The days of global dominance by Western brands may be numbered. Research from a U.K. consulting firm predicts that due to shifts in global economic wealth, many of the next mega brands are likely to emerge from Asia, the Middle East or South America.
Wolff Olins, the consultants behind the London 2012 Olympics logo and the Product Red campaign, highlighted five food and drink brands from emerging markets that have the potential to become global brands. They consist of Juan Valdez Café, a Colombian coffee chain; Almarai, a Saudi dairy and fruit-juice company based in Riyadh; Patchi, a Lebanese boutique chocolate chain; ChangYu, China's biggest wine producer; and United Spirits, India's largest liquor group, which owns Scotch whisky Whyte & Mackay.
"It used to be possible to be a global brand by dominating the U.S. market," Melanie McShane, a strategist at Wolff Olins, told the Financial Times. "That's changing rapidly. Now you have to be number one in Asia."
Bain & Co., the Boston-based consultancy, similarly forecast last year that the number of companies based in emerging markets featured in the FT Global 500 - a ranking of the biggest corporations - will increase from roughly 10 percent in 2001 to around 25 percent in 2015. Bain attributed the change to what it called a "seismic shift" away from developed markets.
According to Bain's estimates, representation from Western Europe in this group is expected to stay largely constant over the timeframe, but Japan and Australia could see their totals fall by around a third. The number of firms based in the U.S. and Canada is expected to erode from around half to under 40 percent by 2015.
Satish Shankar, a Singapore-based partner with Bain & Co, told the Financial Times that established western consumer goods brands were being forced to "battle it out" with emerging market brands. In response, PepsiCo last year bought Lebedyansky, Russia's largest juice group, and Unilever picked up Inmarko, Russia's biggest ice cream brand. Coca-Cola was blocked this year by Chinese regulators from acquiring Huiyuan, China's biggest juice group. Diageo is in talks over acquiring up to 15 percent stake of India's United Spirits, while PepsiCo this year formed a joint venture with Almarai in Asia, Africa and the Middle East.
Last week's release of the 2009 Superbrand survey of the U.K.'s top 500 consumer brand was still dominated by Western names such as McDonald’s, Krispy Kreme, HMV, Microsoft, Google and the BBC.
Discussion Questions: Do you expect to see more global brands coming from emerging markets? If so, when and how should Western brands - especially U.S.-based ones - respond?