Overview

India is on the cusp of new optimism and brand growth

The BrandZ™ Top 50 Most Valuable Indian Brands 2014 totals $70 billion in value. Service sector brands, banks and telecoms primarily, drive that result. Consumer product brands also contribute, powered by Indian family conglomerates and MNCs (Multinational Corporations). The value of the India Top 50 reflects the efforts of these brands to serve the rising middle class and those who aspire to it, both in India’s cities and countryside.

Brand value growth is taking place as India experiences a resurgence of hope following the election in May of Prime Minister Narendra Modi, and a shift from the Indian National Congress party, which ruled India much of the time since independence in 1947. Indians from diverse backgrounds expressed dissatisfaction with the status quo, and their desire for a society based on equal opportunity rather than stratification and entitlements.

BrandZ™ India Top 50 Portfolio outperforms India’s SENSEX

The strong stock growth of the India Top 50 confirms that valuable brands deliver solid shareholder returns, our BrandZ™ analysis shows.

We created a stock portfolio of the BrandZ™ Top 50 Most Valuable Indian Brands 2014 and compared its performance over the past five years with the performance of India’s SENSEX.

Between May 2009 and May 2014, The BrandZ™ India Top 50 Portfolio appreciated 201 percent compared with a rise of 74 percent for SENSEX.

The BrandZ™ India Top 50 Portfolio includes all the brands in BrandZ™ Top 50 Most Valuable Indian Brands. SENSEX is a weighted Index of 30 stocks listed on the Bombay Stock Exchange.

The immediate impact for brands seems to be that a country market that’s been hospitable is about to become even more supportive and welcoming. And the potential is enormous. Perhaps the world’s oldest civilization, India is among its youngest nations. Its population totals 1.25 billion, with a median age of 27, around 10 years younger than the US, UK, and even China.

There is this caveat. As an ancient civilization, the birthplace of Hinduism, Buddhism, Jainism, and Sikhism, the home of 22 regional languages, a place where cultural traditions can change village-by-village, the only definitive statement about India is that nothing is simple. The country has been on the cusp of change before. The optimism following independence ended in failed economic policies and political trauma, including the assassinations of two prime ministers.

Change happens slowly in India, modulated by the competing interests of the country’s democratic polity, and an Indian view of time and progress that respects the past while embracing the present. Daily life unfolds in this duality. India is not a teardown nation where infrastructure appears almost overnight even if heritage is obliterated in the process. It’s a place that attempts to advance with material and spiritual needs aligned. If the pace of growth is slow, it’s also inexorable and relatively stable.

Growing Brand Confidence

Indian entrepreneurs have become more sophisticated and focused on brand building. Leadership of the Indian family owned conglomerates has moved from the entrepreneurial founding generations to younger family members and professional managers with extensive business education.

To satisfy the demands of Indian consumers, Indian brands perfected their value-for-money propositions. And the presence of competitive MNCs forced Indian brands to innovate, certainly in FMCG (Fast Moving consumer Goods), but also in categories like cars, where the Indian brand Mahindra leads the SUV segment.

The mobile phone category illustrates the growing confidence of Indian brands. After initially offering low priced imitations of global smart phone brands, Indian brands, such as Micromax, Karbonn, and Lava, improved functionality and gained credibility, in part by using international celebrities as brand ambassadors to suggest parity between Indian and global brands. Micromax scaled up to sell phones internationally at a competitive price.

Similarly, Indian motorcycle brands, like Hero, Bajaj, and TVS are expanding into Southeast Asia, Africa, and other developing markets where the experience of Indian brands prepares them to serve the needs of value-focused consumers. For categories, like wellness, Indian brands offer the additional advantage of heritage. Examples include the Parachute brand of Marico and the ayurvedic offerings of Dabur, like its flagship Vatika hair care brand.

The Indian family conglomerates most clearly demonstrate the potential power of Indian brands. Having developed respected master brands across disparate categories in India, these dynastic organizations are building international presence. The Aditya Birla Group operates industrial businesses in 36 countries. Over time, Tata companies have acquired brands as different as Jaguar Land Rover and Tetley Tea.

Trends and Countertrends

These developments unfold in an Indian way. Trends meet countertrends and change happens in this tension, as these current examples suggest:

“Premiumization”/Inclusiveness Driven by rising aspirations and income, brands across categories are introducing more premium products and services. But premium is only a narrow band of the potential. The move to premium alone accrues only shortterm results. The larger opportunity is in achieving inclusiveness by making most brands more available and affordable.

National/Regional Because of India’s rural character, with languages and traditions that sometimes change within short distances, brand preferences change too. Especially in FMCG, multiple regional brands compete successfully with national brands. Smart local consumers purchase the local brand over the national when they believe they’re getting similar benefits at a lower price. Brands face two clear and opposing opportunities: growth by consolidating regional brands into powerful national brands; and growth by developing regional brands which, in India, can have economic scale.

Talent Drain/Talent Pool No consumer technology brands appear in the BrandZ™ India Top 50. In contrast, several of China’s most valuable brands are in technology. This absence of valuable technology brands in India is striking because of the presence of so many Indian entrepreneurs in major tech companies worldwide, but it’s easily explained. Global consumer technology brands – Google, Facebook, Twitter, LinkedIn – operate relatively freely in India, so there’s no gap in the market. The recent rise of India tech brands, particularly in ecommerce, indicates that Indians who may have pursued their technology ambitions abroad in the past, are increasingly contributing their talents at home, a development that should have tremendous impact for the technology category and brands going forward.

An Expanding Opportunity

Influenced by the Internet and social media, Indians with widely different income levels share similar aspirations. But the affordability gap remains. Although India is becoming wealthier, even in rural areas, almost 30 percent of the population lived below the poverty line as of 2010, according to the World Bank.

Many brands support efforts to help create a country that’s economically and socially inclusive. As a democracy, India depends on organic cohesiveness, rather than imposed order, to keep the nation whole. It has experienced traumatic periods when cohesiveness wore thin.

The determination to achieve inclusivity is in the DNA of India’s leading brands across all sectors. They don’t treat CSR (Corporate Social Responsibility) as an add-on, but rather as a relevant business function. FMCG brands that produce laundry products often become involved in hygiene and water conservation initiatives. Banks expand into underserved rural areas where initial ROI may not be significant but the potential of the unbanked is great.

Finally, there’s the Indian Diaspora. While 1.25 billion Indians live in India, perhaps another 22 million Indians, almost the population of Australia, live in other parts of the world. These people form a receptive audience for exported Indian brands. And many of them live abroad only temporarily, for study or work, returning to India with knowledge to contribute, money to spend, and brand sophistication that will influence purchasing.


BrandZ India Top 50 2014

BrandZ Global 2014 Report Top 50 Report

Top 50 Chart

Top 50 Infographic


Methodology and valuation by Kantar Millward Brown


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