Economic and political
forces hurt brand value
Mexico increases contribution to Latam Top 50
The economic and political turbulence that has wracked Latin America and produced an average 29 percent currency devaluation impacted the performance of the BrandZ™ Top 50 Most Valuable Latin American Brands 2017, which declined in value 22 percent to $103.4 billion.
Only six brands increased in value. Eight brands appeared for the first time. And 36 brands lost value. The Latam Top 10 also declined, but by a more modest 14 percent, demonstrating the relative stability of strong brands even during periods of economic crisis.
Six of the Latam Top 10 brands were Mexican, two were Brazilian, with one Colombian and one Chilean brand. Of the categories represented, beer brands comprised half of the Top 10, and three retailers and two communications providers comprised the other half.
The beers in the Latam Top 10 included: the Brazilian beer Skol, No. 1 in the Latam Top 100 ranking; Mexico’s Corona; the Brazilian beer Brahma; Aguila, from Colombia; and Mexico’s Modelo. The two communications providers in the Top 10 were Telcel and Televisia, both Mexican brands.
The retail brands in the Latam Top 10 included the Chilean-based department store Falabella and two Mexican chains, Bodega Aurrora and Liverpool. Both Bodega Aurrora, a discount store chain owned by Walmart, and Liverpool, a department store operation, increased in value, 16 percent and 28 percent, respectively.
Mexico contributes value
Mexico again led the BrandZ™ Latam Top 50 in contribution of brand value, rising from 37 to 43 percent, followed by Brazil, Chile, Colombia, Peru, and Argentina. Overall brand value declined in each country, with Chile down the least, 9 percent, and Colombia down the most, 59 percent.
Three sectors primarily drove the growth of Mexico’s brand value: beer, food and dairy, and personal care. Although Brazil is Latin America’s largest economy, producing around one-third of regional GDP, Brazilian brands contributed less than a quarter of the value to the BrandZ™ Latam Top 50 because of economic and political instability, which produced unfavorable exchange rates and falling stock prices.
Chile, the third-largest value contributor to Latam Top 50 value, after Brazil, increased its contribution slightly, to 17 percent, on the strength of the beer, food and dairy, personal care, and services categories. Colombia, the fourth-largest brand value contributor, reduced its value share dramatically to only 8 percent because of weakness in the banks category.
The weakness of Colombia’s banks, down 76 percent in value, drove an overall 56 percent decline in the value of the banks category in the BrandZ™ Latam Top 50, making it the ranking’s poorest performing category. Retail, the only category that did not decline, recorded no change. Beer, food and dairy, and personal care declined only 5 percent. These sectors together comprise the largest proportion of value in the Latam Top 50, over a third.
Several themes emerged for building valuable brands despite this difficult economic context:
- Emotional connection Consumers are shopping more often, but spending less on each trip. Convincing a cautious consumer to spend requires a fair price and good value, for sure, but also an emotional connection beyond the functional benefit.
- Transparency Even in strong economies, consumers today expect honesty and transparency from their brands. These expectations are even greater among consumers experiencing economic instability and uncertainty.
- Optimism Even in some of the most difficult economic circumstances, life goes on. Consumers desire some normality and consistency. They will buy their favorite brands, even if they buy them less frequently.
- Mobile High mobile penetration in this region provides brands with an important opportunity to reach consumers with creative, personalized, data-driven communications.
The Latam Top 50 brands do not control external events that affect their valuations, including the local political turmoil. Regional GDP growth spiked briefly after the global financial crisis, but has declined since 2010. In an instance where the BrandZÔ Latam Top 50 brands can control results, they have performed well; Brand Contribution of the Latam Top 50 has steadily risen over the past five years. Brand Contribution is the BrandZÔ metric of brand equity, the consumer inclination to choose one brand over another.
BrandZ™ Latam Top 10
Six of the Latam Top 10 brands were Mexican, two were Brazilian, one Colombian, and one