In this issue
Scope for new hope
|It's time for Irish industry to get back to work after the feel good month of May. The Millward Brown Lansdowne BrandZ report on the top 100 global brands points to areas where Irish companies can prosper; James MacCarthy-Morrogh writes|
Last month I wrote about the happiness index and how we could do with some. So who would have thought that the States visits of Queen Elizabeth II and US President Barack Obama could deliver such a healthy dose of national feel good factor. But, as we soon found, the realities impacting on our stricken nation, have a habit of making a quick return and once our happiness rush wears off it is time to get on with the job of rebuilding our economy.
Business and trade is our solution and the more we have of it with our friends next door and across the pond the better. Competing in the global marketplace we can only succeed by adding value in every area of economic activity: from domestic food production, to the most high tech products of the foreign multi-nationals on whom we depend so much.
Adding value is all about brands. So it is opportune that the Millward Brown Lansdowne BrandZ report on the top 100 most valuable brands was launched recently. This is the sixth annual report which puts a monetary value on global brands using a combination of financial and consumer research data. Many of its findings are instructive to Ireland as we look to the industries, both native and global, that must grow us out of the economic crisis.
Brewing is a good place to start. One Irish brand had a very good month indeed - what with its royal inspection and rather heartier presidential imbibing. BrandZ ranks Guinness as the seventh most valuable beer brand with a value of $3.4 billion. The report notes a nine per cent increase in the value of the Guinness brand despite the difficult domestic market. A number of trends were noted this year that will resonate with the industry domestically.
There is a global shift towards home consumption which has led to fierce retail competition with the accompanying danger of eroding brand value. In response, brewers have developed portfolios of good, better and best brands and improved packaging to better compete on retail shelves. International marketing power is becoming increasingly important, with Budweiser's InBev parent the main driver, resulting in two of its Brazilian brands joining the top ten.
President Obama's State visit to Ireland, which followed directly on from Queen Elizabeth's first time in the Republic, helped restore some much-needed pride and joie de vivre. The visits should boost tourism and project a stronger image of Brand Ireland overseas.
Retail is another area that will be critical in boosting domestic demand in the Irish economy, as consumers finally begin to spend again. Big changes are happening in retail globally - the most valuable retail brand is now Amazon, a retailer without any stores. It continues to set the standard in e-commerce retailing and its popularity has a myriad of knock on effects - from its impact on small local retailers who cannot compete on price or convenience to forcing traditional large retailers into on-line channels in order to compete effectively.
The impact of the i-Phone and other mobile devices cannot be underestimated, as consumers are now armed with ever more complete information - not just on price, but on reviews and comparison sites as well as word of mouth is spread via social media. Household name brands had mixed results in terms of their brand value performance.
Aldi and Lidl did well out of the recession, but their growth has been tempered to a degree by the price response of the likes of Tesco and Carrefour, and in Ireland, Dunnes Stores and SuperValu. Marks and Spencer's brand value declined globally by eight points, the strength of their food offering being offset by a difficult clothing market. Ikea had an increase of 28 per cent worldwide, but this is unlikely to have been the case in Ireland, two years on from its launch, due to the ravaged property market on which furniture stores are so reliant.
The technology sector is the one where so much of our hopes are pinned. Once again it dominates the top 10 list of brand values globally, but this year Google has been supplanted by Apple as the world's most valuable brand. Facebook also made its first appearance in the top 100 at number 35. The power of these brands and their platforms is indicative of the movement in technology toward ‘cloud' computing, where data and applications are stored in giant data warehouses and accessed, as required, by consumers through portable devices.
A journalist tried to trip up Enda Kenny on the issue of cloud computing during the election campaign and to his embarrassment was wrong footed when the Fine Gael leader gave an assured response. It seems the Taoiseach was right, cloud computing and its derivative elements are where Ireland should look for the next generation of high tech industries. The days when we were competitive at assembling computer hardware are history and ominously perhaps for one of our largest employers the BrandZ report states: ‘as applications and files move to clouds it potentially becomes less critical to have an Intel inside'.
BrandZ Top Ten Brands
- China Mobile
- General Electric (GE)
BrandZ Top 100 Brands compiled by WPP
Irish food suppliers should look to the impressive performance of fast food brands globally, a sector which increased by 22 per cent in brand value, as a source of growing market demand. Breakfast in particular is cited as a meal targeted by brands from McDonald's to Starbucks as a key driver of growth, and one that was able to tack on a ‘take out' lunch business.
The growth of the Subway brand in Ireland is a good example and one whose fresh food image resonates well with Ireland's as a fresh food producer, particularly after the e coli scare in Germany. The country is well positioned to make gains in breakfast foods, with anything from dairy, to black pudding and rashers, to porridge oats. We have strong brands in them all.
Another indicator of the return to growth in the global economy is the uplift enjoyed by luxury goods brands. The likes of Louis Vuitton, Chanel, Cartier and Moet & Chandon have all recorded increases in brand value. BrandZ reported that "in a world of mass-produced consumer goods, bespoke attention to individuality became the ultimate luxury. And it provided a rational reason - if needed - for justifying an emotional, expensive purchase".
The trend presents opportunities for Irish businesses. From world famous designers to local craftspeople, products from Midleton whiskey to Irish silver and ceramics all fit into this category of luxury goods: unique products to sell to tourists and export. If understated luxury is now more in keeping with the times then surely Irish goods can target this demand.
Brand power is growing all over the world again and Irish industry can leverage this growth to its advantage if we are to successfully sell our goods on world markets and restore our competitive advantage. The fortunes of global brands speak much of where we ought to direct our energies and harness our talents to best advantage.
What of financial institutions? Well, we all know too well that in this country financial brands are toxic and their equity has been wiped out. But do global trends point to what might emerge eventually as a new financial environment in this country? Globally, the sector is recovering in brand value with a nine per cent increase since last year.
Much of this is driven by growth in the Bric markets of Brazil, Russia, India and China, where Chinese banks in particular are forging strong brand relationships. Of the European banks, only Spain's Santander makes the top 20, underling the shift in the global power stakes. BrandZ notes that in the US restoring trust in banks is still an issue as the fear of foreclosure remains high. It is likely that in Ireland the banks that were too big to fail will struggle with brand equity for some time yet and the worst offenders wound down.