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LatAm 2014: Latin American Overview

The Headline News

Even though the BrandZ ™ Top 50 Most Valuable Latin American Brands 2014 decreased 4.5%, certain segments showed a very good performance, including Beer (+13%), Food (+21%) and Retail (+14%). One of the reasons for this growth is that some brands have implemented successful strategies to address the growing middle class need. A good example is Brahma, which created Brahma Fresh for the market in northeast Brazil, to compete against low price beers.

The bad news came from financial institutions (-3%), B2B (-19%) and Services (-4%) segments – each for different reasons, which are explored here.


At The Top Of The Table

In 2014, Beer, Retail, Communication Providers and Financial Institutions segments dominate the top five positions, a repetition of what we saw in the 2013 ranking.

First and foremost – and once again – Corona, the Mexican beer brand, heads the BrandZ ™ Top 50 Most Valuable Latin American Brands 2014. This achievement demonstrates the strength of the brand’s solid positioning and its high regard amongst consumers in both Latin America and overseas.


A Good Year For Beer All Round

2014 sees a real predominance of the beer segment overall, owning five of the top ten positions.

Corona had a 21% growth, to US$ 8 billion. This was followed by Skol, Brazil’s most valuable brand, with a value of US$ 7 billion, an 8% growth in comparison to 2013. All these brands helped to hold the fall in value of the BrandZ ™ Top 50 LatAm 2014.

The other three beer segment brands that made it into the overall top ten were Brahma (Brazil), Águila (Colombia) and Modelo (Mexico).


Newcomer Brands

The BrandZ ™ Top 50 LatAm 2014 had six new entrants: Marinela (Mexico – Food) Ipiranga (Brazil – Retail), Pilsen Callao (Peru – Beer), Tottus (Chile – Retail), Banamex (Mexico – Financial Institution) and Une (Colombian – Communication Provider).


Key Findings From Brandz ™ Top 50 Latam 2014 And Future Trends

  • 1.Local icons that remained relevant to consumers became more valuable – Latin America has several local icons and BrandZ results showed that these brands are very strong. Examples are Telcel, Skol, Águila, Sodimac, and Inca Kola, among others. What the study shows is that all these brands have taken action to improve their offer to retain their relevance to consumers, which consequently increased their brand equity. Bradesco in Brazil is a very good example of this; traditionally a bank for the middle class, it has improved its offer for low-end consumers, with activity such as sponsorship of the Olympic Games.
  • 2.Internationalization of brands – there are very few genuine Latin American brands. Latin America is a region composed of several countries, cultures and languages and this creates a barrier for geographic expansion of local brands. The beer industry is a clear example of this. Even though the brands belong to international groups, in general they have kept local brands local, for example, Águila, Skol, Cristal, among others. But internationalization of local brands can offer great potential for growth, as proved by the likes of Falabella and Corona. In these organizations, they take the view that geographic expansion is worth the commercial risk. Exposing their brands to compete in different markets, with different cultures is a big challenge but at the same time, it’s an opportunity for learning and an important step in creating sustainable growth for the corporation. Colombian brands such as Bancolombia, Avianca, Grupo Sura are moving in this direction to create Latin American brands; Brazilian brands such as Itaú, Sadia, Natura and Vale are also starting to do so.
  • 3.Brand consolidation following Mergers & Acquisitions creates a big “house of brands” – over the last few years, we have seen some important mergers such as in the beer market (AB Inbev, SABMiller), BR Foods (Sadia, Perdigão), Latam (Lan and Tam), Avianca (Avianca and Taca), ItaúUnibanco (Itaú and Unibanco) among others. Last year these consolidations started to generate results. AB Inbev is a clear example of this; consolidated, brands that belong to AB Inbev represent 19% of the total BrandZ ™ Top 50 LatAm 2014 and SABMiller consolidated represents 7%.


Value Distribution By Country

The BrandZ ™ Top 50 Most Valuable Latin American Brands 2014 reveals pretty much a repeat of 2013’s ranking of the extent of contribution by country: Mexico once again is the main contributor, showing a 33% share. Brazil, in second position, sees a drop in its contribution from 28% to 24%.


LATIN AMERICAN BRAND VALUE % DISTRIBUTION BY COUNTRY


Source: Millward Brown Vermeer

Mexico remains in first place in the BrandZ ™ Top 50 Most Valuable Latin American Brands 2014. Its contribution to the ranking grew from 28% in 2013 to 33% in 2014, led mainly by Beer, Communication Providers, Retail and Financial Institutions, the combined value of which rose 27% in the period.

Brazil decreased its contribution to the BrandZ ™ Top 50 LatAm 2014 from 28% to 24%, mainly due to the weak performance of almost all of its brands: of the eleven Brazilian brands in the ranking, eight dropped in value. The segments Energy, Financial Institutions and Cosmetics displayed the worst performance, a reflection of the Brazilian stock exchange, which in 2013 experienced the second largest drop globally (-34% in dollar). This was mainly due to the commodities companies’ and investors’ insecurity about the country’s economic performance.

Chile, in third place, increased its contribution to the ranking in 2014 from 19% to 20%. From nine Chilean brands in the ranking, the retail segment domains with six, which clearly shows the power of well-positioned brands. Chile is the only Latin American country to join the OECD (Organization for Economic Cooperation and Development), which it did in 2009, due to its more efficient growth compared to the other economies in Latin America.

Colombia and Peru basically maintained their positions in the BrandZ ™ Top 50 LatAm 2014. The Financial Institutions segment dominates the Colombian contribution to the ranking while for Peru, the Beer segment is the most representative.

Argentina, in last place, contributed only 1% of the BrandZ ™ Top 50 LatAm 2014, generated by YPF, from the Oil Industry segment.

Performance By Industry Sector


BRAND VALUE BY INDUSTRY SECTOR


Source: Millward Brown Vermeer


Beer, Food & Personal Care

The Beer, Food & Personal Care segment continues to be the leader in value contribution to the BrandZ ™ Top 50 LatAm 2014, with an increase of 9% in terms of value. The category enhanced its presence in the Latin America region, contributing 33% of the total brand value, against 29% of the previous year ranking.

Beer is the main sub-segment, representing 78% of the segment (73% in 2013), with growth of 13% driven by Mexican, Brazilian and Peruvian beers: Modelo from Mexico had the strongest growth, (51%). The capital markets’ financial performance of the organizations that own the beer brands – Anheuser Busch, Sabmiller, Grupo Modelo and CCU, among others – justify the success of the beer sub-segment, reflecting the increasing consumption of beer in the region (according to Euromonitor, from 2008 to 2013 the consumption of beer increased 76%).

The increasing middle class and the consequent improvement in purchasing power have benefited the segment as a whole.


Financial Institutions (Banks and Insurances)

This segment is still the second most important in the region, contributing 22% of the brand total value, in spite of a fall of 3% from 2013 to 2014 driven by Brazil (-20%) and Chile (-13%). The Mexican brand value increased 43%, compensating for the poor performance of the other countries.

In Latin America (except for Banorte and Bancolombia), almost all Brazilian and Peruvian brands decreased brand value due to failure to deliver expected earnings and a decrease in interest rates. This generated pressure to reduce costs and, consequently, reduced the value of the brand. In Brazil, specifically Banco do Brasil decreased value due to Government intervention, this created a negative perception amongst investors, which was consequently reflected in its market capitalization.


Retail

The Retail segment showed the second highest growth on the previous year (5%), increasing 14% in 2014. Among the eleven brands that compose the segment, Falabella and Sodimac – with participation of 41%, showed 11% growth on average. These brands have been successful in meeting the needs of the growing middle class.


Services (Communication Providers and Airlines)

This category, that represented the biggest fall in 2013 (-31%), decreased in 2014 by -4%. Mexico dominated the Service ranking, with four brands out of the six in the total. The 21% average decrease of Telcel and Claro was compensated by the good performance of Televisa and Telmex, which grew 11% (mainly in terms of financial performance).


B2B (Energy / Oil and Industrial)

B2B is the category showing the biggest decrease this year (-19%). The category is dominated by the Energy/Oil subcategory, which decreased 26% due to the fall in commodity’s price. The industrial segment, represented by the sub-category Cement, compensated this fall, increasing by 35%.


Comparison With Other Brandz ™ Brand Valuation Rankings

In the emerging countries of Latin America, in general terms Consumer Goods and Services categories lead the rankings, reflecting the characteristics of those economies – particularly the noticeable increase in the purchasing power of the middle class. In China, despite Financial Institutions and Services being the lead categories, Technology is starting to gain ground. As the global ranking encompasses more countries, Technology naturally appears as the major category because it includes important international players in the global technology sector.


COMPARISON WITH OTHER BRANDZ BRAND VALUATION % RANKINGS

Source: Millward Brown Vermeer