¬rm cooperation.

Vol. 11, No. 1 (1990): 47“54; Mark S. Granovetter, “Economic Action and Social Structure:
The Problem of Embeddedness,” American Journal of Sociology, Vol. 91, No. 3 (1985):
481“510; R. Levine, “Financial Development and Economic Growth: Views and Agenda,”
Journal of Economic Literature, No. 35 (1997): 688“726.
35 Alfred D. Chandler Jr., “The Emergence of Managerial Capitalism,” Business History
Review, Vol. 58, (1984): 473“503.
36 Roy Church, “Family Firm and Managerial Capitalism: The Case of the International Motor
Industry,” Business History, Vol. 28, No. 2 (1986): 165“6; idem, “The Family Firm in Indus-
trial Capitalism: International Perspectives on Hypothesis and History,” Business History,
Vol. 35, No. 4 (1993): 18.
37 Mary B. Rose, “Family Firm Community and Business Culture: A Comparative Perspective
on the British and American Cotton Industries,” in Andrew Godley and Oliver Westall (eds.),
Business and Culture (Manchester: Manchester University Press, 1996); Andrea Colli and
Mary B. Rose, “The Culture and Evolution of Family Firms in Britain and Italy,” Scandi-
navian Economic History Review, Vol. 47, No. 1 (1999): 24“47; Alfred D. Chandler, “The
Enduring Logic of Industrial ˜Success,” Harvard Business Review (March“April, 1990): 132.
38 More recently, literature has pointed out that communications technology has tended to
“¬‚atten” ¬rms, reducing the amount of hierarchy. The examples commonly cited (Federal
Express and Wal-Mart) are clearly not particularly personal in their control.
Brands and the Evolution of Multinationals
Other authors emphasize the importance of different factors for making
a comparative analysis of national systems of corporate governance. For
example, Jenkinson and Mayer focus on types of ownership. They classify
national business systems as “outsider” and “insider.”39 “Outsider” systems
disperse ownership among a large number of individual and institutional
investors. Shareholders do not intervene in decision making, which is done
by professional managers. In “insider” systems, by contrast, shares are con-
centrated in the hands of a small number of other ¬rms, ¬nancial institutions
and families, even when they are publicly quoted. These owners may partic-
ipate more directly in management decisions. Cross-shareholding between
¬rms is also commonplace in this case.
Jenkinson and Mayer also give considerable importance to external factors
such as the political and regulatory environment of countries (e.g., share-
holder protection, and development of capital markets). In the beginning of
the twenty-¬rst century, countries such as the United Kingdom, the United
States, and Canada were considered generally to use “outsider” business sys-
tems.40 Continental European countries and Japan tend to have “insider”
business systems. Nonetheless, elements of convergence were discernible
between the two.41
Both the Chandlerian perspectives and those of Jenkinson and Mayer
assume cultural and economic determinism and believe that dominant indus-
tries establish the “rules of the game” for all other players in the same coun-
try. Therefore, they suggest a strong correlation between the country of origin
and the ownership structures or management control systems of ¬rms. For
example, if ¬rms are based in the United States, they are expected to have
“managerial” corporate control according to Chandler, and to be based
on “outsider” systems of corporate governance according to Jenkinson and
Mayer. Conversely, if ¬rms are based in countries like France, then corpo-
rate control is expected to be “personal,” and ownership to be “insider”
based. However, these national systems do not necessarily preclude ¬rms
in particular global industries from developing distinctive industry-speci¬c
capabilities and competitive norms.42 This is particularly true in pluralist
societies, which have a great variety of institutions and a weak cohesion
within national boundaries. Indeed, in industries such as alcoholic beverages,

39 Tim Jenkinson and Colin Mayer, “The Assessment: Corporate Governance and Corporate
Control,” Oxford Review of Economic Policy, Vol. 8, No. 3 (1992): 1“10.
40 P. W. Moreland, “Alternative Disciplinary Mechanisms in Different Corporate Systems,”
Journal of Economic Behaviour and Organization, Vol. 26 (1995): 19.
41 Geoffrey Jones, “Corporate Governance and British Industry,” Entreprises et Histoire, No.
21 (1999): 29“43.
42 Alfred D. Chandler, Franco Amatori, and Takashi Hikino (eds.), Big Business and the Wealth
of Nations (Cambridge: Cambridge University Press, 1997); Keijo Rasanen and Richard
Whipp, “National Business Recipes: A Sector Perspective,” and Richard Whitley, “Business
Systems, Industrial Sectors and Strategic Choices,” both in Whitley (ed.), European Business
12 Global Brands
cosmetics, or consulting, the national systems perspectives are not suf¬cient
to explain the evolution of their ownership and control.
By bringing ownership and corporate control perspectives together, it is
possible to ¬nd a wider range of combinations of ownership and control
of ¬rms. Apart from technological innovation, other determinants such as
brands and marketing knowledge may also have an important impact in the
control and ownership structures of multinational ¬rms.

There is extensive literature on the growing importance of alliances as
alternatives to markets and hierarchies in the evolution of ¬rms that have
become global.43 It shows that a number of these alliances have been formed
between ¬rms with similar capabilities and size, aiming to increase ef¬cien-
cies in various activities such as the procurement of raw materials, research
and development, or production. Other alliances are formed between ¬rms
of different size with complementary activities, such as production and
Alliances are de¬ned as collaborative agreements between two or more
¬rms involving the exchange of knowledge (technological, marketing, or
information about the markets and the customers) and the commitment
of resources and capabilities. They include a wide spectrum of modes of
organizing the economic activities that lie between single market trans-
actions (involving a buyer and a seller) and hierarchies (wholly owned
operations).45 They can take the form of long-term contractual distribu-
tion agreements, joint ventures, minority equity stakes, or licensing agree-
ments and may involve only production or distribution, or a combination of
the two.

43 See Mark Casson, Alternatives to the Multinational Enterprise (London: Macmillan, 1979);
idem, “Contractual Arrangements for Technology Transfer: New Evidence from Business
History,” Business History, Vol. 28, No. 4 (1986): 5“35; Geoffrey Jones (ed.), Coalitions
and Collaboration in International Business (Aldershot: Elgar, 1993); John H. Dunning,
International Production and Multinational Enterprise (London: Allen & Unwin, 1981);
idem, Alliance Capitalism and Global Business (London: Routledge, 1997); J. Farok and
Peter Lorange (eds.), Cooperative Strategies in International Business (Toronto: Lexington
Books, 1988); James C. Anderson and James A. Narus, “A Model of Distributor Firm
and Manufacturer Firm Working Partnerships,” Journal of Marketing, 54 (1990): 42“58;
Williamson, “The Modern Corporation.”
44 George B. Richardson, “The Organization of Industry,” Economic Journal, Vol. 82, No. 327
(1972): 883“96.
45 Ronald H. Coase, “The Nature of the Firm,” Economica, NS. 4 (1937): 386“405; Oliver E.
Williamson, Markets and Hierarchies (New York: Free Press, 1975); idem, The Economic
Institutions of Capitalism (New York: Free Press, 1985); Stephen H. Hymer, “The Large
Multinational Corporation: An Analysis of Some Motives for the International Integration
of Business,” Revue Economique, Vol. 19, No. 6 (1968): 949“73; Peter J. Buckley and Mark
Casson, The Future of the Multinational Enterprise (London: Macmillan, 1976).
Brands and the Evolution of Multinationals
This book is a work of international business history, informed throughout
by the application of economic theory, in particular the theory of interna-
tional business.46 Focusing on the study of the development of global brands,
and the growth of business over time and across borders, the book deals
with complex changes in the environment and compares the international
evolution of large multinational ¬rms, using empirical research on each one
individually. My analysis draws on concepts from the economic theories of
international business.
Most frequently, the comparative analysis of institutions and of the envi-
ronment leads to new generalizations about international business.47 But
sometimes the use of preestablished conceptual frameworks from economic
theory can be useful in developing new generalizations,48 as are general
propositions developed by business historians like Alfred Chandler. His
ideas about the growth of large ¬rms from different sectors in industrial-
ized countries are extremely useful.49 And yet, his discussion focuses pri-
marily on manufacturing and other technology-based industries. That is
the case even in his discussion on branded and packaged consumer goods
in Scale and Scope. This book, by contrast, focuses on branded consumer
goods in an industry where developments in manufacturing and technol-
ogy have not had a signi¬cant impact, and challenges the applicability of
some of Chandler™s generalizations to such industries. Here it is argued that
rather than technological innovation it is brands, marketing knowledge, and

46 For a discussion of this topic and the scope of business history see Mira Wilkins, “Business
History as a Discipline,” Business and Economic History, Vol. 17 (1988): 1“7; Geoffrey
Jones, “Business History: Theory and Concepts,” The University of Reading: Discussion
Papers in Economics, No. 295 (1994); idem, “Company History and Business History in
the 1990s,” in Wilfried Feldenkirchen and Terry Gourvish (eds.), European Yearbook of
Business History, 2 (Aldershot: Ashgate 1999); Geoffrey Jones and Tarun Khanna, “Bring-
ing History (Back) Into International Business,” Journal of International Business Studies,
Vol. 37 (2006): 453“68; S. R. H. Jones, “Transaction Costs and the Theory of the Firm:
The Scope and Limitations of the New Institutional Approach,” Business History, Vol. 39,
No. 4 (1997): 9“25.
47 See for instance Alfred D. Chandler Jr., “Comparative Business History,” in D. C. Coleman
and Peter Mathias, Enterprise and History: Essays in Honour of Charles Wilson (Cambridge:
Cambridge University Press, 1984).
48 About theory and business history see also Alan Roberts, “The Very Idea of Theory in Busi-
ness History,” The University of Reading: Discussion Papers in Accounting and Finance,
Vol. 54 (1998); Terry Gourvish, “Business History: in Defense of the Empirical Approach?”
Accounting Business and Financial History, Vol. 5, No. 1 (1995): 3“16; T. A. B. Corley,
“Firms and Markets: Towards a Theory of Business History,” Business and Economic His-
tory, Vol. 22, No. 1 (1993): 54“66.
49 On the in¬‚uence of Alfred Chandler in Business History in general see Louis Galambos,
“Identity and the Boundaries of Business History “ An Essay on Consensus and Creativity,”
in Amatori and Jones (eds.), Business History Around the World.
14 Global Brands
distribution channels that are the main determinants in the growth and sur-
vival of ¬rms.50
Nevertheless, some Chandlerian concepts are of particular relevance to
this book. These include the concept of “¬rst-mover advantages,” which
helps account for the capacity of original ¬rms in an industry to retain their
position as industry leaders if they continue to invest in their organizational
capabilities; the concept of “economies of scale and scope,” which helps
explain how ¬rms come to dominate industries; and the concepts of “per-
sonal capitalism” and “managerial hierarchies” to describe the predominant
governance structures of ¬rms in different countries.51 The major distinction
between this book and other studies that have also drawn on Chandler™s
work arises from the kind of industry being analyzed “ alcoholic beverages “
and the scope of activity of the ¬rms “ essentially multinationals, originally
from multiple countries spread over many continents.
Geoffrey Jones™s extensive research on the history of multinationals from
various industries is another major in¬‚uence on the approach followed in
this book. Jones™s work follows that of Mira Wilkins, who began the histor-
ical research on why ¬rms cross borders. Their work is distinct from that
of economics as they show the diversity of institutional forms used by ¬rms
crossing borders, strong national variations in strategies and propensities to
invest, multinational investment in industries other than high-tech manufac-
turing (such as banking and trading companies), and signi¬cant discontinu-
ities. Jones also analyzes the role of brands in consumer goods industries.52
But it is not only the focus on multinational activity that makes Jones™s work
so relevant for this book. The methods he uses and the issues that he raises
are also very in¬‚uential.
Jones™s work systematically combines empirical international business his-
tory and economic theory, looking at a wide array of subjects that have not
received much attention in the ¬eld of international business history. Of par-
ticular relevance to this book is his edited book Adding Value: Brands and
Marketing in Food and Drink, wherein he looks at the growth of ¬rms in
food and drinks. Like Chandler, Jones emphasizes the importance of making

50 For a discussion of the impact of Chandler™s work on the development of business history,
see, e.g., Richard R. John, “Elaborations, Revisions, Dissents: Alfred D. Chandler, Jr™s, ˜The
Visible Hand™ after Twenty Years,” Business History Review, 71 (1997): 151“200; Maury
Klein, “Coming Full Circle: The Study of Big Business Since 1950,” Enterprise and Society,
Vol. 2, No. 3 (2001): 425“60; Chandler, Scale and Scope.
51 Alfred D. Chandler, Strategy and Structure (Cambridge, Mass: The MIT Press, 1962); idem,
The Visible Hand; idem, Scale and Scope.
52 Mira Wilkins and Frank E. Hill, American Business Abroad: Ford on Six Continents (Detroit:
Wayne State University Press, 1964); Geoffrey Jones, Renewing Unilever: Transformation
and Tradition (Oxford: Oxford University Press, 2005); idem, British Multinational Banking;
Geoffrey Jones et al., “L™Or´ al and the Globalization of American Beauty,” Harvard Business
School Case No. 805-086 (Boston, 2005).
Brands and the Evolution of Multinationals
comparative analysis between ¬rms, rather than looking at single ¬rms, as a
way to create generalizations.53
In his Multinationals and Global Capitalism, Jones looks at the interna-
tional growth of whole sets of ¬rms in such industries as banking and trading.
He focuses on industries and ¬rms other than “high-tech manufacturing,”
stressing the importance of “soft” things like knowledge and information. In
his other writings, Jones also examines the importance of alternative orga-
nizational forms, including networks or partnerships of merchant houses,
rather than just large “Chandlerian” corporations.54
Casson™s and Dunning™s in¬‚uence on this book goes much beyond the
usual application of their theories on the economics of international busi-
ness and the explanation of the frequent changes in the boundaries of ¬rms.55
Casson™s “systems view” of international business, “internalization theory,”
and the “theory of the entrepreneur” provide a particularly rich theoret-
ical background for understanding the evolution of multinationals in the
alcoholic beverages industry.56 By relaxing some of the assumptions of neo-
classical economics, his theories are able to encompass the extent to which
multinationals are integrated in the global economy and are linked by a

53 Jones and Morgan, Adding Value; Geoffrey Jones, Merchants to Multinationals (Oxford:
Oxford University Press, 2000); Richard S. Tedlow and Geoffrey Jones (eds.), The Rise &
Fall of Mass Marketing (London: Routledge, 1993); Geoffrey Jones (ed.), “The Making of the
Global Enterprise,” Special Issue: Business History, Vol. 36, No. 1 (1994); Charles Harvey
and Geoffrey Jones (eds.), “Organizational Capability and Competitive Advantage,” Special
Issue: Business History, Vol. 34, No. 1 (1992); Geoffrey Jones and Harm G. Schroter (eds.),
The Rise of Multinationals in Continental Europe (Aldershot: Elgar, 1993); Geoffrey Jones
and Mary B. Rose (eds.), “Family Capitalism,” Special Issue: Business History, Vol. 35,
No. 4 (1993).
54 Geoffrey Jones, Multinationals and Global Capitalism (Oxford: Oxford University Press,
2005); idem, Merchants to Multinationals.
55 Much of the theoretical discussion draws on Mark Casson and John H. Dunning, whose
economic methods and concepts of international business help resolve and generalize
different issues about the growth of multinationals being analyzed. See, e.g., Casson,
The Entrepreneur; idem, Economics of International Business (Cheltenham: Elgar, 2000);
Buckley and Casson, The Future of the Multinational Enterprise; Dunning, “Trade, Location
of Economic Activity and the MNE”; idem, Explaining International Production (London:
Unwin Hyman, 1988); idem, “The Eclectic Paradigm of International Production: A Restate-
ment and Some Possible Extensions,” Journal of International Business Studies, Vol. 19,
No. 1 (1988): 1“31; idem, Multinational Enterprises.
56 About the applicability of John Dunning™s and Mark Casson™s work to international business
and business history see, e.g., the special issue of International Journal of the Economics of
Business, Vol. 8, No. 2 (2001). About Mark Casson and Peter Buckley™s work, see the
special issue of Journal of International Business Studies, Vol. 34, No. 2 (2003); Gordon
Boyce, Information, Mediation and Institutional Development (Manchester: Manchester
University Press, 1995), draws extensively on Casson™s concepts. A good illustration of an
application of Dunning™s Eclectic Paradigm in business history is James Bamberg, “OLI and
OIL: BP in the US in Theory and Practice, 1968“98,” in Geoffrey Jones and Lina Galvez- ´
Munoz (eds.), Foreign Multinationals in the United States (London: Routledge, 2002).
16 Global Brands
complex web of product and information ¬‚ows. Some of the questions he
raises deal with the reasons that lead multinationals to internalize activ-
ities in the value-added chain and across borders, the costs and bene¬ts
of internalization, and the process of recon¬guration of the boundaries of
¬rms driven by entrepreneurs in pursuit of greater ef¬ciency.57 Casson™s
analysis takes into consideration ¬rm-speci¬c advantages and can be used
as a way to systematize the predominant characteristics of multinational
Casson™s work is primarily theoretical. As with all theoretical work, its
value must ultimately be proved in terms of its ability to deal with real-world
cases. This book brings such real-world examples into Casson™s models. In
the process, I conclude that an information-based model helps deal with
issues raised by the marketing knowledge developed, held, and exploited by
¬rms in their branding and distribution strategies.
Dunning™s in¬‚uence can be seen in the kind of questions this book aims to
answer, sometimes without citing Dunning. The Eclectic Paradigm is used
throughout as it provides an understanding of multinational growth and
survival and also of the changes in boundaries of ¬rms over time. Dunning™s
work also in¬‚uenced the levels of institutional analysis here and my take on
the dynamic interplay between countries and industries over time.58

57 See, e.g., Mark Casson and Mary Rose (eds.), “Institutions and the Evolution of Modern
Business,” Special Issue: Business History, Vol. 39, No. 4 (1997); Mark Casson and Howard
Cox, “International Business Networks: Theory and History,” Business and Economic His-
tory, Vol. 22, No. 1 (1993): 42“53; Mark Casson, “General Theories of the Multinational
Enterprise: Their Relevance to Business History,” in Peter Hertner and Geoffrey Jones (eds.),
Multinationals: Theory and History (Hants: Gower, 1986); idem, “Institutional Economics
and Business History: A Way Forward?” The University of Reading: Discussion Papers in
Economics and Management, No. 362 (1997/98); idem, “The Nature of the Firm Reconsid-
ered: Information Synthesis and Entrepreneurial Organization,” Management International
Review, Vol. 36, No. 1 (1996): 55“94; idem, “Internalisation Theory and Beyond,” in Peter
J. Buckley (ed.), Recent Research on the Multinational Enterprise (Aldershot: Elgar, 1991):
4“27; idem, Economics of International Business; idem, The Entrepreneur; idem, Enterprise
and Competitiveness: A Systems View of International Business (Oxford: Clarendon, 1990);
Peter J. Buckley and Mark C. Casson, “Analyzing Foreign Market Entry Strategies: Extend-
ing the Internalization Approach,” Journal of International Business Studies, Vol. 29, No. 3
(1998): 539“62.
58 John H. Dunning is the pioneer in the development of international business, having pro-
duced the ¬rst post“World War II academic monograph on international business “ Ameri-
can Investment in British Manufacturing Industry. In his subsequent publications over four
decades, he has unrivalled mastery of empirical evidence in all ¬elds of international busi-
ness. His concern for the origins and evolution of multinationals, the countries of origin of
multinationals, the making of the global enterprise, and the practical methodology he created
with his Eclectic Paradigm, based on these and other questions, form an ideal framework
for carrying out large-scale research in international business. John H. Dunning, American
Investment in British Manufacturing Industry (London: Allen & Unwin, 1958).
Brands and the Evolution of Multinationals
The ¬rm is the basis of the Eclectic Paradigm (also known as the OLI
paradigm: Ownership“Location“Internalization). Dunning argues that to
engage in foreign direct investment the ¬rm must possess ownership
advantages (O). This is a necessary condition for sustained pro¬tability and
growth, and in this book it provides the initial framework for analyzing the
growth of multinationals. The country level is incorporated in the location
advantages (L) of alternative regions, for undertaking the value-adding activ-
ities of multinationals. Dunning uses the term location (L) not only to refer to
the country or region of destination but also to the country or region of ori-
gin. The internalization advantages (I) again relate to the ¬rm and refer to the
alternative ways in which ¬rms may organize the creation and exploitation
of their core competencies by exploiting locational attractions of different
countries and regions. The Eclectic Paradigm further includes a contextual
variable that provides the precise con¬guration of the OLI parameters facing
a particular ¬rm. This takes into consideration not only the country or region
of origin of the investing ¬rms, and the country or region in which they are
seeking to invest, but also the industry and the nature of the value-adding
activities in which the ¬rms are engaged.59
Like Dunning, I am attempting to assess the pattern of evolution of some
of the world™s largest multinationals.60 Dunning tends to focus on nations
rather than on the unique characteristics of industries or ¬rms.61 This book,
by looking at one particular industry, takes into consideration three levels of
analysis: the uniqueness of ¬rms; the special characteristics of an industry;
and the role of the nations in which those ¬rms and the industry are based.

59 John H. Dunning, “Towards an Eclectic Theory of International Production: Some Empir-
ical Tests,” Journal of International Business Studies, Vol. 11, No. 1 (1980): 9“31; idem,
“Location and the Multinational Enterprise: A Neglected Factor,” Journal of International
Business Studies, Vol. 29, No. 1 (1998): 45“66; idem, “Globalization and the Theory of
the MNE Activity,” in N. Hood and S. Young (eds.), The Globalization of Multinational
Enterprise Activity (London: Macmillan, 1999); idem, “The Eclectic Paradigm as an Enve-
lope for Economic and Business Theories of the MNE Activity,” The University of Reading:
Discussion Papers in International Investment and Management, No. 263 (1998/1999).
60 While it has its own particular value, inevitably the database created for the purpose of
this study is not as extensive as Dunning™s. See, e.g., Dunning and Pearce, The World™s
Largest Industrial Enterprises; John M. Stopford and John H. Dunning, Multinationals:
Company Performance and Global Trends (London: Macmillan, 1983); John H. Dunning,
International Production and the Multinational Enterprise (London: Allen & Unwin, 1981).
61 Duguid and Lopes make a similar argument about institutional economics, which under the
in¬‚uence of North has focused primarily on organizations within institutions within coun-
tries and thus has dif¬culty in dealing with the evolution of multinational ¬rms. Paul Duguid
and Teresa da Silva Lopes, “Institutions and Organizations in the Port Wine Trade, 1814“
1834,” Scandinavian Economic History Review, Vol. 47, No. 1 (1999): 84“102; Douglass
C. North, Institutions, Institutional Change and Economic Performance (Cambridge:
Cambridge University Press, 1990).
18 Global Brands

Sources and Data Sets
Business history and international business studies very often address the
same questions: why do ¬rms exist, grow, survive, and have multiple
operations that sprawl across national boundaries, and how do ¬rms deal
with the level of complexity and change in the environment? The approaches
taken to answer these questions are usually quite distinct. By using essen-
tially the international business history approach and by ¬rst establishing the
empirical facts, the reliability and validity of the sources used in this book
becomes even more important.
Much of the discussion rests on material found in the archives of ¬rms,
interviews with top managers and other industry experts, companies™ annual
reports, and secondary sources. The information on the ¬rms comes primar-
ily from public materials such as annual and other company reports, gov-
ernment publications, articles in periodicals, and also business histories and
biographies. Interviews with senior executives and industry experts helped
supplement the published record. More detailed information on some of the
¬rms is based primarily on research in company archives.
Although the importance of each of the sources varies according to the
purpose and the level of detail and institutional analysis being discussed,
their use was constrained by the quality, comparability, and availability of
information. The uneven treatment in terms of the amount of space and
attention given to ¬rms analyzed in this book re¬‚ects essentially the dif¬-
culties of research in this area, in particular the availability of sources. The
large number of ¬rms studied in this book, the kind of analysis carried out
(which focused on strategic moves), and the characteristics of the industry
(with leading multinationals spread in all continents of the world) justify the
importance of public materials and interviews as sources of information.
The ownership structures of ¬rms in this industry were also an impor-
tant constraint in the types of sources used. The historical predominance of
family-owned ¬rms, which are not obliged to disclose any information about
their performance, made access to any con¬dential information about the
company very dif¬cult. To add to this problem the focus on such a recent
time period made access to archives even more dif¬cult. In those cases where
company archives exist and are open to the public, there is frequently a
forty-year embargo, corresponding roughly to the period covered by this
book. Therefore, it was only possible to access the archives of a few ¬rms
such as Distillers Company, Mo¨ t & Chandon, and Seagram, but even in

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