UPDATED WITH INTERBRAND’S TOP 100: Brand is where true investment value vests

The reality of today's consumer environment is unrecognisable when compared to those demands of a couple decades back. The shift that technological advances have forced upon big business and consumers has created a globalised village many businesses are struggling to adapt to. In order for the dinosaurs, and the young bucks to keep and create competitive advantage in a world is dominated by intangibles and fickle tastes, now, more than ever, the brand of a business is its biggest asset. South Africa's branding Tzar, chairman of the local operation of Interbrand Jeremy Sampson came into the CNBC Africa Power Lunch studio today to discuss the global group's Best Global Brand Survey of 2014 – how the giants stack up, why social media has become a key driver and how South Africa can create more like Nando's. – LF

ALEC HOGG: Best Global Brands have just been released, this is your big story for the year.

JEREMY SAMPSON: It really is, Alec, as you say and Japan has been doing it since about 2008 or so. Every year, round about now the results come out, and it really is the sort of thing that a lot of Chief Executives (of captains of industry) around the world, are looking to see how their brands are doing.

ALEC HOGG: How is it or what is the process that is used here?

JEREMY SAMPSON: It's a mixture of the financial and I should suggest that Interbrand does this without the cooperation of the companies, so it is readily available, financial data, so that is annual report/investment relations, etcetera. You analyse the brand, how strong is the brand, and how loyal are its consumers, and then you look at the ability to create a profit margin and to be a sustainable business. Now, more and more we are saying that brands are actually the major assets of companies. Obviously, it depends on the category but in most categories now the brand is the most valuable asset of the organisation and, therefore it has a loyal following. Therefore it has a sustainability, and that's, I think, something that we all want in business, to see that continuity and that is what brands can give you as long as they are invested in and stay relevant.

ALEC HOGG: We'll get into the table itself but maybe, just as a contemporary example, you saw in the studio, Verimark they had a big brand, in time gone by. He now says that it's too expensive to sell in South Africa because of the weaker Rand, so he's looking to do things internationally. How long does it take or will it take for him to build a similar presence internationally, as he has here?

JEREMY SAMPSON: Well, just listening to the issues about currency, you know we've all heard over the years, 'because the Rand too strong'. Well, now the Rand is too weak. Whichever way the pendulum swings is going to affect people and, at the moment, it is affecting Mike's business at Verimark very badly, so that's an issue. I think the other thing is looking at brands staying relevant. That to me is one of the key things that you and I have talked over the years of brands that have come and gone. They're not relevant anymore and this is where you've got to keep on developing and staying relevant. One of the biggest droppers on the tables this year is Nokia.

Even though Nokia was taken over by Microsoft, about two years ago, but if we had been having this conversation five or six years ago, Nokia was 'cock of the walk', when it came to the IT and mobile phone, and it is now slipping away and probably next year it won't even be in the top 100.

ALEC HOGG: It wasn't that long ago. You are so right. IBM is another brand that was iconic in time past. How did it shape up this year?

JEREMY SAMPSON: It came in at number four, but it is quite interesting because it is actually, people talk of business-to-business, business-to-consumer brands and Apple and Google, which are one and two, are more consumer brands, as it were. They are now targeting more and more business apparently, and I haven't seen this in our local papers but Apple has done a JV with IBM, to move more into the business side. I think as we've seen IBM, in the last year or so, hasn't had an easy time. You were talking about Mr. Watson earlier on and it was interesting how a few years ago they got Lou Gerstner, who came from Consumer Goods, as you would know and brought in IBM on it, reinvigorated itself, now it seems to be slipping down again and this shows you that even the top-top brands, there's no security. There is no surety of staying in that position. Competition is so intense all the time, and sometimes that competition is coming from areas you least expect.

ALEC HOGG: I guess, from a South African perspective, and we're seeing a lot of this now, where South African companies are taking a bet on bringing brands, particularly in the fast-food arena, into South Africa. We had Taste Holdings bringing results out today (pretty disappointing) but their big story is that they've now got Domino's Pizza, and that's, to them, the world's leading pizza brand. Is it?

JEREMY SAMPSON: Well, I've got to say 'so what'. I think you and I would know of it. I remember getting their annual report 20 years ago, and it was a stunning annual report but in South Africa, amongst consumers, is Domino's Pizza known at all? When you look at Taste, when you look at Famous, how many brands of Famous have got now, in their portfolio? I've lost count, I think. The competition is intense. Pizza is a good area, as chicken is in South Africa but we'll have to see but there's no guarantee that a top brand from overseas will find its place in the sun here, in South Africa.

ALEC HOGG: One that does seem to be doing so in the fast-food arena is Hassan Adams' Burger King that he's brought here – a big international name. Is that more because he's doing it the right way or is it Burger King is known in this country?

JEREMY SAMPSON: I think a bit of both. The way they launched it, in Cape Town was very clever and they didn't go into high, expensive advertising but they used viral, IT, all sorts of things, the queues around the block and that sort of things. Now, I think people are a little bit shocked to hear how many Burger Kings there are in South Africa already. I believe they're into double figures and it's been a great success but they went in very slowly, piece-by-piece, and now they've opened up and I think this is where it is such a huge brand. When you think of burgers, you do think of Mac Donald's and Burger King. Whereas, if you think of chicken, perhaps you'll think of five or six brands and, already therefore the competition is greater.

ALEC HOGG: Well Nando's and the rest.

JEREMY SAMPSON: Well, exactly and you mention Nando's but Nando's is, arguably South Africa's most successful brand, when you think about it.

ALEC HOGG: Did it make the top 100?

JEREMY SAMPSON: No, but it's in about 30 countries now and it is growing tremendously and it is very interesting that the percentage of South African business, to the total Nando's business, I believe now is down to under 30 percent.

ALEC HOGG: Jeremy, you are very active in social media and you've made a mention about viral or the virality of brands and the top two in the world, Apple and Google, are also very much in the tech space. Is this something that is being appreciated now by, maybe if you say 'old economy' or 'old style' company management?

JEREMY SAMPSON: I think they realise it is an absolute necessity. I use the word 'relevance' here, I've used it with you, and I keep on using it. You and I have to stay relevant as people, as brands in our own right. Companies have to. This is where things change over time. We talk about valuing businesses but back up, until the 1970's or 1980's, 80 percent on average, was tangible. The bricks and mortar, 20 person was the IP. Today it has swung right around, and what are the intangibles of Google?   It is probably over 90 percent and this is what we're looking at. Facebook, the fastest riser, again it is probably over 90 percent and this is where things are changing you as a person. I have two youngish daughters at home, in their mid-twenties, and I remember them saying to me four or five years ago 'Dad, it is either Facebook, Twitter, or both'.

I remember Facebook, at that time seemed to be very intrusive and there were lots of stories, so I said 'I'll have a look at Twitter and, as you say, I enjoy it'. I can monitor what's going on and, especially over the Christmas period in South Africa, when everything goes dead, one of the main conduits to what is going on in the rest of the world is Twitter.

ALEC HOGG: Yes, and I guess you can also destroy a brand very quickly, on social media, once you start looking at the virality of that, spreading like a virus, it is something that must be increasingly on the minds of those who are custodians of brands.

JEREMY SAMPSON: Well, you are quite right because brands today have to be very agile and they have to be very nimble. That's a given, whatever field you are in but especially in consumer goods. Running up to Christmas, two to three years ago, Woolworth's and Frankie's blew up and Woolworth's were too slow (that was three years or so ago) but this is where companies, when they see something happening, must respond quickly. Sometimes they won't give an answer but at least they say 'you've got our attention. We're looking at it'. Do something but don't leave a vacuum. You know, on radio or television, you can't have a blank period of nothing being said. You've got to join the conversation. That, incidentally, one of the big things about Brands Today; it's a conversation.

With Apple or something like that, Apple is almost a way of life, whether you have your iPhone, your iPad, your tablet, or your computer. This is where now, I think it was the FT, a couple of weeks ago, was talking about the 'wallet effect' that Apple is about to bring into play. Is it going to challenge the banks? Is it going to challenge the credit cards? Now, the last couple of weeks, we've had the Apple Watch and this is a whole way of life that they're creating.

THE TOP 100 BRANDS WORLDWIDE – 2014