Big Business Versus Tradition

Article published on Feb. 23, 2004
community published
Article published on Feb. 23, 2004

This article has not been vetted by an editor at Paris HQ

Poland’s national food industry had gone into decline in the late 1990s. The arrival of international companies, such as Nestle, had a profound influence on its development and a new attitude to consumerism was created.

For many years in Poland there were national companies such as E.Wedel (an excellent producer of sweets). This trademark was associated with tradition, old recipes from grandma's cook book and chocolates that melt in the mouth. It was our local (on a national scale) potentate. And then in the early 1990s there was great concern as it was taken over by Nestle, both its employees and its debts. Then everything changed. Fairly aggressive commercial policies were introduced: new products appeared but the names of many sweets were kept, in line with consumers' habits. In this case the change and the flow of capital were good for Poland. We were witnessing an important development and Poland was satisfied.

Sheep in wolves’ clothing

The bigger a company is, the more it can do. Such was the case with Nestle. In terms of expanding its influence in Europe, the key to its success turned out to be respecting national traditions, respecting the things that people are attached to. On the other hand, products were made according to new standards, modern campaigns and trademarks promotions. Polish society found itself in a situation where something fairly old and traditional was reappearing in a completely new skin as the latest product, worthy of a higher price.

Unfortunately, at the same time many local factories went bust. One after another. In the end only big, rich investors had any chance of keeping their businesses going. This was, of course, a natural process. Concentration of production and capital causes the elimination of weaker businesses. And, as a result, the number of those which are profitable decreases.

Survival of the fittest

As far as the smaller firms were concerned, a very interesting phenomenon could be observed. One of Europe’s biggest businesses, Carlsberg, paid to take over a few local breweries. Almost none of them were profitable, but this allowed local, well known trademarks to survive. Such a sophisticated operation allowed for the continued existence of regional symbols and jobs for often poor workers. In the end, those market giants prevented unemployment in the region by taking over smaller breweries.

And here is the sociological explanation. Unlike what is commonly thought, Polish people change their habits only reluctantly. There are some things that Poles are used to, products that they’ve known for many years. They try new things, especially the young; they try to be open minded about foreign products. Statistics show that usually with everyday shopping they don't pay any particular attention to the origin of products; the country that it comes from does not make much difference. The most important thing is that they know what is inside. So, if there is one chocolate with the same name that has existed for dozens of years, it will have a big group of supporters. Sometimes, products are connected to another era and are not particularly well remembered. Then, Poles usually change their habits and start using something new, something offered by a foreign producer. It is believed to have better quality and in this situation the most important thing is the Western label and name.

Customer loyalty

Unfortunately, Polish people rarely realize that this phenomenon is the reason for people losing their jobs. It happens when a new, international potentate, like Danone for example, enters a market which previously was divided between many local producers. During Danone's expansion, some people got used to the new trademark and started buying it and, in so doing, deprived themselves of jobs in the old dairies. Fortunately, some small production plants survived but they had to change their business ambitions and focus their production on the local market without even thinking about spreading their delivery area as a result of their rivalry with Danone.

Whatever you think of big businesses, you have to admit that they are an indispensable part of the market. But the overall success of new companies depends on their ability to win over the consumer, something that international companies have managed to achieve in Poland.