Pete Brown turns to the principles of free market economics to argue against the sponsorship of the Euros and the Olympics
I had to drop Economics after my first year at university. This after realising my A-level teacher had been sorely mistaken when she told me I had a gift for it.
But one thing I remember is Adam Smith and the purity of ‘market forces’, the ‘invisible hand’ of supply and demand and how it made everything work.
My politics were just forming at that stage and, growing up in Barnsley during the miners’ strike, I became a bit of a leftie.
The ideological battle lines were drawn as simply in economics as they were anywhere else: if you were a leftie, you knew that state planning had some role to play in the economy. On the right, you knew that such intervention polluted the beauty of the free market and prevented it from working efficiently.
I was reminded of these simple (simplistic?) positions when I was researching my last book, Hops and Glory, a few years ago, in which one of the main stars was the world’s first multinational corporation, the East India Company.
Anyone who thinks corporations running things is a good idea should have a look at what happens when you give a private corporation tax-raising powers over a large economy and its own army to enforce the law: 10 million dead, and a few years of massive shareholder pay-outs. All of which led to a bankrupt economy with the corporation having spent vast sums, rather than going to its parent government for a hand-out.
(Good job we learned that lesson.)
“The harshest critic of the East India Company, when it was in its prime, was not some raging leftie (although Karl Marx did give it a kicking later on) but Adam Smith”
But then I discovered something that surprised me a great deal.
The harshest critic of the East India Company, when it was in its prime, was not some raging leftie (although Karl Marx did give it a kicking later on) but Adam Smith – father of free market economics, creator of the whole notion of the beauty of the invisible hand.
Smith hated the East India Company because he believed corporations of that size and power distorted the principles of the free market and prevented it from working properly.
A corporation that could wield such political and societal influence was as bad for the free market as any heavy-handed government intervention.
This was an incredible realisation for me: as an unreconstructed leftie, I have more in common with the godfather of capitalism than most people who would call themselves capitalists today.
Smith must be on a fast spin cycle under the slabs of Canongate Kirkyard.
I bet Adam Smith would like the regional breweries and microbreweries that are thriving in Britain now. Lots of small companies, each competing against the other with differentiated products that create varying levels of supply and demand. The best ones grow bigger, but there’s still an open market (in parts, if we ignore the PubCo tie, which we can’t really do, but I will for the sake of this column), which means new entrants are always arriving to keep more established companies on their toes.
I doubt Smith would have the same affection for the global corporations that dominate mainstream brewing. As volumes decline in mature beer markets, some of the practices used by brewers to sell beer are starting to look more like Soviet totalitarianism than free market business practice.
And I’m reminded of this in the week that the first of the summer’s two major sporting events kicks off.
The idea that global brewers were getting a bit lager loutish in pursuit of their commercial interests first struck me in the 2006 World Cup in Germany, sponsored by Budweiser.
Their exclusive ‘pouring rights’ meant that Bud – a beer that laughs in the face of Germany’s celebrated beer quality laws – was the only beer that could be served, drunk or advertised not just in the stadia, but in an exclusion zone around them. The Germans were not happy about being forced to drink something they didn’t even consider to be real beer at the game.
But they weren’t as upset as the Dutch.
A group of Dutch fans turned up for one of their games wearing orange trousers – their national colour. But the authorities knew these trousers had been given to the fans by Bavaria, a Dutch beer brand. And indeed, if you looked very carefully, you could see a tiny Bavaria label. The fans were forced to strip and watch the game in their pants, or miss it.
Four years later in South Africa a group of 30 attractive girls revealed skimpy orange mini-dresses once they were on the terraces. And this is where the perfectly understandable (if excessively executed) desire to protect a sponsorship investment became something more sinister. Because in South Africa, state laws were passed to protect these investments. Infringing sponsorship was no longer a case of commercial law between rival corporations; it was now a criminal offence for which private citizens could be arrested – and threatened with imprisonment.
Even though the orange dresses carried no Bavaria branding at all this time, it was still obviously a stunt, and the girls were dragged from the ground by police, and held for two days in prison before being released.
Similar laws have now been passed in the UK.
“The rights of corporations are now enshrined in law above those of citizens”
The Euros are sponsored by Carlsberg and the Olympics by Heineken, and you are not allowed BY LAW to drink any beers other than theirs at or around events.
If you are lucky enough to have Olympic tickets, you won’t be allowed in if you’re wearing, say, a Stella T-shirt or a Bombardier branded baseball cap. If you sneak them in and put them on, you could technically face arrest and imprisonment and a criminal record.
When I worked in marketing, we always believed that a good sponsorship should add something to the event, to provide fans with an experience they wouldn’t otherwise have, rather than simple piggybacking on the popularity of it and smearing your logo across every available surface.
This summer, Heineken will certainly be providing some fans with an experience they otherwise wouldn’t have had, but not in the way we meant.
Having already kicked out existing sponsors Marston’s from Lords and Brains from Cardiff’s Millennium Stadium, they will be policing their investment very closely. In a country where the rights of corporations are now enshrined in law above those of citizens, be very careful which beer you enjoy the summer’s sporting events with.
And ask yourself what, if anything, this situation has to do with capitalism or free market economics.
Pete Brown is one of the UK’s leading beer writers, working across business and consumer press. He’s the author of several best-selling books and blogs at petebrown.blogspot.com. He was recently named joint-37th most influential person in the British pub industry – a claim he strenuously denies.