We are pleased to renew our partnership with Brand Africa in publishing this unique ranking of all brands active in Africa today. The first annual listing appeared last year in the November 2013 issue.
The listing consists of several elements: 1) The 100 Most-Admired Brands in Africa. The aim was to find out from consumers in the field which brands they liked the most and to rank them. 2) The Most-Valuable Brands: Employing a complex system, Brand Africa and its partners have worked out the current market value of the brands themselves.
While the listings themselves give us a fascinating idea of how brands are perceived in the African market and what sort of value they have built up, the data is invaluable to the companies themselves, as they present a true image of what consumers think, and also to investors. The tables show that local (and increasingly international) African brands can more than hold their own against the might of the large global multinationals, even if the resources they can deploy in brand building are a fraction of those available to their global rivals.
Global giants reclaim the high ground
Economic growth in Africa, which is expected to register 4.7% this year and 5% in 2015, a faster pace of urbanisation and rapidly expanding middle class, have placed Africa among the new attractive retail and consumer markets in the world. Consumer spending is projected to reach $1 trillion by 2020.
The key trends underpinning Africa's consumer growth includes an expanding pool of the working age population, the rapid growth of cities, changing consumer behaviour, greater mobility, improving business and trade environments and rising incomes.
According to New World Wealth, the rate of increase in millionaires and multimillionaires in Africa is among the highest in the world.
South Africa alone has broken the world record: the number of millionaires has grown by 106% over the last decade and multimillionaires by 102%. This easily beats the global average of 58% for millionaires and 71% for multimillionaires.
Africa is home to about 100,000 dollar millionaires--an increase of 7.4% over last year. The number of Nigerian millionaires is expected to grow by 47% over the next four years.
With Africans becoming wealthier, and travel and technology virtually obliterating borders and barriers, Africans have been exposed to, and are demanding, growing options in local and international brands.
Admired and Valuable
This is the second time that African Business is teaming up with Brand Africa to publish tables that rank all the brands active on the continent. For the purposes of this evaluation, Brand Africa has divided brands into African brands (African in origin) and non-African brands (international brands operative in Africa) which are more likely than not to be major global brands.
There are two major tables (pages 20 to 26) in this report. Using the table of 100 Most-Admired Brands in Africa, we then established the brand value of these brands and created a separate ranking: The Most-Valuable Brands. The value was established by crunching a number of metrics including financial statements. There were 15 private companies whose financials were not available and where the brand value, therefore, could not be established.
The tables that we published last year showed that, contrary to expectations, top African brands not only held their own against the multinational giants, they outperformed them in the Most-Admired brands category. However, non-African brands dominated the listings.
This time around, non-African brands have continued their numerical domination, increasing their presence from 73% on last year's list to 80% this year, compared to a decline of 7% for African brands.
However, African brands have fared poorly in terms of their brand values: the value of African brands has declined by 3% compared to an astounding rise of 18% for non-African brands.
On the face of it, this seems disastrous for the future of African brands. However, if you factor in that the South African rand has lost 23.4% of its value against the dollar and that South African brands represent 65% of the African brands on the list and have a combined value of 91%, the figures begin to tell a different story. Had there been no depreciation of the rand, African brands would have outgrown non-African brands by 20.8%.
Nevertheless, non-African brands, with their long history, well-established systems and brand-development experience, and which dominate the technology and auto sectors (which together represent 59% of the value on the list and 31% of the most-admired brands), would still command a gigantic presence in Africa.
Telecoms hold their own
The 2014 Brand Africa 100 illustrates perfectly that while it is not impossible to build a market-dominant brand from within Africa, it is just more challenging. Among the range of difficulties that a home-grown brand faces is the ever-increasing crowd of global brands, most of them giants of their industries, which are looking for alternative growth markets.
While the top 100 Most-Admired Brands in Africa list contains a respectable 22 African brands, it does highlight the continued dominance of global brands on the continent--or rather the growth opportunity for African brands. One industry where African brands have managed to hold their own, and in some cases lead the way, is in telecommunications. Almost 50% of Africans (more than 500m) own a mobile phone. The likes of MTN, GLO, and Tigo are examples of brands that have grown to giant status on the continent.
Tigo is the most notable success story, adding 82% to its brand value over the year. While it may not have its origins in Africa, the brand has spent much of its life developing in emerging markets and the lessons learned seem to be paying dividends.
It is also worth noting that 28 of the brands in the Most-Admired Brands table come from either the telecommunications or electronics/computer sector, highlighting the importance of these categories in Africa.
African brands have also managed to maintain their strong position in the Food sector with Tiger Brands and Peak Milk emerging as the most-admired brands in the sector. In the beer market, the likes of Tusker and Nile are success stories beyond the obvious SABMiller. Tusker has seen an 18% growth in brand value.
In contrast to telecommunications, the electronic/computer sector is dominated by global mega brands from North America and the East. Many of the top-performing brands in this sector are those that have managed to join the expanding mobile device market, the likes of Samsung, LG, Sony and Apple.
Not surprisingly, given the high cost of entry, the auto category, which represents 14% of the most-admired brands and 22% of the value of the list, is dominated by global brands.
Equally unsurprising, given the relatively uncompetitive textile and manufacturing industry in Africa, is that the...