Top African brands could lose up to $60 billion from COVID-19, report
As the COVID-19 pandemic wreaks havoc on the global economy, Africa’s top 150 most valuable brands could lose up to 12% of brand value cumulatively, a drop of $60 billion compared to the original valuation date of 1st January 2020, according to the latest Brand Finance Africa 150 2020 report.
Looking beyond Africa, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
“No truly Pan-African brands exist, with even the highest performing brands in the ranking often only operating out of their home countries and therefore finding themselves a complete unknown across the continent and globally. It is no surprise that South Africa is by far the most represented economy in the ranking, with 87 brands featuring, which account for 76% of the total brand value,” Declan Ahern, Valuation Director, Brand Finance London commented.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
“There is no denying that the African market remains immature and fragmented in comparison to its global counterparts. The lack of connectedness between nations across the continent means that brands’ growth is being stifled and they are unable to flourish beyond their home markets. This does pose, however, a great opportunity for African brands to develop in a market ripe for consolidation and M&A,” Jeremy Sampson, Managing Director, Brand Finance Africa said.
