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News

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Tue, 23 Jul 2019
PepsiCo eyes growth in Africa with $1.7bn Pioneer Foods acquisition...

Multinational snack foods and beverage giant PepsiCo has entered into an agreement to acquire South Africa’s Pioneer Foods Group for approximately $1.7 billion (R23.5 billion). The New York-based food giant – owner of brands like Pepsi, Lay’s and Doritos – will acquire all outstanding shares of Pioneer Food Group for R110 per share. The transaction is one of PepsiCo’s largest acquisitions outside of the United States.

“Pioneer Foods has a robust, locally relevant product portfolio that complements PepsiCo’s current lineup, with strong positions in cereals, juices, and other African nutritional food staples, including well-known, scaled brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko, and White Star. At the same time, this acquisition will help PepsiCo gain a solid beachhead for expansion into sub-Saharan Africa by boosting the company’s manufacturing and go-to-market capabilities, enabling scale and distribution,” PepsiCo said in a statement this morning.

Pioneer Foods exports to more than 80 countries and posted revenue of R20.2 billion in 2018.

Scaling sub-Saharan business

PepsiCo chairman and CEO, Ramon Laguarta commented, “As we look to accelerate our growth in key markets around the world and achieve our vision to ‘Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose’, we are absolutely thrilled to join forces with Pioneer Foods, one of South Africa’s leading food and beverage companies.”

PepsiCo is already represented in SA by brands including Simba, Nik Naks, Lays, Doritos, Pepsi and 7UP. Pioneer Foods represents a differentiated opportunity for PepsiCo, allowing it to immediately scale its business in Africa. According to Laguarta, the South African company forms an important part of PepsiCo’s strategy to not only expand in South Africa, but further into sub-Saharan Africa.

Socioeconomic commitments

This transaction creates a leading food and beverage company in Africa led from South Africa, with a commitment to supporting the broad socioeconomic imperatives of employment, talent development, and benefiting local suppliers, PepsiCo said. The global food giant plans to expand its Sustainable Farming Program in Africa and work with local farmers in Pioneer Foods’ communities – including women and rural smallholders – “to help boost yields, improve livelihoods, and preserve precious natural resources”.

“PepsiCo is keenly aware of the importance of economic transformation through Broad-Based Black Economic Empowerment (“BEE”) and intends to support Pioneer Foods’ BEE programme,” the company added.

“Today’s announcement marks a very exciting milestone for Pioneer Foods and our people, and highlights the strength of what we have created,” said Tertius Carstens, CEO of Pioneer Foods. “As part of PepsiCo, we will have greater scale to expand our leading brands, greater capital to invest in local agriculture and people, greater access to leading global capabilities and a partner committed to taking our company to even greater heights.”

Regional operating centre

As part of this transaction and PepsiCo’s goal to “become faster and more locally-focused”, the company will create a new operating sector for sub-Saharan Africa (SSA). PepsiCo SSA will be led by Eugene Willemsen, who most recently served as executive vice president of Global Categories & Franchise Management.

Willemsen, who has been with PepsiCo for nearly 25 [...]

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Tue, 16 Jul 2019
South Africa’s 10 strongest and most valuable brands

Brand valuation and research group Brand Finance has published its latest annual review of the strongest and most valuable brands in South Africa – with mobile operators again emerging as the top dogs.

As defined by the report, brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’ revenue is contributed by the brand.

In calculating this value, Brand Finance uses the royalty relief approach, which it says “involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.”

Using these metrics, Brand Finance determined that mobile group MTN retained its position as the most valuable brand in the country, with a brand value of R50.28 billion – up 13.7% from 2018 (R44.2 billion).

The telco is followed by competitor Vodacom, whose brand value was calculated at R33.28 billion, up 21.1% from R27.49 billion in 2018.

“The MTN-Vodacom duopoly is continuously grappling for greater market share across the country, resulting in data price wars, and thus leaving smaller brands struggling to compete, including, Telkom (up 15% to R5.9 billion) and Cell C (up 5% to R3.9 billion),” Brand Finance said.

The remaining top 10 most valuable brands in the country are largely unchanged from 2018, with FNB ranked third, Absa fourth, Standard bank fifth, and Sasol, sixth.

Changes have happened in the last four positions of the top 10, with Multichoice climbing to seventh position (from 10th last year), and retailer Woolworths dropping to eighth. Castle climbed to ninth position, with Nedbank rounding out the top 10 (down from ninth in 2018).

# Brand 2018 value 2019 value Change 1 MTN R44.2 billion R50.3 billion +13.7% 2 Vodacom R27.5 billion R33.3 billion +21.1% 3 First National Bank R19.4 billion R25.5 billion +31.6% 4 Absa R18.9 billion R23.5 billion +24.5% 5 Standard Bank R18.5 billion R22.5 billion +21.7% 6 Sasol R15.7 billion R21.0 billion +33.6% 7 Multichoice R14.3 billion R18.8 billion +31.1% 8 Woolworths R15.5 billion R16.7 billion +8.2% 9 Castle R13.9 billion R16.6 billion +19.3% 10 Nedbank R14.8 billion R15.8 billion +6.7%

Strongest brands

According to Brand Finance, brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors.

To determine the strength of a brand, the report looks at marketing investment, stakeholder equity, and the impact of those on business performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Using this metric, the top brands in the country shifts quite significantly.

Capitec Bank retains its spot as the strongest brand in the country, with Telkom retaining its place at ninth position. All other brands have shifted around.

“Since the bank’s inception nearly two decades ago, Capitec has disrupted the country’s financial services sector and traditional banks, through removing barriers to entry for everyday customers,” Brand Finance said.

“This approach has led to the brand boasting a vast customer base, with 44% of South Africans banking with them. This number is growing exponentially as more [...]

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Mon, 15 Jul 2019
#BrandFocus: Ackermans on owning the value-retail space, body positivity...

Ackermans has been in the value-retail space since its inception in 1916 and it’s this focus on delivering value to its customers that Mamabolo believes has been the cornerstone of the brand’s success and growth. “Being a value retailer in South Africa, especially in the early days, was not seen as anything great. In the olden days, fashion was [the] key driver but there was that niche that we found as a brand on the value side and we have really managed to cover ourselves as the best value retailer in the industry,” he says.

There are nearly 800 stores in six southern African countries and, for the past few years, Ackermans has come out tops in the Ask Afrika Kasi Star Brands Awards, as well as being voted no. 1 for children’s clothing in the 2018 Ask Afrika survey for the fourth year running.

Value goes beyond price

Mamabolo is quick to point out that value goes beyond the immediate thought of only being associated with price. The brand understands that value is relative, meaning different things to different customers —a combination of quality, relevance, price, variety, and accessibility. “There is a massive move to the rise of value-driven consumers. People who have never given value an eye before now are deciding there’s no need to always buy high-ticket items all the time. In SA, sitting on about 29% unemployment, the value-retail space will be where people will be going to,” he says.

As leaders in the children’s wear value category, Ackermans focuses on ensuring it delivers the quality every parent is expecting at a price that’s affordable, with an experience unique to the brand. “Our target market is every woman with a child in their lives,” says Mamabolo, explaining that this includes aunties, grannies, and friends.

While children’s wear is important to Ackermans, its primary aim is to be the brand that every woman thinks of when purchasing not only children’s but also women’s wear; it works hard on making every woman feel comfortable walking through its doors while knowing that she will get good service and high-quality affordable merchandise in her style and her size. As part of this, women’s-wear-only stores are busy being rolled out that include the same product range but with a layout and experience focusing on the quiet time every woman enjoys when shopping alone or with friends — but without kids.

Strict brand CI

Ackermans follows a strict brand CI to ensure that all its communications should be immediately recognisable. Mamabole believes that a brand needs to be “smashable” and that, if you break it up into many pieces, it should still be recognisable by everyone. The retailer works with creative agency, 99c; media agency, PHD SA; and content company, New Media.

In February this year, 99c created #IAmMe, the 2019 Valentine’s lingerie campaign using influential public figures Minki van der Westhuizen, Rami Chuene, Kim Jayde, Pearl Modiadie, and Busiswa Gqulu to push the brand’s focus on body positivity and its belief that all women are beautiful, flaws and all. According to Mamabolo, this was an important [...]

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