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What's in Store
for 2013?

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Fast-Developing Markets

By Daniella Bianchi

Fast Developing Markets

2012 started off with high expectations for economic growth in most developing markets. But as the world crisis finally hit these “promising nations,” the strings and players that were once pushing the economies forward became instantly inert.

All of a sudden it was time to settle down and rethink the frantic rhythm of investments towards the “lands of opportunity.” Needless to say, there is still a lot of money to be made in these booming economies, but it now seems to be the moment in which developing markets are confronting the mirror and facing their problems with a more practical and less presumptuous attitude.

The lingering battle against the endemic issues of growing economies such as corruption, inflation, lack of infrastructure, poor education and precarious health systems seems to be the main cause for the inertia that hit these markets in 2012.

While governments concentrated their efforts on solving their own dilemmas, the private sector—from banks to mining companies, from orange juice to coffee, from oil and gas to pulp and paper—had to bring down their top investments both in tangible and intangible assets, including brands.

The results immediately became evident in the stock exchanges as significant efforts were put into keeping foreign investors motivated, although their blue chips’ value did not reach the numbers predicted by analysts.

Many anticipated major branding projects for the year suffered from deep cuts in marketing budgets and, consequently, were either postponed or evolved at a slower pace. Although mergers and acquisitions did happen among relevant companies (prompted by consolidation trends), their brand investments were less generous, in light of the big picture.


"After five years of furious economic growth, followed by a short lull, Latin America’s main growing industries, headed by the banks as well as infrastructure and commodity companies, are now prepared to pick up the pace"



Nevertheless, 2013 will not be another static year. After five years of furious economic growth, followed by a short lull, Latin America’s main growing industries, headed by the banks as well as infrastructure and commodity companies, are now prepared to pick up the pace and outperform developed markets once again. This time, however, a more mature and conscientious approach is expected, setting off the next growth cycle in which brands will be recognized far beyond the continent.

Led by China—with an expected growth at least 8% according to a central bank adviser—the BRICS will continue to push the economic growth of developing markets. In Russia, Putin wants to brand the country as the “explorer of innovative goods and services.” His goal is to maintain its growth level in an unstable environment, thus welcoming the participation of foreign investors in the privatization of state-run companies.

Brazil is now accelerating the rhythm to keep up with the expectations generated by the 2014 World Cup and the 2016 Summer Olympics. Although the population remains somewhat skeptical, there is still hope that the country will recover its growth and be able to honor its position at BRICs. Natura, Havaianas and Itaú are among the brands heading towards the internationalization path of Brazilian brands, which will bring their “bossa” abroad.

India, despite being challenged by a decline in private investments and weak external demand, still has a growth forecast of 5% or more.

Mexico has been performing extremely well through the last decade, and everything indicates that this trend should continue in 2013. At the same time, Peru is growing and regaining confidence as a nation. It is now considered one of the most exclusive destinations in South America.


"2013 is likely to be the year that marks the consolidation of developing brands in developing markets, as they are now prepared to overcome local challenges and become global players."



Argentina is boldly struggling with its brand under president Cristina Kirchner. Luxury brands are leaving the country in response to import barriers, currency controls and soaring inflation. Yet, the country boasts strong brands like Havanna and Quilmes that are conquering the hearts of consumers in neighboring nations.

Chile is investing heavily in retail branding with Falabella. National carrier LAN also plays a major role in the merger with Brazil’s TAM, which originated LATAM. The moment calls for multinational efforts towards building the next major global airline company. On the same path, Avianca, owned by nearby Colombia, was considered the airline company with the biggest growth in the past year. Both companies will be essential for attracting tourists heading south in years to come.

All in all, 2013 is likely to be the year that marks the consolidation of developing brands in developing markets, as they are now prepared to overcome local challenges and become global players.

FYIQ

  • ABOUT Daniella Bianchi
    Daniella Bianchi is Director, Strategy. Interbrand Sao Paulo.

    Daniella.Bianchi@interbrand.com
  • Slowdown in the Fast Lane
    Fast Developing Markets
  • GLOBAL AND LOCAL RESPONSIBILITY