How Some Brands Come Back from Near Death

By Greg McFarlane AAA

Some brands – Pan Am, Montgomery Ward – once carried considerable cachet, only to lose traction and never recover. Others, such as Marlboro and Budweiser, seem to get more valuable every year. And a few others have fallen into disrepair, then come back as strong as ever. Here are some of the most renowned brands and companies to have overcome what seemed like insurmountable odds.

Old Spice: Back from Near Death

Introduced in 1938, Shulton, Inc.’s Old Spice was a staple of the World War II-era man’s bathroom cabinet; its unmistakable aroma of clary sage and ruggedness defined masculinity. After Shulton sold the brand to the now-defunct American Cynamid in 1970, sales remained brisk. But as tastes changed, and cologne and aftershave became less important to male grooming, Old Spice failed to contemporize and profits declined. Such is the hand a company deals itself when the name of its product starts with the word “Old." American Cynamid sold the brand to Cinncinnatti, Ohio-based Procter & Gamble Co. (NYSE:PG) in 1990, under whose umbrella it remains.

Once a product gains a reputation as codger fodder, it’s hard to change public perception. A nuanced marketing campaign won’t do. Instead, Old Spice embraced absurdity. A series of commercials that debuted in the early 2000s used over-the-top sight gags and incisive shots at Old Spice’s own staid reputation to inject life into the tired brand. It worked. While the campaign's recent progression into surrealism and grotesqueness might not be for everyone, the results are clear. Since the launch of  its 2010 campaign, Old Spice sales increased 11% year-over-year. It’s impossible to determine how much of that is attributable to advertising, but Procter & Gamble proudly attests that the formerly beset Old Spice “is now the leading male body wash and deodorant brand in the United States.”

Tylenol: Overcoming Real Death

Few companies have suffered a public relations blow as huge – or unjustified  – as Johnson & Johnson, (NYSE:JNJ) makers of Tylenol, in the fall of 1982. The pain-relief capsules left their factory loading dock and arrived at stores in usable condition, but a murderer, or murderers, removed several bottles from retail shelves in the Chicago area only to return them laced with cyanide. Seven people died, and no one was ever caught.

Having customers die from ingesting their product would seem like the kind of setback a company could never survive, but New Brunswick, N.J.-based Johnson & Johnson’s handling of the tragedy was regarded as almost flawless. Tylenol production paused immediately, and the company recalled 31 million bottles nationwide, even though only Chicagoland residents appeared to be at risk. Tylenol never produced another capsule, instead developing the “gelcap” and introducing triple-sealed, tamper-resistant packaging. Within months Tylenol had returned to its dominant market position, comprising 35% of all U.S. analgesic sales.

Turmoil With Twinkies

In one of the most misconstrued business stories of recent years, reactionary news outlets across North America announced the demise of Twinkies in 2012. The iconic snack cake’s manufacturer, Hostess, had sought bankruptcy protection for the second time in eight years, laying blame at the feet of unsustainable pension benefits. Hostess was also the parent company of Wonder Bread and dozens of other famous brands, but it was Twinkies that garnered the most attention. The cake's sales performance wasn't the cause of Hostess’s misfortune: Americans had purchased 36 million packages of Twinkies the previous year, hardly symptomatic of a wounded brand. (And that figure didn’t include sales at Wal-mart Stores Inc. [NYSE:WMT], America’s largest retailer, based in Bentonville, Ark.)

Stuck in a nation limited to off-brand golden sponge cakes with creamy filling, some desperate Americans trekked to Canada to buy Twinkies baked under license and thus unaffected by the bankruptcy proceedings in the United States. American Twinkies were scarce enough that they’d sell on eBay (Nasdaq:EBAY), based in San Jose, Calif., for around $2.50 a cake, or quintuple what they were going for prior to the bankruptcy announcement. Within months, a couple of private equity firms purchased the Twinkies brand – under an LLC that carries the Hostess name – and production resumed. The new streamlined Twinkies (10% smaller) remain a fixture in the high-caloric-density aisles of supermarkets everywhere.

Apple Polishing

Regarding companies, rather than brands, none in recent history has gone from importance to irrelevance to overwhelming dominance quite the way Apple Inc. (Nasdaq:AAPL) has. The broad strokes of the story are familiar to anyone with a passing interest in American commerce: Two college dropouts build computers in a garage. Within four years their company is the subject of the largest initial public offering in decades. Five years after that, with one founder retired, the professional CEO they brought on board shoves the other founder out the door. Twelve years later, with the company having lost $2 billion, the ousted founder returns and sets the company on the path to righteousness. Today, Curpertino, Calif.-based Apple's market capitalization is half a trillion dollars, making it the biggest corporation on Earth – yet it still maintains a fanatically devoted clientele and an unparalleled reputation for innovation. Exactly what did Steve Jobs do upon his return?

Jobs had a reputation for being brazen and unapologetic, but his first order of business upon reclaiming the CEO mantle in 1997 was to supplicate himself before his biggest rival. Apple agreed to let Microsoft Corp. (Nasdaq:MSFT), then the largest company in the world itself, develop its ubiquitous Office Suite for Apple’s operating system. Jobs also sold $150 million worth of Apple stock to Redmond, Wash.-based Microsoft, this when Apple’s shareholders’ equity was barely $2 billion. Finally, he withdrew a lawsuit alleging that Microsoft was infringing on Apple patents.

Apple stock rose 40% the next day. Jobs was clearly onto something. He began slashing unprofitable product lines and focusing on aesthetics that complemented Apple’s acclaimed powerful, high-margin machines. With the development of the sleek and colorful iMac, the elegant OS X operating system and the pioneering iPod, iPhone and iPad, Apple’s resurgence was complete.

The Bottom Line

While not all dying brands and companies can be resuscitated, many can. The more resourceful management is, and the greater the merits of the products themselves, the greater the likelihood that a brand or company can come back from the dead.

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