The Macroeconomic Environment: A Challenge to Be Overcome

GONZALO FUENTES
CEO
Millward Brown, Latin America
Gonzalo.Fuentes@millwardbrown.com


At the beginning of this year, I had the chance to take part in an event in Ecuador, attended by the main entrepreneurs and celebrities of the country. There, a famous economist was talking about “the perfect storm”: a decrease in global demand, the collapse in the price of oil (on which so many countries in our region depend), and the US dollar high appreciation.

In addition to this challenge shared by the whole region, Mexico and Brazil, the two largest economies in the region, are facing barely positive scenarios. At the end of July, Standard & Poor’s kept Brazil’s country risk rating at –BBB, but changed its outlook from “stable” to “negative”.

In the case of Mexico, the Enrique Peña Nieto administration was confident that last year’s structural reforms would boost the country’s economic growth. However, the impact of these reforms was strongly affected by a difficult economic and social environment, which led to a very large cut in public investment and expenditure.

WITH CHALLENGE COMES OPPORTUNITY!

Although the social and economic environment is challenging, investment in the creation of great brands is needed more than ever. This is evidenced by the fact that in our ranking BrandZ™ Top 50 Most Valuable Latin American Brands, the joint value of the 50 main brands in the region had a 2% increase against last year. The Brazilian beer brand Skol had a 20% growth, which made it the most valuable brand in our region.

How can brands continue to grow in such adverse scenarios? Brands that grow do so because they adapt to the new rules of the game, they understand how these impact consumers, and based on this they look for solutions considered innovative and relevant by their market. Thus, the secret is simple, but it is the details that count.

A good example of adaptation to a new scenario is the Mexican brand Bodega Aurrerá. Seeking to respond to the evolution of demand (consumers with less time “to do the shopping”, but still looking for inexpensive and local options), in 2008 it created a format called Bodega Aurrerá Express. This has helped it to gain share in the informal market, due to its value proposal: low prices and convenience. In 2014, Bodega Aurrerá continued this expansion, adding 45 stores in that format. The success is clear: in a sector with brands facing important challenges —brand value in the retail sector as a whole decreased 15%— Bodega Aurrerá had a 10% value increase.

The new challenge for the retail sector will be related to the development of e-commerce in our region. In 2014, 110 million Latin Americans made at least one purchase online, almost 13 million more people than in 2013. This constitutes a challenge not only for this sector —for brands from other categories such as Alibaba already present in Brazil— but also for brands, since the purchase process and the context are clearly different.

BRANDS AS 'EXPERIENCES' ACTIVATORS

There is no doubt that consumers are human beings first, and that some countries in our region are going through a difficult situation. Brands have the opportunity here to offer playful experiences that unite consumers and allow them to enjoy small pleasures, while building equity and encouraging consumers’ loyalty.

The digital development allows acceleration of this process and going from “brand image building” to “creating experiences with brand content”. The trick is doing this without the brand seeming too intrusive.

Skol is a brand that understands its role is not that of the main character at the party, so to speak, but a vehicle for its consumers to have a great time: it takes advantage of important social events to join the party.

Last years’ events provided an amazing stage to become this companion: from being the main sponsor of Rock in Rio, to taking part in the traditional Festas Juninas and the Brazilian Carnival, and all the way to the Football World Cup, Skol made great efforts to become part of these playful and high-engagement moments.

For example:

  • This brand invests in more than 2,000 events so as to “stay close to customers”.
  • For the World Cup it created “Albergues-Consulados” (Embassy Shelters), where consumers were invited to become Skol ambassadors and receive foreigners in the different host cities.
  • It also used a digital platform to create what was called “Gringo your selfie”. In this activity Skol asked Brazilian consumers to take selfies with fans from all the countries competing in the Cup in less than 24 hours. The prize? A trip around the world!

To sum up, the changes and challenges our region is facing constitute opportunities to grow by means of the elements that have always worked: innovation and relevance. My advice is that, now that we are tempted by too much information and all kinds of data, we should not forget the basics: to be close to our consumers. This book and the BrandZ™ Latin American ranking present 50 brands that seem to understand this quite clearly. Enjoy!

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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