African brands: a $60bn dilemma
Africa’s brands face losing billions in value as Covid-19 wreaks havoc on the continent’s economies and on consumer buying power, according to an assessment by Brand Finance
In the most telling indication yet of how the Covid-19 pandemic has affected African economies, a new survey shows their top brands could lose $60bn in value. The new Brand Finance Africa ranking paints a picture of nothing short of a bloodbath, with the continent’s most valuable brands together losing up to 12% in this respect.
Says one fast-moving consumer goods marketing director, whose company operates in several African markets: "I think 12% is probably [a conservative estimate] and the loss will most likely be in the high teens when the sums are done again. In many of my markets, some buying has ground to a complete halt and [some] is slowing, as many consumers are now closer to the poverty line than they ever have been."
As a result of a paradigm change, brands are now having to rethink their entire purpose, and, says Old Mutual head of strategy Andisa Ntsubane, it’s time to start preaching a new message. Writing for the trade website Channelwise, she says: "Brands need to drive a purpose-led response to the pandemic by giving life to their promises and values and becoming truly preoccupied with how they support their customers and employees during this very difficult period. It is crucial for brands to play a leading role in alleviating the pain points and creating an environment of hope and optimism."
Brand Finance Africa MD Jeremy Sampson believes the continent’s fragmented and immature market is the reason for the huge collective brand value drop. "The lack of connectedness between nations across the continent means that brands’ growth is being stifled and they are unable to flourish beyond their home markets."
In this difficult operating environment telecom giant MTN is the continent’s most valuable brand, despite recording a 1% brand value loss to $3.3bn. The survey says MTN is being squeezed from all sides as messaging apps such as WhatsApp are driving down voice and SMS revenue and challenger brands offer comparable data services at below-market rates. This has led to fierce price competition and decreasing margins.
MTN rival Vodacom’s brand value dropped by 8% to $2.1bn. The other companies in the top five are FNB (down 6% to $1.6bn), Absa (down 3% to $1.5bn) and Old Mutual (up 16% to $1.4bn).
SA brands once again dominate the banking sector; five are placed in the top 10. The highest-ranked bank outside the country is Morocco’s Attijariwafa Bank (down 1% to $459m). There are nine insurance brands in the ranking, all of which come from SA.
Kenya’s Senator Lager beer is the fastest-growing brand, up 88% to $132m.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction and corporate reputation. In terms of these criteria, Vodacom is the strongest brand in Africa, with a brand strength index score of 89.5 out of 100.
One common theme that runs through the ranking is that successful brands have not pulled back on advertising.
Data and measurement firm Nielsen Media says in this operating climate a strategy of limiting advertising is not sustainable, as Covid-19 is here to stay for at least the medium term. Reducing advertising now could have long-term consequences.
Nielsen says brand managers have to ask the following five key questions to measure advertising success: Did their advertising campaign have a positive effect on in-store and online sales? Did it have a positive return on adspend? What impact did the campaign have on existing brand buyers versus new ones? Is the campaign driving more buyers, higher purchase frequency and bigger basket sizes? Which audience segments had the strongest response, and what impact did the campaign have on their market share?
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