UK consultancy Brand Finance has released their 2019 South Africa 50 report, an annual report on the most valuable and strongest South African brands.
Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Alongside revenue forecasts, brand strength is a crucial driver of brand value.
According to these criteria, Discovery is the world’s second strongest insurance brand, behind China’s Ping An, and the nation’s 5th strongest brand across all sectors, with a Brand Strength Index (BSI) score of 86.0 out of 100 and a corresponding AAA brand strength rating. Despite there being a variety of sectors included in the ranking, tech is a sector that is greatly underrepresented. There is a need to develop brands within this sector if South Africa wants to close the gap with leading economies.
South Africa’s largest sugar producer, Tongaat Hulett, has dropped out of this year’s ranking, following an accounting scandal in which the brand is currently being investigated for overstating its 2018 results. It was recently announced that Tongaat has withdrawn its listing on the stock exchange and 5,000 employees have been sent retrenchment letters. This is not the first time a South African brand has hit the headlines for accounting fraud. In late 2017, it was uncovered that Steinhoff had recorded fictitious and irregular transactions, which substantially inflated the brand’s profits, and resulted in the brand’s market value wiping out and the CEO’s resignation.
Capitec is the nation’s strongest brand
Capitec (up 15% to R7.8 billion) defends its position as South Africa’s strongest brand with a BSI score of 88.7 out of 100 and a corresponding AAA brand strength rating. Since the bank’s inception nearly two decades ago, Capitec has disrupted the country’s financial services sector and traditional banks, through removing barriers to entry for everyday customers. This approach has led to the brand boasting a vast customer base, with 44% of South Africans banking with them. This number is growing exponentially as more people turn to the brand for its reliability, transparency and reduced fees.
Brand strength explained
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating. Analysing the three brand strength measures helps inform managers of a brand’s potential for future success.
South Africa’s 10 strongest brands
- Capitec (Banking)
- Castle Lager (Alcohol)
- First National Bank (Banking)
- Black Label (Alcohol)
- Discovery (Insurance)
- Vodacom (Telecoms)
- Sasol (Oil)
- Outsurance (Insurance)
- Telkom (Telecoms)
- MTN (Telecoms)
To read the full report, click here.
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