Tue, 16 Jul 2019
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).
First National Bank
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 [...]