Constancy Amidst Chaos

FERNANDO ALVAREZ KURI
Vice President
Millward Brown Vermeer, Mexico
Fernando.Alvarez@millwardbrown.com


Once, in some book by a classic author, I read that in Greek mythology the word chaos did not refer to “disorder”, but to a “different kind of order”. Now that I’m looking for that concept in texts by Ovid and Hesiod, I wonder if my memory is true or rather something I invented about my college days. In any case, I think the idea is worth mentioning in current times, when we live surrounded by headlines that keep reminding us change is all around us at a regional level, but also day after day in our country.

CONTRASTS: A WAY OF LIFE IN MEXICO

I remember a foreign friend of mine, who has been living here for years, defined Mexico as ‘the country of eternal crisis’. I think this term accurately describes the constant change we experience as a society. This is not only reflected in our fluctuating economy: commercial opening policies and media development display before us a whole new array of brand options, of experiences and needs we now consider ours. Mexico’s opening up, which started in the late 80s — a process that positioned the country in second place in terms of commercial opening, preceded only by Chile — created, probably unintentionally, consumers who are more and more sophisticated, who search for experiences they know are ordinary in the First World and which they expected to arrive here, but did not. Thus, Mexicans became consumers avid for new experiences, for new brands that let them dream about an alternate reality where they can foresee a better future.

Mexicans are people of contrasts, and we must remember the country itself is that way: urban and rural, modern and traditional, a country with high poverty levels but with the world’s richest man. Mexicans might seek modernity, but they will never relinquish the sense of security that tradition offers them. We are consumers who follow habits, finding a kind of comfort — extremely appealing — in the options we are already familiar with.

IN PURSUIT OF MODERNITY AND TRADITION

In this context, it is no surprise that the most valuable categories in our country are the same year after year: retail, beers, and telecommunications. Together, the 18 brands within these three categories represent over 70% of the country’s Top 30 value. Retail and beers are examples of brands that have long been part of Mexican life — they have the earliest foundation average among the categories listed in the ranking: 1927 and 1925, respectively, against the median foundation of the portfolio, which is 1945. Telecommunications is not that new, either: its foundation dates back to around the 1950s. Although these categories and the brands within them have “a history”, most of them are not considered old brands by consumers, since in Mexico they are the categories that change the most.

Mexico’s telecommunications sector is witnessing the entry of new competitors as a result of last year’s reform. Brands entering the market, such as Izzi — an element in Televisa’s strategy to steal share from Mexico’s historic telecommunications giant, Telmex, — are trying to simplify the category’s value proposals, offering a fresh perspective against the virtual monopoly of its main competitor. The presence of new options has posed an important threat to the new leader, which has responded by adopting the same distinctive element that Izzi used in its attempt to dethrone the king: service prices, whilst also taking advantage of the long-lasting tradition in consumers’ minds.

ENTER THE GIANTS

In the case of beers, the past few years have been decisive. The acquisition of the two large Mexican brewers by Heineken International and Anheuser- Busch InBev marked a “before and after” in the category. Large brands with sophisticated practices suddenly faced an environment of increasing competitiveness as the introduction of new brands — iconic in the rest of the world — became a reality they were forced to confront.

The entry of these two giant players intensified the competitive scenario and led local large brands to seek closeness with users so as to gain relevance. From Corona and its massive investment in media during the FIFA World Cup 2014 — being official sponsor of this global event for the first time — to Tecate, which has chosen to try to become a masculinity and pop culture maestro. It’s done this through campaigns like the one with the already famous phrase “te hace falta ver más box” (“You need to watch more boxing”). In short, beer brands have sought to create solid positionings that bring them closer to their consumers’ daily lives.

As for retail commerce, 2015 was a year of reorganization. The sale of large formats and foodservice of Comercial Mexicana —the third largest supermarket chain in the country — stands out. Soriana, the second largest chain, surpassed only by Walmart Mexico and Central America, has strengthened its presence by the purchase of large areas (a total of 160 stores). Grupo Gigante acquired Comercial Mexicana’s foodservice business, which included 2 brands: California and The Beer Factory. In this way, Grupo Gigante has also strengthened its portfolio, which includes the management in this country of brands as important as Petco and Panda Express. This rearrangement of Comercial Mexicana’s assets will result in an enormous change in the retail sector in Mexico, since it means not only a transformation in terms of sales floor, but also the disappearance of key promotions that marked consumption trends in the country, such as Julio Regalado: a 35 year-long discount campaign that set a parameter for all competitors.

There is no doubt that Mexico is not the same country as it was 50 years ago. Furthermore, it is not the same country as in the early years of the past decade. Today, Mexicans live in an environment quite different from the so-called ‘Mexican miracle’, a period in the late 20th century when commercial opening and neo-liberal policies claimed, through official statements, the country’s triumphal entry to the ‘First World’. Global financial crisis and public policies to tackle competitiveness issues, and delayed structural reforms – that are only recently starting to take shape in the Mexican market – became burdens that undermined Mexican ideals in favor of ‘the path to the glories of the First World’. Brands and consumers grew up in this environment: one where small adjustments were —and are— made here and there in pursuit of a better future. Consumers expect brands to be allies capable of fulfilling their promises: we are a society looking for new traditions that bring the certainty of a better lived life.

BrandZ LatAm Top 50 2015

BrandZ LATAM 2015 Report Top 50 Report

Top 50 Chart

Top 50 Infographic


Methodology and valuation by Kantar Millward Brown


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