In 2018, Latin America returned to growth after an estimated GDP rise of 1.3% in 2017, following six years of economic slowdown, according to Kantar Consulting's BrandZ Top 50 Latin American Most Valuable Brands 2018 report. Growth in the region, Kantar said, had mainly been fueled by Brazil and Argentina emerging from recession; Brazil's GDP grew 1% in 2017 and Argentina's around 2.5%.
Despite the backdrop of economic recovery, many brands succeeded in winning the hearts and minds of Latin American consumers and Corona soared to number one as Latin America's most valuable brand for 2018. With a total brand value of US$8.29bn*, the Mexican beer brand bumped Brazilian beer brand Skol into second place (brand value US$8.26bn).
*Kantar's 'brand value' is the dollar amount a brand contributes to the overall value of a corporation, calculated in three steps. Firstly, Kantar establishes a brand's 'financial value' by multiplying financial earnings with future earning prospects (in brand multiple form, for example, x6). Secondly, it calculates brand contribution index as a number from 1-5 looking at purchase volumes and price premiums associated with three consumer considerations – being meaningful, being different, and being salient. Finally, 'financial value' and 'brand contribution' are multiplied to establish the overall 'brand value'.
Bimbo, Sadia and Marinela were the only three food brands featured in the BrandZ top 50 ranking, beer dominated the upper end with six brands in 1st, 2nd, 3rd, 4th, 7th and 9th place. But, food manufacturers can learn from these highly valued Latin American beer brands.
Looking up to Corona – the 'local icon'
Speaking to FoodNavigator-LATAM, Roberto de Napoli, director at Kantar Consulting Brazil, said success pivoted on a brand's ability to remain relevant to consumers with a clear brand purpose; keeping local characteristics of the brand and exploring emotional attributes to strengthen relationships with consumers.
“The worldwide brewery companies AB InBev and Heineken, which control the most valuable beer brands in Latin America, have maintained local characteristics of these brands and invested in this positioning. They have focused the brand strategy on the massive middle and low-end classes. They've done this by exploring emotional attributes very much associated with local needs, creating true local icons such as Brazilian beer Skol,” Napoli said.
It was this ability to understand Latin America consumers and their needs, he said, that underpinned everything.
“Latin American consumers are more passionate and emotional than other cultures. They seek brands that go beyond just meeting their needs, offering new experiences in terms of products or in the touch point with the brand. Such actions make them proud to consumer that brand, creating a true legion of brand admirers.”
The Mexican beer Corona, the most valuable brand in 2018, for example, was a “local icon” amongst consumers.
“The brand is very much associated as both a Mexican and Latin American brand and captures a lot of equity from its unique positioning in the beer category. Corona has invested in customer engagement to drive further preference and increase loyalty, with a more creative communication. It has also sponsored highly influential music events, as well as several football clubs and other sport and entertainment events, with a view to uniting Mexicans.”
Food failings?
For 2018, Mexican bakery brand Bimbo ranked as the most valuable food brand in Latin America, ranking in 19th place behind six beer brands. Present worldwide, Bimbo's brand value for 2018 was US$2.6bn – down 11% on the previous year but its brand contribution index was high, at four out of five.
“Bimbo is a world leader in the baking industry with huge tradition and heritage in the Mexican market, dating back to 1943. Bimbo's bakery products are common features in the diet of many families in Mexico. The image of the Bimbo bear and the slogan 'with love as always' are widely known by consumers and their products reach almost every store in Mexico through an excellent distribution network,” Napoli said.
Brazilian processed and frozen food brand Sadia, a subsidiary of BRF (Brazil Foods SA), ranked as the second most valuable food brand in 31st place of the top 50 list. Present worldwide, Sadia's brand value for 2018 was US$1.4bn – down 22% on the previous year and its brand contribution index was low, at two out of five.
Cake brand Marinela, owned by Grupo Bimbo, was the third and last food brand ranked in the top 50, in 49th place. Present in Mexico, Chile, Costa Rica and Guatemala, Marinela's brand value for 2018 was US$933m – down 11% on the previous year and its brand contribution index was also low, at two out of five.
“Brands from the food sector in the BrandZ Top 50 LATAM did not perform well, decreasing on average by 14% from 2017 to 2018, mainly due to financial factors,” Napoli said.
“However, we can take as an example of a successful initiative in the food segment, the Brazilian bakery Baducco, which is not in the BrandZ Top 50 LATAM but increased its brand value by 16% from 2017 to 2018. The brand opened physical stores called 'Casa Bauducco', offering new products and a different experience to the consumer but remained true to its original values... With this initiative Baducco aimed to improve the brand experience with consumers.”
Importantly, Napoli said the products sold in Casa Bauducco stores were different and did not compete with the products it already sold in grocery stores and emporiums.
“The key for a brand that wants to be highly valued in the region is to innovate, offering a totally new brand experience.”
Five key attributes to success
Napoli said Kantar had identified five key attributes, as perceived by consumers, that brands must overperform in to become a successful brand: brand purpose, innovation, communication, brand experience, and love.
He said it was important consumers had a “clear idea” on how the brand made people's lives better; that it stayed ahead in the market, setting new trends or creating something new; had strong visibility with a “differential message”; delivered the “best experience” at every touch point; and connected on an emotional level with consumers. This “emotional connection”, alongside innovation, was vital to carving out long-term consumer relationships and brand loyalty, he said.
“The combination of these five metrics is the brand's Vitality Quotient (vQ) and tells us how healthy the brand is (the average vQ is 100). A high vQ score of 105 or higher or +5% in all five attributes means that the brand has 'healthy' vital signs and it 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, being classified as 'Ok'.”
Corona, for example, alongside Brazil's largest TV station Globo and Chilean retailer Falabella, had the highest vQ indexes in the top 10 list, he said.
“What these brands have in common is that they have invested to enhance their relationship with consumers, taking into consideration local factors, which has made them powerful and valuable brands.”
“...Corona has a rich history of innovation, having been able to tie itself to Mexican culture through simple, yet iconic communications. It has created strong brand cues that relate it to relaxation and music,” he said.
Importantly, Napoli said brands that followed the formula to success could stretch traction far beyond the home market. Corona, for example, was the world's best-selling Mexican beer, he said, and the best-selling import beer in almost fifty of the markets in which it was present.