Built for value

• Spotlight on Brand Finance’s rankings of Sri Lanka’s most valuable brands

After 10 years of Brand Finance’s rankings of Sri Lanka’s most valuable brands, who has remained on top and why?

The most important trend in Sri Lanka’s most valuable brands ranking, which were recently released in the 2013 Brands Annual, is the resilience of the big brands that are already there. See table 1.

Admittedly, the Colombo Stock Exchange (from where Brand Finance sources most of its data) is not the most dynamic of all exchanges, with no new listings that reflect shifts in the economy and the business environment of the country.  

Eight of the 10 top brands have been in this position over the last five years. These include Bank of Ceylon which continues to retain the top spot, whilst this year they have pulled away from People’s Bank with which they have had a close tussle over the years.

Then there is Dialog (the leader in mobile telecommunications) and SLT (the leader in fixed line telecommunications) who have high market shares in their respective segments of the telecommunication markets. These privileged brands at the top of our table are rounded off by NSB (the largest licensed specialised bank), the dominant retailer Cargills Food City and the two major private banks Commercial Bank and HNB. See table 2.

The fact that we don’t see significant shifts in our table does not bode well for the long term dynamism of the Sri Lankan economy, according to Ruchi Gunewardene, Managing Director of Brand Finance Lanka.

With many company’s opting not to list and to instead borrow from banks to fund their growth by paying relatively high interest on their borrowings, will definitely limit the opportunities for growing brands. So, success in our economy seems to be linked to first mover advantage in traditional sectors and longevity rather than being fuelled by new innovations and global opportunities.

Long term economic success for a country such as Sri Lanka’s must be led through exports of technology and value adding to raw materials. In order to do so, there has to be a long term strategic shift in both the Government and private sector’s future road map, as it takes considerable time for such projects to come to fruition. Our future lies in encouraging local technology initiatives which involves investments in research and development either through local or foreign collaborations, building greater intangible value.

This trend is reflected in Brand Finance’s 2013 global brand league table, where the top five brands are Apple, Samsung, Google, Microsoft and Walmart. Technology is the main value driver here, with the more conventional brick and mortar businesses now being pushed down the table. See table 3.

Despite that trend, three of this year’s top 10 – IBM, General Electric and Coca-Cola – which are over 100 years old are able to still be there because of their ability to renovate themselves and innovate in a fast changing world.

So, from Brand Finance’s view, the conclusions derived from a global context is that without constant renovation brands do not last, which is very different to what the world was 25 years ago, where in an industrial economy based on physical products, plenty of brands actually did last a long time. So, whilst the world is rapidly changing, unless we are in step (or, really ahead) of those technology changes and value adding through innovation, based on global markets need, our economy will continue to struggle.

“Products, services and strategies must be managed for change. Their life expectancies are shrinking. Brand and organisation culture on the other hand must be managed for continuity, with a long term view in mind. How else can brands like IBM, GE and Coca-Cola still be on the global list. These are possibly the strongest brands on earth because they have titanium strength and a strong culture built into them,” according to Gunewardene.

The purpose of Brand Finance’s annual analysis is to drive home the fact that brands play a vital role in translating a company’s competencies into market success. Effective management of brands is therefore an important element of a business strategy which in turn impacts business valuations.

“However, when marketing people talk about what they do, the variables they cite aren’t the ones that the board of directors care about. Customer awareness, customer satisfaction and customer loyalty are all metrics that are nice to know about. But the board is more concerned with market share, shareholder value, market capitalisation, return on assets and return on investment. This is where financially minded marketers can play a major role and brand strategies which link performance to financial outcomes are key to getting a seat on that board,” concluded Gunewardene.  

Brand Finance is an independent global business focused on advising strongly branded organisations on how to maximise value through the effective management of their brands and intangible assets.

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 work has 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 Amsterdam, Athens, Bangalore, Barcelona, Cape Town, Colombo, Dubai, Geneva, Helsinki, Hong Kong, Istanbul, Lisbon, Madrid, Moscow, New York, Paris, Sao Paulo, Sydney, Singapore, Toronto and Zagreb.