I’ve just come across an article about Scottish company AG Barr, producer of the soft drink brand Irn Bru, saying the firm achieved growth of more than 5% in the final quarter of 2014, which was said to be “well ahead” of the total soft drinks market. Good news for them, but not a total suprise. Irn Bru, is strong household name in Scotland and in therms of sales, it is known to go head-to-head with Coca-Cola and Pepsi.
Still in Europe, another local brand based in Sweden – Julmust – also a soft drink mainly sold around Christmas and it’s known for outselling Coca-Cola during this period. In both cases, both companies managed to stay away from the global corporations buy-out.
Also in emerging markets, local brands grow and thrive – however, global companies act fast to acquire these already established and much profitable brands.
In India, for example, the government policy from the invasion of foreign brands made Thums Up cola the country’s market leader, and in the early 90’s, when there were changes in the policy, Coca-Cola was more than quick to scoop up the brand. Thumbs Up is still the leader in the cola segment and has approximately 40% market share in that category.
Moving to Latin America or more specifically the northeast of Brazil – the brand Guaraná Jesus has been a household name since the 1960’s and was created by Jesus Norberto Gomes who, ironically, was an atheist. The bright pink fizzy guarana drink became such a big success in that part of Brazil and in 2001, was acquired by Coca-Cola.
But, does the future belong to local brands? My answer is yes! Although global brands have some obvious scale and breadth advantages, local brands have the benefit of proximity and geographical (and often product) focus. I think the key point for global corporations – in this case Coca-cola – was to fork into an already profitable brand and most of all, keep it still local.
Obviously, I’ve only focused here on the fizzy drinks sector – but what about other sector, such as food service and electronics? Does the future also belong to local brands? I want to hear your opinions!