BrandFinance® South Africa Top 50
Top 50 brands are a catalyst for South Africa’s growth and a winning nation
Thebe Ikalafeng, Chairman – Brand Finance Africa; Founder, Brand Africa & Brand Leadership Group
Despite another year of difficult global trading conditions, the total brand value of the BrandFinanace South Africa Top 50 brands increased 18% from R343bn from 2013’s value of R291bn. Surprisingly though, the Top 10 brands have only grown at 14% against the 22% of the bottom 40 brands, indicating the momentum is with the smaller players. These top 10 brands account for 52% of total brand value amongst the Top 50 with MTN accounting for a massive 16.5% of total brand value.
By sector, there are 13 financial services brands (banks and insurance) in the Top 50 generating R89bn (26%) of value, followed by 5 telecom brands generating 25% of value and 16 food and beverage brands generating 22.6%.
Among the BrandAfrica 100 Most Valuable Brands in Africa, South Africa leads Africa with a 72% share, compared to Nigeria at 26% and Kenya at 2%. MTN tops the table in Africa too.
In the category of South Africa’s Strongest Brand, MTN and FNB are both rated as this year’s strongest brands – this is the third year running that FNB have achieved this ranking. In the year that South Africa lost it’s founding democratic President and Most Valuable Icon, Nelson Mandela, it’s interesting to note that the underlying core values of these brands closely follow those of Madiba’s. It’s no surprise then that these brands resonate with South African consumers where others battle.
It also comes as no surprise that more than half of the brands have a significant presence beyond South African borders. While Nigeria has the highest GDP in the continent, South Africa dominates the branding landscape across Africa – with 80% of the Top 50 all essential staples in a continent that is turning the corner from being a consumer to becoming a creator. It is estimated that if intra-Africa trade is increased by 1%, it will generate $50bn in revenues. With its experience in building and creating portfolios of world-class brands, South Africa is in a good position to play a leading role in that African renaissance.
The brands of a nation are not only a vector of its image, but a catalyst of its wealth too. There is empirical evidence that the value of the brands with the top nations has an almost direct correlation with their GDP.
That South Africa is not among the six African nations in the Top 10 fastest growing economies globally (Economist) and not one of the three African frontier markets that are recognized to offer high returns and improving economic institution (Botswana (#2), Rwanda (#5) and Ghana (#10)) (Foreign Policy Magazine’s Baseline Profitability Index) is a challenge that South Africa needs to address if it is to remain the most admired African nation, and competitive with fellow African and BRICS nations.
A thriving ‘Made in South Africa’ and entrepreneurship spirit are what built South Africa’s wealth, reputation and competitiveness – and the BrandFinance South Africa Top 50 brands. For Africa and certainly for South Africa to grow independent, create jobs and reduce inequality, it will need to invest in the attributes that built these brands – on top of increasing intra-Africa trade – to challenge global brands in Africa.
The pan-African dominance, global reputation and success of the Top 50 shows that South Africa has the creativity, skill and experience to continue building great brands and a great, growing nation. Top 50 brands are a catalyst of South Africa’s growth and a winning nation – and Africa.
Top 50 Most Valuable brands
|1||1||MTN||MTN Group Ltd||Telecommunications|
|3||2||Vodacom||Vodacom Group Ltd||Telecommunications|
|4||4||Standard Bank||Standard Bank Group Ltd||Banks|
|5||5||ABSA||Barclays Africa Group Ltd||Banks|
|6||6||Nedbank||Nedbank Group Ltd||Banks|
|7||8||First National Bank||FirstRand Ltd||Banks|
|8||10||Mediclinic||Mediclinic International Ltd||Healthcare-Services|
|9||18||Investec||Investec Ltd||Diversified Finan Serv|
|10||7||Woolworths||Woolworths Holdings Ltd||Retail|
|11||9||Shoprite||Shoprite Holdings Ltd||Retail – Food Specialists|
|14||11||Spar||Spar Group Limited/The||Food|
|15||13||Mondi||Mondi Ltd||Forest Products&Paper|
|17||12||Pick’n Pay||Pick n Pay Stores Ltd||Retail|
|18||19*||Carling Black Label||SABMiller Plc||Beverages|
|19||20||Telkom||Telkom Sa Ltd||Telecommunications|
|20||22||Sappi||Sappi Limited||Forest Products&Paper|
|22||26*||Hansa Pilsener||SABMiller Plc||Beverages|
|23||21||Mr Price||Mr Price Group Ltd||Retail|
|27||23||Truworths||Truworths International Ltd||Retail|
|29||29||African Bank||African Bank Investments Ltd||Diversified Finan Serv|
|30||32||Bidvest||Bidvest Group Ltd||Holding Companies-Divers|
|32||30||Makro||Massmart Holdings Ltd||Retail|
|33||35||CLICKS||Clicks Group Ltd||Retail-Drug Store|
|34||33||Liberty||Liberty Holdings Ltd||Insurance|
|35||36*||Huletts||Tongaat Hulett Ltd||Holding Companies-Divers|
|36||44||Rainbow Chicken||Rainbow Chicken Ltd||Food|
|37||40||Altech||Allied Technologies Ltd||Telecommunications|
|38||39||Checkers||Shoprite Holdings Ltd||Retail – Food Specialists|
|39||43||Life||Life Healthcare Group||Healthcare-Services|
|41||49||Steinhoff||Steinhoff Intl Holdings Ltd||Holding Companies-Divers|
|42||45*||Capitec Bank||Capitec Bank Holdings Ltd||Diversified Finan Serv|
|43||38||SAA||South African Airways||Airlines|
|44||47||Rand Merchant Bank||FirstRand Ltd||Banks|
|45||48||Imperial||Imperial Holdings Ltd||Holding Companies-Divers|
|46||41||Game||Massmart Holdings Ltd||Retail|
|47||Cell C||Oger Telecom||Telecommunications|
|49||52||Foschini||The Foschini Group Ltd||Retail|
|50||46||Sasko||Pioneer Foods Ltd||Food Service|
For the full details in the table above, download the Top 50 in PDF format.
Definition of ‘brand’
Financial accounting and reporting standards requires a clear definition of what intellectual property is included in the definition of ‘brand’. Brand Finance defines brand as the “Trademark and associated IP including the word mark and trademark iconography”.
Brand Finance calculates brand value using the Royalty Relief approach. This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand. The steps in this process are as follows:
- Calculate brand strength on a scale of 0 to 100 based on a number of attributes such as emotional connection, financial performance and sustainability, among others. This score is known as the Brand Strength Index.
- Determine the royalty rate range for the respective brand sectors. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database of license agreements and other online databases.
- Calculate royalty rate. The brand strength score is applied to the royalty rate range to arrive at a royalty rate. For example, if the royalty rate range in a brand’s sector is 1-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4.2%.
- Determine brand specific revenues estimating a proportion of parent company revenues attributable to specific brand.
- Determine forecast brand specific revenues using a function of historic revenues, equity analyst forecasts and economic growth rates.
- Apply the royalty rate to the forecast revenues to derive brand revenues.
- Brand revenues are discounted post tax to a net present value which equals the brand value.
Why we use the royalty relief approach
The Royalty Relief approach is used for three reasons:
- It is favoured by tax authorities and the courts because it calculates brand values by reference to documented third-party transactions
- It can be done based on publicly available financial information
- It is compliant with the requirement under the International Valuation Standards Authority to determine the fair market value of brands
These are derived from the Brand Strength Index which benchmarks the strength, risk and future potential of a brand relative to its competitors on a scale ranging from D to AAA. It is conceptually similar to a credit rating.
AAA+ – extremely strong
AA – very strong
A – strong
BBB – B – average
CCC – C – weak
DDD – D – failing
All brand values in the report are for the year ending 30 June 2014.
Brand Finance CEO
Chairman, Brand Finance Africa
+27 82 447 9130
Managing Director Africa
+27 82 087 0507; +267 72 984 351
+27 72 459 1743
About Brand Finance
Brand Finance plc, the world’s leading brand valuation consultancy, advises strongly branded organisations on maximising their brand value through effective management of their brands and intangible assets. Founded in 1996, Brand Finance has performed thousands of branded business, brand and intangible asset valuations worth trillions of dollars.
Its clients include international brand owners, tax authorities, Intellectual Property lawyers and investment banks. Its work is frequently peer-reviewed by the big four audit practices and its reports have been accepted by various regulatory bodies, including the UK Takeover Panel.
Brand Finance is headquartered in London and has a network of international offices in Cape Town, Durban, Johannesburg, Amsterdam, Athens, Bangalore, Barcelona, Colombo, Dubai, Geneva, Helsinki, Hong Kong, Istanbul, Lisbon, Madrid, Moscow, New York, Paris, Sao Paulo, Sydney, Singapore, Toronto and Zagreb.
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