The Value of Brands to Society Part 3 of 4

The following series is an excerpt about brands from the book Basic Economicsby Thomas Sowell:

Brands have not always existed. They came into existence and then survived and spread for a reason. In eighteenth century England, for example, only a few luxury goods, such as Chippendale furniture, were known by their manufacturers brand name. It was an innovation when Josiah 'Wedgwood put his name on chinaware that he sold and which ultimately became world famous for its quality and appearance.

In nineteenth century America, most food processors did not put brand names on the food that they sold-a situation which allowed adulteration of food to flourish. When Henry Heinz entered this business and sold unadulterated processed food, he identified his products with his name, reaping the benefits of the reputation he established among consumers, which allowed his company to expand rapidly and an array of new processed foods bearing his name to be readily accepted by the public. In short, the rise of brands promoted better quality by allowing consumers to distinguish and choose, and forcing producers to take responsibility for what they made, reaping rewards when it was good and losing customers when it was not.

Quality standards for hamburgers, milk shakes and French fries were all revolutionized in the 1950s and 1960s by McDonald's, whose methods and machinery were later copied by some of their leading competitors. But the whole industry's standards became higher because McDonald's spent millions of dollars researching the growing, storage and processing of potatoes, in addition to making unannounced visits to its potato suppliers, as it did to its suppliers of hamburger meat, in order to ensure that its quality specifications were being followed, while its huge buying power forced dairies to supply a higher quality of milk shake mix that McDonald's demanded. After all this was Done, Some might say in later years that leading hamburger chains were “all alike,” but they were all better because McDonald's could first reap the rewards of having its brand name identified in the public mind with higher quality products than they had previously been used to in hamburger stands.