Western brands have had a major problem - domestic rivals in some of the biggest countries – Russia, China, India and Brazil. Investors start showing more and more concerns while the media start doubting that McDonalds, Coca-Cola, Pepsi, Nescafé, Gillette and other global brands will conquer the world. What are the threats for those who invested in the “blue chips”?
Who managed to suspend the expansion of global brands and how did they do it?
According to the experts of the following groups influence the global processes:
· Antiglobalists. Numerous unofficial organizations around the world have been fighting against economic globalization through continuous protests. However their efforts seem to have no desirable effect.
· Nationalists and dictators. Over the recent years numerous nationalist movements around the world have been considering globalism as a major threat to their countries’ sovereignty. Dictators (from Iran to North Korea) have also been using this ideological “bogeyman story” as a weapon. However, no legislation or tax barriers can be a permanent solution.
· National brands. They seem to be the only weapon against global brands that has been efficient so far. Moreover, some emerging markets seem to have reversed the process of expansion. Now it is them who are trying to expand their influence.
How did emerging markets start ousting global brands?
1. Tendency. More and more experts in global marketing research say that about 50 global brands keep yielding their position to domestic companies.
2. The BRICS’s success. International corporations feel especially strong pressure in the countries of the so-called BRICS (Brazil, Russia, India, China and South Africa). For example, over the last 5 years the world’s top 50 manufacturers of consumer goods have managed to increase their production in the BRICS states by only 13.1% while their domestic rivals have seen a 18,4% increase in production.
3. The price-quality ratio. The formula is favorable for domestic manufacturers, thus allowing them to compete with well-known brands.
4. Brazil:
- For example, Inbev, a Brazilian brewer, which is a mere leader in South America, is making successful steps to conquer Europe with its Beck’s and Hasseroeder. Inbev comes 6th in the world’s top 50 manufacturers of consumer goods.
- BR Foods, one of the biggest poultry manufacturers with $15B turnover, has already entered the North American market.
- Another Brazilian food giant, JBS, can boast its $40B turnover. The company bought the US-based Swift and Pilgrim’s Pride. They successfully sell their products in South and North America, Australia, Russia and Europe.
5. China:
- Chinese manufacturers of nonalcoholic beverages Wahaha and Tingyi are the major rivals for Coca-Cola and Pepsi in China’s domestic market.
- C-Bons, China’s biggest manufacturer of shampoo, caused a lot of problems to Henkel, which had to reduce its presence in the Chinese market down to its most famous brands - Persil and Schwarzkopf.
- In 2010 Trinity, a Chinese clothing and footwear manufacturer, spent 52M euro to buy Cerrutti, a Luxembourg premium retailer.
6. India:
- A daughter of Lakshmi Niwas Mittal, a steel magnate, purchased the German clothing manufacturer Escada.
7. Russia:
- Wimm-Bill-Dann, a Russian manufacturer of dairy products, has been a serious rival for Danone.
This tendency has already spread over the entire world. Consumers start paying more attention to domestic products, especially in the food market.
What defensive measures do global brands use to stay in the game?
According to Evgeny Olkhovsky, the leading expert of the US-Canadian Association of Traders and Investros under , no market giant wants to get cheaper. If a company’s products are not in high demand, its stocks start depreciating, Eventually, such a company may go bankrupt. That is why the giants strive to keep dominating the market by all means:
· Various mergers of major brands. Local manufacturers can merge in order to make a strong national brand. It is especially typical of the Polish and Chinese. International companies also prefer to expand from time to time at the expense of mergers and takeovers.
· Most popular products only. International companies prefer to sell in the emerging markets only the most popular products in order to reduce their risks.
· Purchases of national brands. Global tycoons prefer to purchase the most successful national brands to avoid rivalry.
· Defending the emerging markets. The emerging economies do their best to defend themselves against “aliens”, sometimes even on the governmental level. For example, in China it is possible to create only a joint company because no takeovers are allowed.
· Advertisement. Global brands spend tons of money on commercials throughout the world.
Coca-Cola and Pepsi: stock market outlook
According to the Department of Stock Trading, , despite the fact that the companies share the same market sector and are influenced by the same seasonality factor, Coca-Cola is currently doing better than Pepsi in terms of sales and looks stronger in terms of tech analysis:
However, Pepsi stocks looks more promising for traders as the trading volume has grown.
Market Leader and would appreciate it if you could participate in a survey. Please, visit the Academy’s forum and answer the question given below:
What are the perspectives of national brands?
· They have no chance against such global brands as McDonalds, Coca-Cola, Pepsi, Nescafé, Gillette, which will continue conquering the world.
· They will be able to compete with global brands only in domestic markets.
· Your own opinion
