Key Findings & Future Trends
In the 21st century, we are living in a disruptive economy, where new technologies and innovative thinking have changed established markets and broken the models that have previously driven them. Banking and automobiles are prime examples of markets where this tendency has been observed: brands like Paypal and Tesla have been successful in changing the way we pay and drive cars, forcing competitors to rethink the way they do business.
Despite that, the BrandZ Top 50 Most Valuable LatAm Brands 2018 have grown 18 percent in value, and the reason for this is not only explained by the region’s economic recovery, with GDP growing around 1.3 percent in 2017. There is a cultural aspect to consider: Latin American people tend to establish strong emotional relationships with their favorite brands; deciding which brands to consume is more of an emotional than a rational decision. Moreover, they are keen to consume local brands, in part due to their great respect and pride for those brands.
We observe this characteristic of Latin American people’s behavior in several categories in the BrandZ LatAm ranking in 2018.
Brands in the Financial Institutions category are facing an increasing threat from FinTechs - the innovative and technological way of delivering financial services. In Brazil, Nubank started this revolution and became the first billion-dollar startup in the country, followed by Banco Original and Banco Neon. However, despite this threat, very well-positioned brands like the Brazilian banks Bradesco and Itaú, and the Chilean bank Banco de Chile, are still very strong brands in consumers’ minds, with strong attributes aligned with local needs, generating great brand values. In addition, these banks have also launched digital platforms, in line with the new market reality.
In the Beer category, the global brewing companies AB Inbev and Heineken control the most important brands in Latin America – Corona (Mexican beer and the most valuable Latin America brand), Skol (Brazilian beer), the second-most valuable brand in the region, and Brahma (another Brazilian beer), in seventh positon, all belong to AB Inbev. Aguila, in ninth positon, belongs to Heineken. Nevertheless, these multinational companies have maintained the local characteristics of these brands and invested in this positioning, which allows them to maintain their high brand value and stay in the top positions in the LatAm ranking.
In the Services category, brands that have sought to understand the most relevant attributes to consumers and have reinvented themselves accordingly have been the most successful. They, too, tend to focus on local attributes when communicating to consumers. The Brazilian brands Claro, Embratel and Net – all belonging to América Móvil – the giant Latin American telecom group, are successful examples of this approach.
A similar degree of disruption is happening in Retail, where e-commerce is constantly replacing stores as internet usage and mobile phone penetration grows. The Retail portion of the Top 50 Latin America ranking posted slight growth, of 2 percent, and seems to be in a transitional phase in terms of technology innovation. The Chilean Retail brands, even in this changing scenario, remain very robust, adding significant value for shareholders. Furthermore, many Latin American retail brands have investested considerable sums in improving their brand experience at all touch points, allowing them to stay favorably positioned in the ranking.
In spite of the disruptive backdrop, the Latin American brands that have stayed true to their purpose and relevant to consumers have managed to stand out and perform well in the LatAm ranking.
To be as successful as possible in the market, brands need to outperform others in their categories on five key attributes shared by healthy, strong and valuable brands, identified by BRANDZ™ analysis: Brand Purpose, Innovation, Communication, Brand Experience and Love.
· Brand Purpose: this is what a brand does beyond producing and selling, and is the way in which the brand aims to make people’s lives better. Having a sense of purpose is particularly important to consumers who are looking for brands that have positive impact on society.
· Innovation: Innovative brands stay ahead in the market and set new trends or create something new. Innovation does not only mean technological advances; it could be new services, new sales channels or entering into a new category. Innovation can lead to a long-term relationship with consumers.
· Communication: Brands must gain visibility through advertising with a message that differentiates them from the competition. To do this, a brand must engage in something that really matters to people, and then advertise it in the right place.
· Brand Experience: Experience is related to how a person interacts with a brand. This interaction includes much more than just the moment of consumption, it starts before a person considers what to buy and goes beyond the moment of consumption. Brands must show consumers that they are focused in delivering the best experience at every touch point.
· Love: In this case it means an emotional connection with a brand. Love is developed when a brand invests in purpose, innovation and in delivering a great experience. Love is what helps maintain a long-term relationship with the consumer, alongside innovation.
The combination of these five metrics is called a brand’s Vitality Quotient (vQ) and represents how healthy is the brand (the average vQ for all brands is 100). A high vQ (a score of 105 or higher) in all five attributes means that the brand has “Healthy” vital signs and can drive growth in brand value. If the brand scores 99 or less in all five measures it is considered “Frail”. When the brand has a mix of high and low scores, it is at risk of damaging its brand health and underperforming in the market, and it is classified as “OK”.
Looking at the Top 50 LatAm brands, more than a third are considered healthy, while nearly half of them are OK. Just 15 percent are frail, but this figure is higher than amongst the Top 50 brands globally, in China and in the US.
When we put the LatAm ranking in a global context, there are important differences. Latin America has a smaller proportion of healthy brands than the Global, China and US rankings. At the same time, the proportion of frail brands in Latin America is bigger than the other regions. This demonstrates that there is scope for OK and frail brands to improve their performance, being more relevant to consumers by exploring local preferences, and becoming healthier brands as a consequence.
In Latin America, the brands Falabella, Corona and Globo are examples of healthy brands, all with outstanding vQ scores. Each brand has invested in strong ties with consumers, taking into consideration local preferences and priorities.
- Falabella has been an innovative and trendsetting brand in Chile. It was the first in its category to develop online platform offering the full range of products, and this allowed Falabella to boost its loyalty schemes and expand to new territories. The brand has a drive to understand its consumers and is an effective communicator. Falabella is also a leader in e-commerce development, offering a valuable experience that is constantly reviewed and adjusted. All the platforms developed by the brand have enhanced the way they interact with consumers, improving shopper affinity. Falabella is the most valuable Chilean brand, and ranks sixth in the LatAm Top 50.
- Corona is a highly popular brand, benefiting from an exceptionally wide distribution network across Mexico and the LatAm region. Its communications have shifted in recent years to become more creative and engaging, turning the brand into a true “lovemark” and one of the most iconic Mexican products available globally. The brand aims to unite Mexicans, and its campaigns achieved the strongest levels of media effectiveness of any brand in 2017, with high ad recall, branding and enjoyment scores. The big impact that Corona’s “earned media” coverage had shows the brand’s strong influence among Mexican society and among the Hispanic community abroad. Through several experience-led platforms, and sponsorship of highly influential music events, football clubs, sports and entertainment events, Corona continues to invest in customer engagement to drive preference and increase loyalty. It is also innovating in product formats and promotions at point of sale, especially focused on the upcoming soccer World Cup, and its Light sub-brand.
- Globo, the Brazilian TV station, has a mission to tell stories and to broadcast quality, relevant content to the public. The station has been sharing its content across different platforms and devices, investing in interactive experiences, and has a sense of responsibility for contributing to the social transformation of the country. This year, the station invited Brazilian people to record a video sharing their thoughts about the way they would like to see the country’s future. These videos were then aired in Globo’s main news programs.
The performance of Falabella, Corona and Globo on the five signs of brand health are as follows:
Each of the five metrics has an average score of 100 for all brands. A brand can score above or below the average. For example, if a brand has a score of 120 on any attribute, it means that performs 20 percent above the average.
The next charts compare, by attribute, the performance of both the Top 10 and the Top 50 LatAm brands with the leading brands in China, Global and the US.
Latin American brands underperform on all indicators when compared to the other regions, and this is observed for both the Top 10 and the Top 50 brands.
However, when we compare the performance of the Top 10 LatAm brands with the Top 50 for the region, the Top 10 brands score far better. This trend is seen in China, Global and the US as well. This indicates that brands that focus on all five elements of brand health improve their brand value. These brands have a purpose (creating the perception of making consumers’ lives better), are creating perceptions of innovation, are communicating creatively, providing a great brand experience that meets consumers’ needs, and are fostering a strong sense of love. These brands have an huge advantage in the market, delivering meaningful difference for consumers, and this, ultimately, translates into greater value for the brand and its shareholders.