South African Brands Record Brand Value Growth Despite Ailing Economy

South Africa’s economy contracted by 3.2 percent in the first quarter of 2019, the worst quarterly performance in a decade. The contraction rate exceeded what economists and market watchers had foreseen for Q1.

The National Treasury also recently said SA faces “significant risks” to its fiscal outlook, including weak economic growth and uncertain revenue collection.

Despite the economic slowdown experienced in South Africa, the country, known to be Africa’s most industrialised is recording a healthy brand value growth. This is according to a new report by Brand Finance, the world’s leading independent brand valuation consultancy.

The nation’s 50 most valuable brands have surpassed the country’s GDP, recording 5.8 percent brand value growth in real terms year on year since 2018, compared to only 1.2 percent GDP growth over the same period.

Jeremy Sampson, Managing Director, Brand Finance Africa said, “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”.

The country’s telecommunications companies, MTN and Vodacom, lead the park in the rankings claiming first and second position respectively. MTN (brand value up 14 percent to ZAR 50.3 Bn), has grown its subscriber level steadily over the last year and boosted revenue.

Vodacom’s brand value increased by 21 percent to ZAR 33.3 Bn, despite the brand recording revenue losses in its South African business. The company’s growth has however, partly been attributed to Vodacom’s international operations as well as benefits reaped from the 2017 Safaricom acquisition. The two brands have achieved excellent results against the backdrop of falling telco brand values around the world.

The banking sector is the most valuable in the country with First National Bank, Absa, and Standard Bank completing the top 5.

FNB has sustained strong brand value growth after it broke into the top 3 last year, its brand value increasing a healthy 32 percent to ZAR 25.5 Bn.

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.

Castle, a beer that is 100 percent grown and produced in the country, has jumped into the top 10 for the first time with an increased brand value of 19 percent to ZAR 16.6 Bn. The beer is sold in over 40 countries worldwide.

These are among 50 top brands that are outpacing the country’s GDP, recording a 16.1 percent brand value growth rate YoY and the top 10 recording an impressive 19.8 percent growth rate YoY.

These brands, despite the persistent economic weakness and lackluster domestic private sector, have recorded an impressive performance. Their growth poses a potential source of growth for the economy that, in turn, could lead to increased job creation and funds flowing to the fiscus.

While other brands recorded an upward growth trajectory, healthcare brands suffered with MediClinic (down 50 percent to ZAR 5.8 Bn), Netcare (down 40 percent to ZAR 3.2 Bn) and Life Healthcare (down 17 percent to ZAR 1.9 Bn) recording high brand value losses. These three brands have a combined market share of 83 percent of the national private facilities.

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