The global market of consumer packaged goods is US$ 1.2 trillion and global brands are facing strong competition from local brands in emerging markets.
And what’s the global companies’ strategy to remain in relevant in emerging markets? They act fast to acquire these established and already much profitable local brands.
In India, for example, the government policy from the invasion of foreign brands made local brand Thumbs Up cola the country’s market leader. In the early 90’s, when the Indian government opened the market to multinationals, 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 – another local 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 want an already profitable brand and most of all, keep it local still.
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!
Main photo by Felipe Braga on Flickr