Brand experts are divided on the move to drop the 10-year old name of the European steelmaker, which contributes 70% of Tata Steel’s production.
The Corus mark consists of two components: a symbol and a brand name. Together they represent a powerful identifiable mark. That was the Corus policy statement in July 2006.
Close to three years after “the powerful identifiable mark” was acquired by Tata Steel in a $12 billion deal, and a year after the corporate identity was changed to Tata Steel Europe, the red-coloured logo of the once Anglo-Dutch steelmaker is set to finally make way for the familiar blue of the Tata group.
If carried out, this would be the fourth name change for Corus since 1967 and a lot of people still call it British Steel even now. But the Corus name has been in use for a decade now following the merger of British Steel and Netherlands’ Koninklijke Hoogovens on October 6, 1999.
While the latest name change is still at the proposal stage, the buzz is that the changeover will happen sometime in June next year.
But the jury is out on the impact of what would be one of the world’s biggest brand makeover in the steel sector.
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Harish Bijoor, chief executive officer at Bangalore-based brand consultancy Harish Bijoor Consults, says, “What do you acquire a brand name for? To preserve what it has. The Corus name has a certain heritage attached to it. It has a certain brand equity. Any change in name will compromise that. That is not likely to help Corus in the long run because the new name will create disconnect in the minds of consumers.”
But others dismiss this logic, saying the Tata brand name is equally strong in the UK and Europe. Millions of British wake up to Tetley morning tea, acquired by the Tata group in 2000, and know that it’s now a Tata brand. With a spate of global acquisitions from Tetley to marquee British brands like the Jaguar and Land Rover, with Corus thrown in the middle, Tata is a global brand name.
According to one of the world’s leading independent brand valuation consultancy, Brand Finance, Tata was the only Indian brand to feature in the Top 100 brands of the world and it actually moved up from 57 to 51 in 2009, despite the downturn.
Tata group insiders say had the downturn not happened, the re-branding process would have started much earlier.
Anand Halve, partner at Mumbai-based brand consultancy Chlorophyll, says “the decision of a company to stay with or drop a brand name depends on the objective of the acquisition in the first place. In Tata Steel's case, the objective of the Corus buyout was to acquire its tangible assets, not brand name. So replacing the Corus name with the Tata identity will have no material impact on the company, in my view”.
The tangible assets are indeed big. Corus is Europe’s second largest steel producer with annual revenues of £12 billion and crude steel production of 20 million tonnes. Corus contributes to a hefty 70 per cent of the 28 million tonne crude steel production of the Tata Steel group.
R Sridhar, chief executive officer of Bangalore-based brand consultancy BrandComm, says he doesn’t see any adverse impact on Corus on account of a name change effected by its parent Tata Steel. “If anything, I see this as a good move on the part of the Tatas to carry forward its legacy into other markets. This is important in its drive to expand its footprint abroad,” he says.
Industry representatives also say unlike FMCG products such as tea (Tetley) or the automotive segment (JLR) where the product is sold to a retail customer, steel is sold to industrial consumers who may not be that sensitive to a brand makeover.
That explains why the group has refrained from changing the name Tetley, though the packets mention that it’s a Tata product. Tata Steel has already rebranded Thailand’s Millennium Steel — which it acquired in 2005 — as Tata Steel Thailand. However, Singapore-based NatSteel, which was acquired in 2004, is yet to be rebranded.
Some brand experts, however, say one of the main challenges before the Tata group would be to manage the environment. At a time when Tata Steel worldwide operations have reported losses in two subsequent quarters, and Corus have committed to austerity measures to pare costs, the group may find it difficult to justify a rebranding move that would involve millions of pounds as the change in the brand name will also show up on the company’s stationary and vehicles.
But there is already a strong discontent over the 1,700 job losses following the closure of the Teeside plant. Already some websites operating out of the UK have started asking for feedbacks on whether they support the name change.The steel company is one of the largest employers in the UK with 23,600 people on the rolls. It also employs 11,100 people in the Netherlands and 5,000 more in different countries, totalling around 40,000.
The rebranding of Corus is clearly going to be much more than just a marketing exercise.
