Emerging markets house future big brands

21 July 2009

LONDON: Brands from areas such as Asia and the Middle East are likely to emerge as the next major global players in the food and beverage sector, with changing patterns of wealth being one of the main factors contributing to this trend.

The number of brands from fast-growing markets in Millward Brown's BrandZ rankings rose this year, but it has also been argued that companies based in nations such as China face some difficulties in establishing themselves elsewhere.

In an analysis prepared for UK daily newspaper the Financial Times, Wolff Olins, the brand consultancy, identified five brands which it believes have the potential to expand worldwide.

One is Juan Valdez Café, a coffee house chain formed by the National Federation of Colombian Coffee Growers, and owned by 22,600 shareholders, who also grow the beans it uses in its drinks.

Last year, the company announced a plan to open a total of 500 stores across the US, Latin America and Europe by 2010, building on a network of over 100 outlets already operating in its home country.

Almari, based in Saudi Arabia, describes itself as the "largest integrated dairy foods company in the world, with a reputation for quality that is unmatched within the gulf countries in which we operate."

It was founded in 1976, and has recently forged a partnership with PepsiCo, and announced it has a budget of $1.6 billion (€1.1bn; £971m) set aside for acquisitions over the period to 2013.

Patchi, a premium Lebanese chocolatier, was launched in 1974, and now has 140 boutiques in 35 countries worldwide, from Hong Kong to the UK.

ChangYu, a Chinese wine manufacturer trading since 1892, is also tipped for long-term success, and introduced a mass-market red wine this year, having previously concentrated on premium products.

The final company which Wolff Olins predicts will develop into a multinational giant is United Spirits, India's biggest liquor group, which owns assets including Whyte & Mackay, the Scotch whisky.

Diageo, the world's number one spirits group by revenue, is currently said to be in talks to buy a stake of up to 15% in its Indian counterpart, as it seeks to tap in to a key emerging market.

Melanie McShane, a strategist at Wolff Olins, said that "it used to be possible to be a global brand by dominating the US market. That's changing rapidly. Now you have to be number one in Asia." 

Bain & Co., the consultancy, has also forecast that the number of companies based in emerging markets featuring in the FT Global 500 – a ranking of the biggest corporations  will increase from roughly 10% in 2001 to around 25% in 2015.

While representation from Western Europe in this group is expected to stay largely constant over this timeframe, Japan and Australia could see their totals fall by around a third.

The number of firms based in the US and Canada will also see tumble from around half to under 40% in the period to 2015.

Overall, there is a "seismic shift" in progress, which will see Western consumer goods brands "battle it out" with rivals from emerging markets, according to Satish Shankar, a partner at Bain & Co., Singapore.

Data sourced from Financial Times; additional content by WARC staff