2020 was by all accounts one of the most tumultuous years for all businesses, not only in Sri Lanka but throughout the world. The nation, first having to deal with the Easter bombing in 2019, followed by COVID-19 lockdowns over the last year, has had to negotiate a significantly depressed economy, which has resulted in a reduction in consumer purchasing power. In such circumstances, the brands that a company owns, are arguably now more critical than ever before to sustain and grow businesses.
The total value of Sri Lanka’s most valuable brands has increased slightly by Rs.16 billion or 3% this year, an impressive feat given the current economic climate. Total value, however, still falls short of the total value recorded in 2019, which stood at Rs. 630 billion. With a reduction in consumer spending power our review highlights that the larger, more established brands have withstood the downturn better, because of their resilience.
Brands can take decades to build. However, once built, brands are very resilient and can sustain a business during difficult times. This is what we see in this year's results in the Brand Finance Sri Lanka 100 ranking. Those businesses that have systematically and strategically built strong brands can withstand the vagaries of uncertain times, performing significantly better than weaker brands in the categories they operate within.Ruchi Gunewardene, Managing Director, Brand Finance Sri Lanka
Amidst the pandemic turmoil, Dialog has retained its enviable position as the most valuable brand in Sri Lanka for the third consecutive year, recording an 11% brand value increase to Rs. 54.0 billion. However, it now has a serious competitor to contend with, in SLT-Mobitel (brand value Rs. 22.3 billion) which has catapulted as a new entry into the top 10 through the merger of the two independently operated brands. Everything will now depend on the ability of SLT-Mobitel to deliver the services of a fully integrated technology service company, whilst leveraging brand and operational synergies, to be able to take on Dialog at the top of the ranking.
Dialog is only slightly ahead of second-ranked BOC (brand value Rs. 53.9 billion) with just Rs. 73 million separating them. People's Bank has retained its position as the third most valuable brand, despite brand value decreasing by 3% to Rs. 44.8 billion.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Dialog is also the nation’s strongest brand with a Brand Strength Index (BSI) score of 86.2 out of 100 and a corresponding AAA brand strength rating.
Since the late '90s, Dialog has continued to prove itself as a pioneer in technology by being quick to take new initiatives to embrace digital innovations. The brand demonstrates confidence in its growth strategy through key initiatives such as acquiring H One to supplement Dialog's expansive suite of enterprise solutions and its partnership with Zoho to enable technology diffusion across all enterprise segments.
This year, we mark a significant milestone in the Brand Finance Sri Lanka 100 ranking, with the top 10 strongest brands awarded a AAA brand strength rating - an increase from seven brands last year – showcasing that the more established brands have been able to consolidate themselves, even in times of crisis.
Supermarkets record impressive 33% brand value growth
The ability to obtain basic groceries became a challenge in most urban areas across the country, whilst online delivery surged. As consumer movement was restricted during the nationwide lockdown, supermarket chains had to dust off their online platforms to serve their customers through direct-to-home delivery. Brands that successfully leveraged technological advancements emerged as winners in this year's brand valuations.
The supermarket sector performed strongest this year, with the four brands that feature in the Brand Finance Sri Lanka 100 2021 ranking seeing an impressive 18% cumulative brand value growth – excluding new entrant to the ranking Lanka Sathosa’s brand value at Rs. 6.4 billion.
Keells remains the most valuable supermarket brand, sitting in 7th in the overall ranking, with a brand value of Rs. 23.9 billion. Following an impressive 20% brand value increase to Rs. 20.8 billion, Cargills Food City has made its debut into the top 10. In contrast, Arpico Supercentre recorded a 18% brand value loss to Rs. 5.9 billion.
When leading Supermarket brands, Keells and Cargills, were still struggling to perfect their online platforms, Sathosa's collaboration with PickMe to deliver groceries in the city of Colombo made them stand out as a customer centric brand.
Consumer perceptions of Keells and Cargills Food City's innovativeness, however, have improved significantly this year, possibly due to the greater emphasis and successful acceptance of their online initiatives and home delivery services.
Hospitality and airlines brands suffer
In contrast, the hospitality sector was hit the hardest this year, with total brand value down by nearly 36%. As holidays were cancelled and people were instructed to work from home, the hospitality sector reached an almost complete standstill, from both foreign tourism and domestic travel. This had a significant negative impact on the sector's financial outlook, driving down brand values across the board. Kingsbury (brand value Rs. 398 million) and Amaya (brand value Rs. 228 million) were the worst hit, losing 52% and 50% of their brand values, respectively.
The airlines sector has also fallen victim to the pandemic. Sri Lankan Airlines has lost 15% of brand value this year to Rs. 9.7 billion, primarily due to weakening financial performance.
Banking sector is nation’s most valuable
Banking remains Sri Lanka’s most valuable sector, with the 19 brands featuring in the ranking accounting for an impressive 43% of the total brand value. Overall brand value for the sector is up by 2% this year. There were mixed results across the sector, however, with some brands losing value in double digits and others growing in double digits.
Banking brands claim six of the spots in the top 10 this year, with some movement, including NSB (up 9% to Rs. 30.7 billion) climbing one spot to 5th overtaking Sampath Bank (down 15% to Rs. 24.3 billion) which has slipped one place to 6th.
Despite the lower economic activity and reduced interest rates, some banks were still able to record an increase in year-on-year revenues. NDB was the fastest growing bank this year, recording a 15% growth in brand value to Rs. 10.3 billion, and simultaneously jumping four spots in the ranking to 16th. This solid performance can be attributed to continued growth in revenue, linked to an improvement in the brand's perception, and thus the resulting boost to brand strength.
At the other end of the spectrum, RDB has lost 18% of its brand value to Rs. 2.0 billion and is the fastest falling banking brand this year – a reflection of the brand’s diminishing growth in revenues that it has been experiencing over the previous four years. The brand also lacks consistency in its branding, which has negatively impacted its brand strength.
Banks have played a vital role over the past year to ensure economic stability and to provide consumers with relief from the financial burden caused by the pandemic. Brand Finance’s Global Brand Equity Monitor has showed an uptick in reputation for banks globally due to these initiatives taken to support communities. However, despite similar efforts being made by Sri Lankan banks, our consumer research showed a drop in reputation this year.
Insurance sector drops 3%
This year, general insurance brands (excluding new entrants Continental Insurance and LOLC General) recorded a decrease in brand value of 3%. This drop could be attributed to the pandemic’s impact on all types of travel, as a result of nationwide and global lockdowns, curtailing transportation and thus impacting motor premiums, which account for a large proportion of general insurance premiums. Furthermore, the pandemic severely impacted travel in the tourism sector, resulting in a significant drop in demand for hiring these vehicles. But as the restrictions begin to ease, most general insurance brands’ gross written premiums have bounced back, and thus negative brand impact has been reduced.
Despite the hard times, Ceylinco General Insurance saw its brand value grow 18% to Rs. 3.6 billion. According to Brand Finance’s Global Brand Equity Monitor study, the brand has strengthened faster than its peers and was also the fastest growing brand in the sector.
Among the general insurance brands, Sri Lanka Insurance General retains its position as the most valuable and strongest brand, with a brand value of Rs. 3.9 billion and a AAA- brand strength rating.
Keeping in line with the historical trend of growing faster than the general insurance segment, the life insurance segment (excluding the new entrants) saw total brand value maintain stable. The SLIC life business recorded a 20% growth this year, thanks to it becoming the strongest brand amongst the life insurance sector, with a BSI score of 79.1 out of 100. Most other brands in the life segment saw their brand strength scores decline, and as a result, this impacted their brand value.
Though Sri Lanka is no stranger to rough patches, the road to recovery and hopes are pinned on a return to normalcy with no further lockdowns and the kick-starting of the global economy again.
During times of uncertainty, building resilient brands should be what drives marketing actions. This requires a long-term view by adopting a brand blueprint or a well-defined brand platform, better brand management processes with rigorous systems, effective strategic decision making where investments are made in only those areas that will result in superior returns. One of the major challenges for marketing is to be more accountable through not only tracking consumer perceptions but also business performance output, as there are significant marketing investments made each year.
What is essential is to understand the drivers of value and adapt marketing strategies that leverage these, thereby moving brands to a more resilient platform in the long term. By viewing the brand not as an advertising outcome, but as an asset that could be molded to impact all stakeholders - beyond customers, to include employees, suppliers, governments, regulators, media.
This asset requires careful nurturing over a long period – often beyond the tenue of a brand manager, for which there must be a long-term blueprint in place to be picked up by whoever maybe next in charge of the brand.
This approach will ensure consistency and a sustainable approach is adhered to as businesses navigate through tumultuous times.
The complete list of the most valuable brands and detailed analysis can be found in LMD’s Brands Annual.