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Sun, Mar 16, 2003 - Page 12 News List

US brands stand to suffer should war be declared

US firms once used their Americanness as a selling point in Europe and in the Muslim world, but they have recently had to cut back on the amount of flag waving

NY TIMES NEWS SERVICE , PARIS

These brands may stoke competition, but they usually remain narrow niche products, according to Jagdish Sheth, a marketing expert at the Goizueta Business School of Emory University in Atlanta. (The school is named for a former Coca-Cola chief executive.) In some situations, he said, they even present opportunities for the market leaders: Two earlier Coke imitators, Thumbs Up in India and Inca Cola in Latin America, ultimately were bought by Coca-Cola and turned into successful regional brands.

The problems that anti-American sentiment in Europe may be causing for American companies already operating in Europe and the Middle East are harder to gauge. The Starbucks franchisee for Switzerland and Austria, the Bon Appetit Group, sold its 21 stores back to the Starbucks Coffee Co this month, less than two years after opening them, prompting speculation in the Swiss media that concern about anti-American sentiment harming the stores' sales played a role as well.

In the Middle East, McDonald's introduced a new product this month -- the McArabia, a chicken sandwich on Arabian-style bread -- with a sales and promotion campaign that overshadowed the flagship Big Mac, an effort that one French newspaper said was meant to "relaunch McDonald's in the Muslim world."

Both Starbucks and McDonald's denied that their moves had anything to do with geopolitical tensions.

Indeed, Starbucks said that buying out Bon Appetit's interest in the stores reflected its determination to expand ambitiously in Europe; Bon Appetit's main businesses, institutional catering and food distribution, had been struggling lately and the company had no spare cash to finance additional Starbucks stores in its territory.

"It's not at all connected to Iraq," said Karin Vogt, a Starbucks spokeswoman in Zurich. "We're on line with our stores. It's not had an impact."

McDonald's said the McArabia had been in the works for two years and was not a response to recent anti-American sentiment over Iraq. Rather, the company said, the new sandwich is part of a worldwide effort to adapt its menu more closely to local preferences.

"There is no liaison between the McArabia and politics," said Rafiq Sakih, the owner of several McDonald's restaurants in Dubai, United Arab Emirates, where the new sandwich has been a big hit.

Ricarda Ruecker, director of marketing and communication for McDonald's in the Middle East, said that after April last year, when tensions between Israel and the Palestinians worsened sharply, "We, like every global brand, suffered definitely."

But she said the company's local franchisees reacted with an advertising campaign.

"We educated people; we have a 100 percent local ownership model, 80 percent local suppliers; we do a lot of charity," Ruecker said by phone from Dubai. "Now people understand more."

Even so, in recent weeks two McDonald's restaurants in Saudi Arabia, at Kharj and Dammam, were the targets of unsuccessful firebomb attacks.

The growing drive to tailor products and advertising to varying national tastes and cultures is gradually eroding the progress of globalization, Sheth of Emory said, by breaking up world brands into a network of localized versions.

"It is a question of saying, `When in Rome, be Roman,'" he said.

In the process, experts said, the magnetism of American flair as a promotional tool is waning.

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