Gryzewski:
Pro-Marka is an association of fast-moving consumer goods companies (FMCG) set up in 1996 to protect the trademark rights of its members such as Master Foods, Johnson & Johnson and the Zywiec Group. The organization's activities include government lobbying and public education on the illegal production of brand-name goods. The organization also belongs to a European Union (EU) committee that is preparing a directive to combat smuggling and piracy. Among Pro-Marka's achievements is the passage of a law last year that removes a proposed requirement that all brand names must be translated into Polish. The organization's general director, Tomasz Gryzewski, 37, talked to the Business Journal's Magdalena Wierzchowska about the issue of brand-name theft as well as the history and development of brand-name products in Poland. The following is a translated, edited version of their conversation.
Q: How would you define a brand?
A: A brand is an association, a name of a product, a service or a company that in our everyday consumer life has good implications, or sometimes bad ones. Then it's a bad brand, but it's recognizable. To the meaning of a brand we attribute all qualities that are associated with a given product or service its prevalence, availability or advertising. Also, emotions, the identification with a particular group of people, or whether a product fulfills the needs of snobbishness especially (but not exclusively) among young people such as 'I write with Mont Blanc,' 'I ride an F2,' or 'I only buy Mercedes.' That's (brand) recognition. It tells us what a brand is.
Q: Do Poles pay attention to particular brands?
A: Brand recognition is relatively high in Poland. Three times as high as in Germany or the U.K., according to research done a few years ago. However, the level of brand loyalty is low. For example, brands of washing powder are highly recognized because everyone knows there is Pollena, Omo, Vizir and Persil. But they (still) switch (products). One time they'll buy Pollena Rex, another time Vizir, but they buy relatively little of a particular product.
Q: Why are Poles so brand conscious?
A: Under communism you didn't talk about brands at all. The word 'brand' meant a Western product, which we received in a package or bought at the Pewex (a luxury foreign-goods shop). People would say, 'I got some branded chocolate,' and it wasn't important what brand it was, but that it had a brand. After (communism), branded products indicated luxury. When we began to have some disposable income, we began buying these products to raise our self-esteem and image, to identify with the West. It turned out that Poles are attached to brands. According to research by Young & Rubicam, two to three years ago half those polled said they use branded products.
Q: How do you create a brand?
A: It takes years. You can't build a brand quickly. You can create an awareness among consumers that such a brand exists. For example, Leader Price did it in a year and a half or two years. But it's a brand in terms of name, not in terms of a symbol or emotion. To create a brand (with an emotional response), you need 10-15 years. And it's not only due to advertising. Advertising can only maintain brand awareness, but it doesn't create it. Creating a brand is achieved by deciding on a special name, packaging, means of production, quality, distribution, and later by sustaining that level and improving on it. If you took a product that wasn't advertised for 10 years, but which remained consistent in its quality, and even improved in quality, you'd see that people use it even though no one ever sees it in an ad. It has significance if something has been recommended to me by word of mouth. That's how you build emotions and tradition.
Q: How is the value of a brand determined?
A: We can talk about the value of a brand in financial terms. There's the value of a brand as a product and the value of a brand as a company. The values are relatively easy to estimate if the product branding is also the company branding, like with Marlboro, Coca-Cola and Mercedes. It's then estimated financially, so in relation to a company's financial results or its value on the stock exchange. That's how the estimated worth of Coca-Cola and Marlboro each reached $50 billion.
Q: What are the most valuable Polish brands?
A: If you asked an average person on the street they would say it's Wedel or Atlas. Younger people mention Troll, Swarzedz, the brands that appear in ads. If you asked an older generation, Metalexport and Exbud would probably appear. Gino Rossi is Polish because they have a factory somewhere near Olsztyn. However, I can't give you the values of these brands.
Q: Apart from Atlas or Wedel, do Polish companies regard establishing a brand name as vital?
A: We have 4 million companies registered in Poland, but the number of brands is much smaller. Some brands exist and have remained, together with those bought out by international companies such as Winiary, Goplana and Pudliszki. When international capital appears, together with the know-how, there's a tendency to build a company and a strategy based on a brand. In places where domestic capital already exists, this is not so common. Maybe it's because there isn't enough funding. Maybe there's a strategy that says we are not concerned about brands now, but we will build up enough capital to create a capital group and launch a brand in five years. I don't believe that our businessmen are so farsighted, though, especially the small and medium-sized companies because there are so many legal and administrative problems that it's a day-to-day struggle to survive.
However, focusing solely on producing someone else's goods is like tying your own noose. For example, two years ago there was a famous case of some apple producers from Grojec. They boasted that four or five of them had an agreement to sell everything they produced to a group of hypermarkets. Fine. They sold their wares for two or three months in one season. The hypermarket knows that they sell 100% of the produce to him. The next season the hypermarket says, 'We're buying apples not for zl. 1 but for zl. 0.50.' They say, 'Well, no, it's below cost,' The hypermarket says, 'Sorry, but I'm going to the Ukraine.' And these people are left with debts. Now if they had said during negotiations, 'We're selling you the apples, but at least 10% of them must be sold under our own name or at least labeled as apples from Podlaskie,' even if the hypermarkets stop buying their apples, they could sell the apples to grocers. In a few years, the apples would become a brand. It would be something like: 'These are Podlaskie apples.' It wouldn't be on such a big scale, but there would be a brand. Later on they could say the apples that come from Podlaskie are organic. I would venture that 70-80% of production would be sold in supermarkets, so the marriage could be long lasting. The question is who will cheat whom? A hypermarket without branded products has no chance of survival. Imagine going into a shop where you can't buy a familiar candy bar or drink, you'll look at a shelf two or three times and you'll leave and never return.
Q: So the apple example is a case for investing in brand creation?
A: There is no other way for somebody to survive in business than to be branded. Scouts used to pledge, 'Rely (on a scout) as on Zawisza.' Zawisza is a model, a kind of a brand to be followed. For some people, it's Jesus for others Hare Krishna is a brand, some kind of mark. In business, a brand is a product on which I can rely. If my Ford breaks down I know where I can go and that I'll be properly served. (The car) has the right to break down, but I receive decent service. It's a brand because even if it breaks, they'll help you.
Q: What about look-alike products?
A: So-called 'private label' products often try in their graphics to refer to a brand product to convince a client to buy them. You have to look closely whether it's Nestle or look-alike cornflakes. How many colas are there in Geant now? I've seen a cola whose upper label resembles Pepsi and the lower part looks like Coke. It's legal, but it's dishonest. It's taking advantage of the emotion and the customer's devotion (to a product).
Q: Isn't Poland somewhat of a paradise for such products and producers?
A: Every country is a paradise and we'll never root it out. I don't think a law can be created in such a way to eliminate it completely. In Poland, the patent office can sometimes register brand images and names that are look-alikes of the known ones. Recently, together with the change in the law on industrial ownership, the concept of a renowned trademark was introduced. The lack of (such a concept) resulted in some problems with international companies coming to Poland. For example, somebody learned that Tchibo was coming to Poland and registered the Tchibo trademark. They had to come to an agreement on how much the compensation fee was.
Q: Can firms manufacturing look-alike products be prosecuted?
A: You can't do anything about look-alike products. You can meet over dinner or a beer and ask them to change their colors or sell their products two shelves further away. But they'll only do it as long as somebody buys (the look-alike products). You can take them to court, but that's where the problems begin. A visual connection may exist for you, but the other side will bring 16 people for whom it doesn't. We need a uniform standard that (certain) research standards are adequate, and then the research would have to say: This is a look-alike.
Q: Has anybody been prosecuted in Poland for selling look-alike products?
A: I can't give you specific examples. However, sometimes bringing a suit to court causes some people to withdraw from producing look-alike products or using associated elements. In Silesia there was a Milka chocolate look-alike. After press publications, and after our campaign against look-alike products, they withdrew from (the market). Izosprint, an energy drink that ripped off Izostar, has changed its graphics. Recently police caught some people who counterfeited Persil near Bydgoszcz. However, the man who did it (only) received the maximum fine of zl. 2,000. We'll try to work on some legal solutions for that in Poland.
Q: Do you wear brand-name goods?
A: Yes. Brand-name products last longer.
