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LATIN AMERICA OVERVIEW TOP 50 MOST VALUABLE LATIN AMERICAN BRANDS 2015 THE LATIN AMERICAN ECONOMIC CONTEXT In the last two years the Latin American region presented relatively low GDP growth rates, around 2%. This is far removed from the prosperous scenario seen from 2004 to 2012, when the rates reached over 5% in many years, according to CEPAL – Economic Commission for Latin America and the Caribbean. In 2014, the region had a 1.3% GDP growth, the second worst performance in the last 10 years (in 2009 the region showed a -1.8% GDP growth, a reflection of the world financial crisis). The countries that most contributed to the slowdown in the economy performance of the region in 2014 were Brazil, Argentina and Venezuela. Brazil, the largest country with around 50% of participation in the region’s GDP, had almost a zero growth of 0.1%, Argentina grew only 0.5% and Venezuela dropped 4.0%. Other important countries in the region such as Colombia achieved a GDP growth rate in 2014 of 4.6%, 2.4% for Peru, while Mexico and Chile registered 2.1% and 1.9% respectively. However, almost all of these countries, with the exception of Mexico, have shown decreasing GDPs in the last two years. Latin American GDP growth It was the first time that Latin America grew less than the average of the 34 countries of The Organization for Economic Cooperation and Development (OECD). 5% 5.7% 4.2% 5.3% 5.3% 1.8% 0% 1.3% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -1.8% Source: CEPAL GDP growth 0% 2.7% 2013 2014 0.1% 2.9% 0.5% 4.9% 4.6% 1.4% 3.5% 2.1% 5.8% 6.1% 2.4% 4.6% 4.2% Brazil Argentina Colombia Mexico Peru Chile 3.1% 1.9% 1.3% 2.6% Venezuela Brazil is in bad shape, with political and economic problems in addition to inflation. Argentina also faces political and economic problems, and Venezuela has had serious problems with internal supply, high inflation and political issues. The deceleration of the economy in the region – decreasing steadily since 2010, when it reached a high 6.1% GDP growth, can be explained by the following factors: 1. In the most important countries, much of the growth in 2010 was due to the increase in middle class purchase power and relative stability of public accounts. Also, prices of commodities were high and China grew 2-digits per year – China is a huge market for Latin American companies. 2. For the domestic market, factors like the ascension of middle class and stability of public policies failed from 2011-2014 and generated a very small growth in the period. For 2015, the World Bank is forecasting a worse scenario, with a GDP growth for Latin America of merely 0.4%. According to the bank, the region is practically in recession. 3. During the same period, prices of commodities like iron, steel and oil, decreased substantially. Part of the problem is the slowing Chinese economy, but also, in the case of oil, it was strongly influenced by the industry context. In addition to this unfavorable scenario, Moody’s Investors Service has downgraded Brazil’s government bond rating from Baa2 to Baa3, a clear signal that the country has delivered less than expected in terms of economic performance. Another important index that reflects the economic instability in Latin America is the Emerging Markets Bonding Index – EMBI+, produced by JP Morgan, which tracks emerging markets, government debt and corporate debt asset classes. Country risk - EMBI + Almost all the main countries in the region have risen in terms of risk (except Chile). 3% 2% 1% 0% 2013 2014 July 2015 Brazil Chile Mexico Peru Source: JP Morgan Colombia As a consequence of all these factors, market capitalization of Latin American public traded companies in the region suffered a substantial decrease, as shown in the chart below The region has to learn how to deal with the new external context: lower growth of emerging economies, less dynamism of developed economies and lower prices of raw materials. All these factors greatly affect the economic growth and development of the region, which require significant changes to aspects such as investment levels and productivity growth with a long-term perspective. Companies’ Market Value Market capitalization of Latin American public traded companies in the region suffered a substantial decrease. 10% 0% -10% -20% -30% 2013 2014 July 2015 Brazil Ibovespa Mexico IPC Source: Bloomberg Chile IGPA Peru BVL Colombia IGBC Source: CEPAL -4.0% 16 17
LATIN AMERICA HEADLINE NEWS TOP 50 MOST VALUABLE LATIN AMERICAN BRANDS 2015 HEADLINE NEWS BRAND VALUE Total Value of Latin American Top 50 Brands US$ 131.9 BILLION Brand Value Change 2014-2015 <strong>+2%</strong> Source: Millward Brown and BrandZ The total value of the BrandZ Top 50 Most Valuable Latin American Brands 2015 increased 2% in comparison to 2014 (US$ 129.2b in 2014 vs. USD 131.9b in 2015), despite the low economic activity in the region since 2014. This demonstrates that strong brands can better face difficult periods, with less damage to the shareholder value. If we consider the Top 10 BrandZ LatAm, the variation was +10% in US$ from 2014 to 2015. Brands from the Financial Institutions, Services and Beer, Food & Personal Care segments performed rather well, with growth rates of 18%, 11% and 9%, respectively. On the other hand, brands from the B2B and Retail segments performed poorly: they decreased by 34% and 15% in 2015, respectively. THE TOP FIVE BRANDS For the first time, the most valuable Latin American brand was Skol, the Brazilian beer brand that belongs to Ambev, an AB Inbev company. This performance reflects the consistency in brand positioning of Skol, targeting its products to younger audiences more willing to adopt a brand for a lifetime and supporting its strategy with sponsorships of music festivals, which has strengthened the brand relationship with this audience. Once again Beer, Retail, Communication Providers and Banks categories took the top 5 positions: Skol (Beer – Brazil), Corona (Beer – Mexico), Telcel (Communication Providers – Mexico), Bradesco (Banks – Brazil) and Falabella (Retail – Chile). BEER MAKES THE TOP 10 FOR THE THIRD CONSECUTIVE YEAR The beer category dominated the ranking again in 2015, conquering five of the top ten positions – four of the brands belonging to AB Inbev: Skol, Corona, Brahma and Modelo. Skol, the most valuable Brazilian brand, had a 20% growth to US$ 8,500 million, followed by Corona, the most valuable Mexican brand, with a value of US$ 8,476 million, a 6% growth. 1 US $8,500 Million 2 US $8,476 Million NEW ENTRIES The BrandZ Top 50 LatAm saw six new entrants in 2015: MEXICO 36 38 41 BRAZIL 42 ARGENTINA 46 Banks Retail Beer Banks Communication Providers 8 US $4,185 Million COLOMBIA 49 Banks 9 US $3,672 Million 10 US $3,604 Million 18 19
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Page 4 and 5: LATIN AMERICA WELCOME TOP 50 MOST V
Page 6 and 7: LATIN AMERICA THOUGHT LEADERSHIP TO
Page 10 and 11: LATIN AMERICA KEY FINDINGS AND FUTU
Page 12 and 13: LATIN AMERICA TOP 50 MOST VALUABLE
Page 14 and 15: ARGENTINA THOUGHT LEADERSHIP TOP 50
Page 16 and 17: ARGENTINA KEY FACTS AND TOP 5 MOST
Page 18 and 19: ARGENTINA THOUGHT LEADERSHIP TOP 50
Page 20 and 21: BRAZIL TOP 50 MOST VALUABLE BRAZILI
Page 22 and 23: BRAZIL BRAND STORIES TOP 50 MOST VA
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Page 34 and 35: CHILE KEY FACTS AND TOP 15 MOST VAL
Page 36 and 37: CHILE BRAND STORIES TOP 50 MOST VAL
Page 38 and 39: CHILE THOUGHT LEADERSHIP TOP 50 MOS
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Page 42 and 43: COLOMBIA KEY FACTS AND TOP 20 MOST
Page 44 and 45: COLOMBIA BRAND STORIES TOP 50 MOST
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Page 50 and 51: MEXICO KEY FACTS AND TOP 30 MOST VA
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MEXICO THOUGHT LEADERSHIP TOP 50 MO
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PERU KEY FACTS AND TOP 12 MOST VALU
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PERU THOUGHT LEADERSHIP TOP 50 MOST
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RESOURCES BRANDZ VALUATION METHODOL
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RESOURCES BRANDZ PUBLICATIONS TOP 5
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RESOURCES CONTRIBUTORS TOP 50 MOST
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