Hidden gems

“CASH IN THE ATTIC” is one of the jewels in the BBC’s crown: “The show that turns hidden treasures into cash and viewers’ dreams into reality”. The format is as addictive as it is straightforward. A camera crew turns up at an ordinary-looking house and searches the attic and other nooks and crannies for things that might have hidden value. The choicest items are sold at auction. Joy is unconfined when a ragged doll turns out to be worth a small fortune. The business world has its own version of this game: entrepreneurs rummaging in corporate attics for neglected but valuable old brands. It is thanks to such treasure-hunting that you can ride an MV Agusta motorbike, wear a Shinola watch, stuff yourself with Twinkies, wash them down with Orangina and play a Gibson guitar.

There are two reasons why such rummaging is so popular. The first is that companies often discard brands that contain plenty of what marketers call “equity”. In plain English, ones that people still remember fondly. Healthy brands can be sacrificed on the altars of corporate takeovers and restructurings: Brim Coffee bit the dust when a succession of mergers and acquisitions left it sharing a stable with Maxwell House; Procter & Gamble abandoned White Cloud toilet paper to focus on its Charmin brand. Or they can become orphans when their parent companies die: former household names that are currently looking for a new guardian include Hidden Magic hairspray, Climax ginger ale and Puss’n Boots cat food.

The second reason is that reviving an old brand often beats spending months and millions on creating a new one, with a lower risk of failure. If something has worked before there is a good chance that it will work again. Old brands come with ready-made logos, slogans, jingles and memories. Brim Coffee’s previous owners had spent 35 years and hundreds of millions of dollars drumming the phrase “Fill it to the rim—with Brim” into American brains. Besides equity, another folkloric quality brands are said to need is “authenticity”: whereas Wally Olins, a veteran branding expert, warns creators of new brands that the worst thing they can do is to try to fake this (see article), old brands are more likely to possess it.

The simplest version of this strategy is for a company to revive one of its own brands. The textbook case is Volkswagen’s revival of the Beetle in the 1990s. VW played on nostalgia for the 1960s, when the Beetle became the semi-official vehicle of the hippie movement, while reassuring purchasers that it was thoroughly modern: “less flower, more power”. A second version is for a healthy firm to take over an ailing rival’s brands and breathe new life into them. BMW acquired Mini when it bought Rover in 1994, retooled the car to German standards, and made it a huge success.

There are now companies that, like the BBC’s antique-hunters, specialise in rooting out undervalued gems. The Himmel Group, based in Florida, buys old health and beauty brands and relaunches them with a blitz of advertising. Its successes include Ovaltine, a hot drink, Topol tooth polish and Lavoris, a mouthwash. Private-equity groups have also become enthusiastic recyclers. In 2006 the Blackstone Group and Lion Capital joined forces to buy the rights outside America to Orangina, a soft-drink brand discarded by Cadbury, and sold it three years later to Suntory of Japan, realising a 30% annual return on equity. In 2013 Apollo Global Management and Metropoulos & Co acquired Hostess Brands for $410m, and relaunched Twinkies and Ho Hos in what it billed as “the sweetest comeback in the history of ever”. Supermarkets are also savvy purchasers, buying old brands and keeping their distinctive appearance, to justify charging a bit more than for their own-label products. Walmart did this with White Cloud nappies and tissues, for example.

Some striking examples of brand revival are the work of individual entrepreneurs. Shinola was once such a successful producer of shoe polish that Americans reprimanded each other with the phrase, “You can’t tell shit from Shinola.” Tom Kartsotis, a college drop-out turned businessman, revived the name for a new company that produces luxury watches in Detroit and sells them for up to $975 each. The East India Company once controlled half the world’s trade, commanded its own army and issued its own currency, but went out of business in 1873. Sanjiv Mehta, an Indian diamond trader, bought the brand in 2005 and applied it to a new, upmarket retail chain.

Whole lotta lolly

There is no guarantee that your dead brand in the attic will turn into cash: Daimler tried to revive its Maybach luxury marque as a competitor to Rolls-Royce and Bentley, but sales were dire, and it gave up in 2013. You need to choose your brand well—there is a big difference between Shinola and, say, Enron—and manage its revival carefully. Many of the most successful exercises in reviving brands are also exercises in repositioning them. Henry Juszkiewicz revitalised Gibson Guitars because he focused on selling to ageing lawyers and doctors, who were willing to pay $20,000 to own the same type of guitar as Eric Clapton and Jimmy Page, rather than struggling young musicians. He has since added brands such as Slingerland drums and Wurlitzer jukeboxes to his portfolio. Claudio Castiglioni revived his family’s MV Agusta brand by repositioning a classic racing bike as a mid-market roadster.

Such quibbles aside, rediscovering and restoring a neglected brand, tapping into consumers’ fond memories of times gone by, is surely a cost-effective way of competing in a marketing landscape where start-up costs are prohibitive and the chances of failure are high. If capitalism is a system of creative destruction, in Joseph Schumpeter’s famous phrase, it is a system of creative reconstruction as well.

^{Economist.com/blogs/schumpeter}