Five Emerging-Market Brands to Watch

Who’s the next Alibaba? Investors, and consumers, are all eyes to find tomorrow’s blockbuster brands.

25 billion US dollars speak far louder than words. The Chinese online retail platform Alibaba – which started from its founder’s modest flat – morphed over 15 short years into making the largest Initial Public Offering (IPO) of stock ever. That deal, done in late September, beamed out a beacon of hope to entrepreneurs everywhere. It confirmed the possibility of creating – at home, with funding from friends and family – the next global brand. And it confirmed that the home need not be somewhere in the rich world. Unlike Apple, Amazon, eBay, Google and other competitors that started on America’s flash west coast, Alibaba debuted in China’s unprepossessing city of Hangzhou.

Abracadabra! – here come emerging-market brands. Now that Alibaba has proved it can be done, expect to see more. Here’s a look at five possibles.

Huawei to Go

Ranked 135th globally in brand-value by consultancy Brand Finance, Huawei has become the world’s largest supplier of telecommunications equipment. The Shenzhen-based brand has used two of the strategies recommended by Professors Nirmalya Kumar and Jan-Benedict E.M. Steenkamp in their 2013 book, ’Brand Breakout’. One is to concentrate first on business-to-business (B2B) and second on business-to-consumer (B2C). Only after two decades of flogging switches, routers and cabling did Huawei move into making one of the main products these networks support: mobile phones. Ten years on, the leap seems to have succeeded. According to the market researcher International Data Corporation (IDC), as of mid-2014 Huawei commanded 7 percent global market share in smart phones – trailing Apple at 13 percent and Samsung at 25 percent. In its home market of China, Huawei is a close second to competitor ZTE, says Credit Suisse analyst Jerry Su, with respectively 29 percent and 30 percent shares. The other Kumar-Steenkamp approach has been to be "a pampered national champion." Founder and controlling-stockholder Ren Zhengfei, a former government employee himself, is known to enjoy close ties to and support from senior officials.

Hello Tata

Already in the top-ten Indian companies by revenue, Tata is a true conglomerate, involved in generating power, making consumer goods and most everything in between, including chemicals and steel. Its best-known brand plays, however, are in cars and computing. In 2008 Tata took a page from Kumar-Steenkamp’s book and bought a Western brand: in this case the luxury English marque of Jaguar Land Rover. While that foreign foray has worked well, with sales hitting new highs, an experiment at the other end of the market has tanked. Tata’s Nano, which debuted in 2008 at a price of about 2,000 US dollars, was seen as heralding a new era of inexpensive automobiles. Too much so, it seems. In an interview with New Delhi Television in late 2013, Tata’s former chairman Ratan Tata said the tiny car had been poorly marketed, with ’cheap’ being interpreted by consumers as ’poor quality’. Still, he contended, a rebranded Nano might yet be launched in Indonesia or Europe. Steadier success has been achieved by the conglomerate’s other global play: IT services. Revenues doubled in the past four years for Tata Consultancy, which now counts over 300,000 employees worldwide.

Saudi Fried Chicken

Al Baik, in Arabic, means ’the choice’ – which was the right choice of a name. Patrons are as devoted as Apple fanboys, except for a product decidedly low-tech: pressure-fried chicken, shrimp, fish sticks and french fries. Over 40 years the restaurant has branched out to 50 sites across Saudi Arabia (rival KFC has 57). Three factors stand out in Al Baik’s unusually strong branding, says Fahd Iqbal, one of Credit Suisse’s analysts in the Middle East. Everything on the (limited) menu is succulent yet not greasy. Prices are astonishingly low: less than 4 US dollars for a combo of four chicken pieces, sauce, fries and bread. And the food is truly fast. Despite booming trade, customers are almost always served quickly. What once was a Saudi secret has begun to come out. Review sites like Trip Advisor and Virtual Tourist are full of fulsome praise, and the success has spurred unauthorized copies in surrounding countries such as Egypt, Kenya and Pakistan.

Sadia Fried Chicken

What started as a small chain of Brazilian slaughterhouses has over 60 years become the world’s 8th largest food company, now called BRF. The new name came in 2012, when Sadia (Brazil’s 7th most valuable brand) acquired competitor Perdigão (11th most valuable). At home, BRF brands command over 50 percent market share in processed meat, pasta and other ready-made food such as frozen pizzas. Where it has gone global, however, is particularly in halal chicken (halal means food prepared under Islamic dietary guidelines). As Credit Suisse analysts Alexandre Amson and Tobias Stingelin point out, Sadia supplies half the chicken in Saudi Arabia and 40 percent in the neighbouring Emirates. This is set to grow even further, when an 80,000-tonne per year meat-processing plant, Sadia’s first outside Brazil, goes on-stream in late 2014.

Beko Breaks West

Household earnings in Turkey have boomed over the past two decades, nearly quadrupling in real terms to 19,000 US dollars per person. During this ’sweet spot’ of income growth, as Credit Suisse’s ’Emerging Consumer Survey 2014’ puts it, people morph from survivors into denizens of the middle class. They buy a fridge, a vacuum, a contemporary stove and all the other modcons. In three-quarters of Turkey’s 20 million households, some or all of those white goods come from Arçelik, a home-grown manufacturer. The company has not simply copied competitors; it pumps 1-2 percent of its revenues into innovation and has a long string of patents, says Onur Muminoglu, a Credit Suisse analyst in Istanbul. From this strong domestic base, the company has over the past decade built in Western Europe a premium brand called Beko. In the UK it has become the top-selling appliance line, the company says, and in Germany, Italy and France it is number two.