The COVID-19 pandemic wiped out $5.5 billion from the value of Africa’s top brands between 2020 and 2021, according to a study by South Africa-based Brand Finance Africa, a brand valuation consultancy.
The 150 top African brands surveyed in the report saw their valuation decline $5.5 billion to $40 billion in 2021 from $45.5 billion in 2020, a 12 percent decline due to the impact of the COVID-19 pandemic.
The brand valuation report also reveals that Nigeria’s top brands account for only 6 percent of the total brand value on the continent, a ranking that puts it behind South Africa even though the latter is second to Nigeria in terms of economic size and even farther behind in terms of population.
The study notes that some top Nigerian brands are yet to make inroads in the continent, a development analysts say limits both their market share and the country’s sphere of influence.
The report ranks 33 Export Lager Beer, Nigeria’s most valuable brand at 43rd in the overall ranking, but the brand declined 8 percent to $292 million.
Access Bank emerged as Nigeria’s fastest growing brand, according to the report, following an 8 percent increase in brand value to $262 million, a growth that has bucked global trend for the banking sector this year.
Babatunde Odumeru, the managing director of Brand Finance Nigeria, says Nigeria’s top brands are not yet truly pan-African, although their performance may be solid on home soil; they are failing to translate this internationally.
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“We are witnessing some brands make strides towards expanding their footprints, should they do so successfully we could see a greater uplift in brand value, as well as more Nigerian brands featuring in the ranking,” Odumeru states.
In measuring brand value – the net economic benefit a brand owner achieves by licensing it in the open market – Brand Finance Africa adopted the royalty relief approach.
This method involves a combination of the market and income valuation approaches. The value of the intangible asset is based on the costs that the company would avoid by not having to pay a license fee or royalty to use the asset. This is compliant with the industry standards set in ISO 10668.
This latest report, the second by the organisation, comes at a time when businesses are still reeling from the impact of the coronavirus pandemic.
“In a year that saw most African countries go into lockdown and significant unrest across the continent, a decline in total brand value for the top African brands is unsurprising,” notes Jeremy Sampson, managing director at Brand Finance Africa, in the report.
Sampson states that following the pandemic, African brands will need to search for opportunities to make up lost ground by embracing new technologies and collaboration, to propel its recovery.
South African brands dominated the current ranking, clinching the first 10 spots. In total, 81 South African brands featured with a cumulative brand value of $29 billion, equating to 73 percent of the total brand value in the ranking, a 15 percent decrease from last year.
Morocco is the third most represented nation in the ranking, with 10 brands featuring, which account for 6 percent of the total brand value.
Analysts say Nigerian brands that want to transform to global giants should have a coherent strategy that includes quality goods and services, acquire deep consumer insight in different parts of the world and develop a winning route to the market.
“If your root to market is weak then people will not see your brand when and where they need to see it. Many times, we are not good at root to market in this part of the world. People just copy and paste it without going deep into understanding the design and development of it,” Uchenna Uzo, consumer expert and faculty director at Lagos Business School, says.
Uzo urges leading local companies to deliver on their brand promise, be consistent with quality offerings and learn from top brands like Coca Cola and Nike, who are locally rooted in their messaging, showing good consumer insight.
“We also need innovation. Great brands keep refreshing their offering, message and packaging. It is not just offering the same thing always. There is always an element of refreshing, renewing and we also need to get Nigerian brands to have this innovative mind-set around doing things,” Uzo states.
Analysing specific sectors where there were a significant shift, the report authors found that the decline in alcohol brand value follows global trends, where economic shutdowns due to pandemic forced a closure of bars and restaurants.
The African banking sector has celebrated strong revenue growth over the previous year and has made some strides towards its expansion plans with Access Bank Nigeria completing acquisitions in South Africa and Kenya, among others, the report notes.
“Access Bank shows no signs of slowing down with plans to become ‘Africa’s Gateway to the World,” the report says.
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