Brands that feature in Brand Finance’s latest South Africa 50 report released on Thursday 11 July are defying the flat local economy. These brands are outpacing the country’s GDP – likely to be no more than 1% in 2019 – with the top 50 recording a 16.1% value growth rate year-on-year and the top 10 recording an impressive 19.8% growth over the same period.
Jeremy Sampson, managing director at Brand Finance Africa, says: “We can celebrate that the top South African brands are consistently recording high brand value growth rates, in stark contrast to the nation’s sick economy, which is currently falling short of other countries’ growth across the continent.”
Brand Finance is a leading global brand valuation consultancy. Every year, it values 5,000 of the world’s biggest brands and releases its report.
The report confirms that confidence in tech is high, and brands continue to disrupt and create synergies within their industries to keep consumers interested, and more importantly loyal.
In South Africa, the sector ranks first for overall reputation out of the seven sectors covered in Brand Finance’s research, and globally, tech is in the top three. Also on important brand equity drivers such as trust, consideration, recommendation, and – unsurprisingly – innovation, the tech sector ranks #1 in South Africa.
Tech brands such as Google (scoring 8.8 out of 10) and Samsung (8.6), enjoy a very strong reputation, with several others in the top 20 of all brands covered.
Internationally, banks and telecoms are lagging behind their competitors, but still perform well in South Africa. Telecommunications brands MTN and Vodacom lead the way in the rankings, claiming first and second position respectively, according to the Brand Finance survey.
Africa’s biggest telco company, MTN (brand value up 15% to R50.3 billion), has grown its subscriber level steadily over the past year and boosted revenue.
Vodacom’s brand value increased by 21% to R33.3-billion, despite the brand recording revenue losses in its South African business. The strong results from Vodacom’s international operations and the benefits reaped from the 2017 Safaricom acquisition, however, have provided solid growth for the brand over the last year.
The MTN-Vodacom duopoly is continuously grappling for greater market share across the country, resulting in data price wars, and leaving smaller brands like Telkom Mobile and Cell C struggling to compete.
FNB, Capitec (and in a way Discovery) are bucking the global reputational trend in the banking industry. Capitec (7.8) and First National Bank (7.6) are the 8th and 11th most reputable banks according to the survey. Discovery stands out as the third most reputable insurer globally.
In the SA overall ranking, FNB, Absa and Standard come in as third, fourth and fifth most valuable brands behind the two big cellphone companies. These banking brands consistently rank highly for measures such as innovation, quality of products and services, as well as value for money, with Capitec regarded as delivering the highest value for money of any financial services brand worldwide.
Sampson agrees that key reputational drivers in financial services, such as trust and quality, are warning signs to local incumbent banks in South Africa such as Thyme, Bank Zero and Discovery Bank challenging the status quo. FNB continues to reinvent itself in keeping up with the Joneses.
That being said, according to the Brand Finance Report, the banking sector is the most valuable sector in the country with First National Bank, Absa and Standard Bank completing the top five.
FNB has sustained strong brand value growth after it broke into the top three last year, its brand value increasing a healthy 32% to R25.5-billion. The bank’s retail division has expanded its customer base, extended its credit line to top clients and recorded high levels of transactions through its app, all demonstrating its defiance to the economic troubles in the country.
Following Barclays’ sale of its final stake in Absa in 2017, it has begun its return to the global banking marketplace. Absa (up 25% to R23.5-billion) has opened offices in the US and UK in a bid to support growth on the continent, as more European businesses are looking towards Africa for investment amid Brexit uncertainty.
Standard Bank (up 22% to R22.5-billion), sitting in fifth place, has delivered sustainable earnings growth, which the brand attributes to the strength and breadth of its client franchise.
But Sampson adds that tech is greatly under-represented in this country. “There is a need to develop brands within this sector if South Africa wants to close the gap with leading economies,” he says.
Healthcare providers, however, are hanging at the bottom of our food chain.
“Brands in these sectors are rated lowest of all for overall reputation, trust and quality of service, and little improvement is evident over the past 12 months,” says Sampson
Healthcare brands have suffered across the board with MediClinic (down 50% to R5.8-billion), Netcare (down 40% to R3.2-billion) and Life Healthcare (down 17% to R1.9-billion) recording high brand value losses. These three hospital group brands have a combined market share of 83% of the national private facilities market and have faced criticism that the sector is too concentrated.
Sampson emphasises that brand can be a company’s most valuable asset.
The impact of a brand is not limited to marketing metrics; it can be felt in business outcomes. It is therefore imperative to elevate the brand discussion to the strategic realm and evaluate it via strategic metrics, he says. BM
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