Brand Failures

Tired brands 283
such as the luxury coffee-maker specialist Krups, which Moulinex acquired
in 1987. Debts steadily grew, and in 1996 Moulinex tried to return to profit
by laying off 2,600 workers. This tough measure worked, at least in the short
term.
In 1997, the company declared a profit for the first time in years. However,
the celebrations were short-lived. Not only had the job-cuts damaged the
brand’s reputation in France, the following year saw the new collapse of the
Russian economy. As Russia was Moulinex’s second largest market, sales were
dramatically affected and the company went back into the red. Things got
even worse with a similar economic crisis in Brazil, a country where Moulinex
had made various acquisitions.
In September 2000, the company merged with the Italian company
Brandt. This did nothing to prevent declining sales and rising debt. The
bankruptcy filing in 2001 was a drastic, but almost inevitable last resort.
As Moulinex is still struggling to find a buyer, the omens are not good for
one of France’s most famous brands.
Lessons from Moulinex
Watch the competition. Moulinex was caught off guard by the influx of
microwaves from Asian manufacturers.
Watch the economy. When economies are in trouble, so are brands. Following
the economic crisis in Russia, Moulinex lost a major part of its market
overnight.
Keep employers on side. The numerous disputes did more to damage
Moulinex’s reputation in its native France than anything else.