Battle of the brands gets bigger

The battle of the brands has got aggressive in post-war Sri Lanka judging by the findings of the latest and the seventh annual review compiled by specialist Brand Finance.

State owned and industry giant BOC which topped the table for the third consecutive year, with a value of Rs. 16.7 billion is still the country’s most valuable brand. However, this year, it is able to retain that top slot by just a whisker, as second best People’s Bank was just Rs. 73 million away, which is only 0.43% of its value.

 “This can be attributed to People’s Bank’s strong showing in the year under review, where they achieved a brand rating (or brand strength index) of AAA-. This status of being one of the strongest brands in the country was shared by seven other brands,” Brands Finance Lanka Managing Director Ruchi Gunewardene told the Daily FT.

Brand Finance’s annual review has now gained wide acceptance with combined value of top 100 brands had topped Rs. 175 billion mark, up by 18% over 2009’s figure of Rs. 148. 3 billion. In 2008 it amounted to Rs. 127 billion whilst three years ago the value was Rs. 119.3 billion.

Gunewardene said the high growth was reflective of the underlying strong economic performance in the post war era, with the 2010 Central Bank data recording a GDP growth of 8%.

He said that it was refreshing to see the adoption of a customer centric focus by two revitalised state institutions the Bank of Ceylon and People’s Bank.



 “In fact this battle for market share has been going on for several years now, which augurs well for both customers of these banks,” Gunewardene said.

The battle between brands continues lower down the table, and this time it is between the largest private banks, HNB and Commercial Bank, where HNB overtook Commercial Bank for the very first time after seven years of publishing the most valued brands ranking. “This was achieved by HNB strengthening their brand rating index. Here too the difference between the brands was relatively small at Rs. 270 million, just 3% of the brand value of Commercial Bank,” explained Gunewardene.

Among the newly emerging banks, a close battle is shaping up too between Nations Trust Bank (at No.14) and NDB Bank (at No.15). According to Gunewardene these relatively new banks are much more flexible in their operations and growing rapidly and will therefore close the gap with the more established banks in the years ahead. “Having a good understanding of how value is being generated and where there is greater potential for value creation and will augur well as they continue to grow,” he added.

In the insurance sector too, a close battle is ensuing between three brands. Leading the fray is Ceylinco Insurance which has been slipping in its ranking over the years (now at No.16, in 2008 it was at No.5), followed by Aviva NDB Insurance (at No 24 up from 28 in 2009) and Union Assurance (at No. 28 up from 33 last year) both of whom have significantly narrowed the gap with the leader.

In the retail sector, another closely contested head to head battle is playing out below the undisputed leader Cargills Food City. This is between Keells Super (at No. 22) and ARPICO (at No.23). Each of whom have staked their strategy on different store formats (ARPICO on super stores and Keells on the conventional supermarket model) which will be very interesting to monitor over the years ahead.

The most compelling news is that Sri Lanka’s most valuable brand league table has got an injection of new blood through a spate of IPO’s that took place in 2010. As a result, several newcomers displaced weaker brands, which used to languish at the bottom of the table, many of which were hotel brands. Leading the new brigade were Laufgs Gas which came in at No. 38, closely followed by Odel at No. 40. With more companies listing in the future, weaker brands will continue to exit our top 100, and in a few years we could expect a much more robust table of product and service brands.

In order to make the list, Gunewardene says the brand has to be listed on the Colombo Stock Exchange, as this provides access to the financial information required to carry out the valuation. In addition, Brand Finance considers consumer facing product or service brands, as a result of which many of the holding companies or business to business brands are eliminated. Valuing holding companies and B2B companies calls for more complex valuation models and more in-depth understanding of their operations than what is publicly available.

Recognising that those consumer brands which are not listed on the CSE should also be highlighted, Brand Finance publishes a supplementary table which is an index of the top unlisted brands, and when taken together, these tables provide a holistic picture of the brand landscape of the country. These annual reviews, for which a considerable amount of research has been undertaken, provides the reader with a view of the performance of the top brands in the country, added Gunewardene.