Once upon a time, big companies bought smaller companies and integrated their offerings into the larger product line. It made sense to sprinkle the better-known brand on the lesser-known products and leverage all that brand power. Hence
DEC Compaq HP.
But now big is bad. Consumers are fleeing the mainstream for the authenticity and quality of niche products. Today, when a big company buys a little one, it hopes that nobody notices. The aim is to keep the indie feel of the niche brand, while applying the distribution and marketing advantages of the big acquiring firm.
I spent the morning in Hershey, PA ("The Sweetest Place on Earth"), speaking to Hershey about just this. A few years ago the candy giant bought Scharffen Berger, a high-end chocolatier based in Berkeley. (As it happens, my kids' school is right next to the Scharffen Berger factory, so I start each day with the lovely smell of chocolate-making; indeed, some of the book's chapters were sketched out in meetings at the factory's chocolate-themed restaurant, Cafe Cacao). The question is how Hershey can benefit from Scharffen Berger's indie/artisinal cred without screwing it up. I won't tell you more than that about the conversation, but I will give you an example that I brought up as an analogy.
If you go shoe-shopping on Zappos, you's see that there's a category for "Vegetarian" shoes, which is to say shoes without leather or other animal products. The bestselling brand in this category is Converse sneakers, which as you probably know is the cool shoe of the moment (and not just among vegans). In an era where consumers are socially conscious and green issues drive taste, being both cool and kind to animals is a good thing.
What you probably don't know--and not by accident--is that Converse is a wholly owned subsidiary of Nike. Yes, the Nike of sweatshop infamy (unfairly, since Nike now has some of the best business practices in the industry, but lasting perceptions have power). For consumers who care about such things, it looks like this:
No wonder that the Nike Store doesn't mention Converse and Converse marketing doesn't mention Nike. If people knew that Converse was a division of Nike it wouldn't be as cool. Call it brand dis-synergy.
Back to candy. Hershey has just launched AllChocolate.com, which is built around the high-end boutique brands of its Artisan Confections subsidiary, such as Dagoba Organic Chocolate, Joseph Schmidt, Cacao Reserve and Scharffen Berger. Hershey is mentioned as a "sponsor" of the site, but the connection isn't drawn much more explicitly than that.
It is a testament to the inversion of power in the marketplace that for the influentials Hershey is trying to reach, an artisinal Berkeley chocolatier such as John Scharffenberger apparently has more brand power than America's largest candy company. But that's exactly the conclusion Anheurser Busch came to when it created Long Tail Libations. Niche brands rule!
[UPDATE: Greta Lorge from the Wired Science blog reports on one way not to promote a chocolate brand: sponsor giddy research on how the sweet stuff might make you smarter.]