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READING PASSAGE 2
According to the Wall Street Journal: "More and more shoppers are by- passing
household names for the cheaper, no-name products one shelf over. This shows that even
the biggest and strongest brands in the world are vulnerable."
It has been clear for some time - principally since recession began to be felt in the
major economies of the world - that the strength of brands has been under fire. During the
second half of the eighties, the Japanese, for example, showed themselves willing to pay
a huge premium to buy goods with a smart label and image to match: they were fashion
victims par excellence, be it in choosing their luggage (Louis Vuitton was much
favoured) or in buying their booze, where a 20-year-old version of a good malt whisky
could fetch the equivalent of £60 or more. Over the past year or two, that enthusiasm to
spend big money on a classy label has waned markedly.
First, every story that now appears about the troubles being experienced by makers of
luxury goods triggers wise nods and told- you-so frowns.
Two days ago, LVMH in France, which owns Moet et Chandon champagne, Louis
Vuitton and the Christian Lacroix fashion house, reported lower earnings for the first half
of 1993 than it did a year ago. As David Jarvis, in charge of the European operations of
drinks company Hiram Walker, puts it: "A few years ago, it might have been considered
smart to wear a shirt with a designer's logo embroidered on the pocket; frankly, it now
seems a bit naff."
This conclusion fits with one's instincts. In the straitened nineties, with nearly 3
million out of work and 425,000 people officially classed as homeless in England alone,
conspicuous consumption now seems vulgar rather than chic.
But just because flashy, up-market brands have lost some of their appeal, it does not
follow that all brands have done so. Cadbury's Dairy Milk is just as much a brand as
Cartier watches. Tastes may have shifted down-market, but that does not mean that they
have shifted from flash-brand to no brand.
The second strand of the brand argument is tied intimately with the effects of
recession. No one yet knows to what extent the apparent lack of some brands' appeal is
merely a temporary phenomenon.
Third, the example of Marlboro is an extreme one. The difference in price between
premium brand cigarettes and budget rivals in the US had become huge during the 1980s:
a packet of Marlboro or Camel might cost 80 percent more than a budget variety. Few
brands in any area of consumer goods could hope to maintain so great a premium
indefinitely.
And fourth, in looking at the brands argument globally, it is too easy to become
misled by what is happening in an individual market. In the UK as a whole, about one
third of groceries are under supermarkets' own labels. In the USA the proportion is only
20 per cent. But it does seem that the gradual shift from manufacturer-branded to retailer-
branded goods is worldwide.
As David Jarvis of Hiram Walker says: "We believe that brands will retain their halo,
but people are less inclined to pay for something just because it's a fashion accessory.
They need to be reassured that the product is intrinsically better."
Fill in the gap in the summary below with NO MORE THAN TWO WORDS from
the passage.