Why do giant corporations pretend to be small, local, craft businesses?

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Posted Nov 9 2015 by Dave Darby of Lowimpact.org
jackdaniels

Jack Daniel’s is a classic example of this. You must have seen their ads – on posters, in magazines, on TV? The ones where they try to disguise a massive corporate behemoth as a folksy, friendly, small, local business? Old men in dungarees play cards on upturned barrels, or park battered old trucks outside small, family stores.

In reality, their factory is huge, and Jack Daniel’s is owned by the Brown-Forman Corporation, which has a turnover of $3.6 billion – so hardly a small, ‘mom & pop’ corner shop. Brown-Forman own Southern Comfort too – so that particular ‘competition’ is, well, not really competition at all.

This is what just a tiny part of the interior of their massive complex is like:

jackdaniels1

It’s fully automated, so that profits can be maximised whilst employing as few people as possible. Wages are a significant cost in Western countries, and they reduce profits. Jack Daniels, for example, has 368 employees – rather than the tens of thousands of people who would be employed if that much whiskey were produced by small, local distilleries instead. Local distilleries could supply local markets too, rather than maximising environmental damage by transporting heavy cases of whiskey all over the world from a central point. And of course work in small, craft distilleries would be varied, skilled and interesting, instead of the unskilled, repetitive, low-paid work that Jack Daniel’s worker’s have to do. How do you fancy sitting and checking bottles going past on a conveyor belt all day, wearing ear-plugs because of the noise of the machines?

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But they’re trying to disguise reality, and sell the image of a small, homely, craft business. Why?

And how about Scottish distilleries?

I went to see ‘Suffragette’ on Sunday evening (which was very good, by the way), but made the mistake of turning up early enough to have to watch the toe-curlingly, cringingly, ironically cool, sick-inducing, corporate adverts. I don’t know – for me, they may as well have been saying ‘We’re evil; you’re stupid; so give us your money.’, but they must work, or they wouldn’t pay for them.

The advert for Glenfiddich whisky (whisky in Scotland, whiskey in the US and Ireland) showed a hearty, determined William Grant walking around a Scottish village rounding up his family to start building a distillery from local stone and timber. All very inspirational – but the advert finished by saying that Glenfiddich has been a family-run business since 1887.

I smelled a rat. Glenfiddich is a family-run business? I looked it up later. Sure enough, William Grant & Sons Ltd. doesn’t seem to have any external shareholders, and is completely owned by the Grant family.

It makes a change from Diageo I suppose. See here for the number of Scottish distilleries that the £50 billion giant owns. It’s becoming difficult to think of a branded drink that they don’t own. But what do we really understand by a ‘family firm’? Forbes say Grant & Sons is worth over £4 billion. 43 shareholders own the business – most, if not all, distant relatives of Grant. So technically, yes, they’re a family firm. But their advert disguises their size and the fact that they manifest all the same problems associated with Jack Daniel’s and other Godzilla companies.

So why do they do it? Why do corporate giants pretend to be community businesses? I think it’s because they know that people like small businesses, rooted in their local communities. And they like them for the following reasons:

  • more personal service
  • higher-quality craft produce
  • goods don’t have to be transported so far
  • more jobs
  • more interesting work
  • money stays in local communities instead of being sucked out to pay international investors
  • wealth and power is dispersed more widely, rather than being concentrated in the hands of the few
  • small businesses don’t corrupt politics with huge political donations
  • small businesses don’t give jobs to politicians in return for favours
  • small businesses don’t have a lobby industry to make sure they control more and more of the economy

But there’s no way that a small, independent distillery can compete with the economies of scale of Jack Daniel’s or William Grant; and in this corporate-controlled system that we live in, small independent distilleries can’t be left alone. They have to be absorbed. Corporations are primed to grow, which means that they have to compete for a bigger and bigger share of the market, which brings them into direct (and unfair) conflict with small, independent businesses.

Here’s the list of owner of Scottish distilleries again, so that you can choose independent ones. But for how long? How do we stop independent companies either a) being swallowed by the corporate sector, or b) growing to become corporations themselves? Option b) is less likely now that small companies have to compete with the corporate sector, but corporate acquisitions of independent businesses happen all the time.

The only way I can think of is via co-operatives, but any other ideas welcome.