Brand Agnosticism in the Middle East
The Middle East. Could it be the source of the world’s next big brands? Even if you’ve been a long-term resident here, you would be hard pressed to recall five great Arab brands off the top of your head. If anything, Emirates Airlines and Al Jazeera are perhaps the only ones that quickly come to mind.
When we shift our thoughts westwards, however, our responses are both expansive and instantaneous: Google, Pepsi, Marlboro, Nokia, BMW, Facebook, Adidas, and Starbucks are just some of the great brands that come to mind. The list of these ‘top-of-mind’ brands is virtually endless, mainly because these are businesses we are constantly in touch with. If we don’t use their products and services ourselves, our peers do. If they don’t, we’ll definitely read of them, hear of them, see them used by others, or experience them in some other way.
So why have such few Arab brands made a similar impact, both outside the region and within it? Many large Arab firms have superb financial records and an undeniable capacity to expand. In fact, many have tried to enter new markets, with mostly lackluster results.
The truth is, most Arab companies harbor a holding company attitude towards business expansion, and the resulting brand agnosticism serves to chain most potentially great Arab brands to the ground.
Arab firms focus mainly on traditional business processes and do not yet see brand as a cornerstone element that can propel a company towards far greater business. To date we’ve seen some large Arab companies try to go global through M&A activities, yet very few have put the required frameworks in place to actually manage these acquisitions, let alone the brands. As a result, we’ve seen a lot of these initiatives fail to fully capitalize on their potential.
However, there are some Arab brands that have begun taking the necessary steps to become competitive on the world stage, at least from a business point of view.
Take Almarai, the Saudi Arabian dairy producer, for example. With $1.3 billion in 2008 revenues (up 33% on 2007) and around $250 million in net income for the same year, the company has, unarguably, done quite well. The difference between Almarai and most of the other regional titans is that this company has widened its scope and is set on exploring greener pastures, beyond the sands of the gulf where its cash cows roam. Recent deals with PepsiCo and others will see it expand from its dairy roots into a full-fledged food conglomerate serving a far wider market than it currently does. The next step will be to develop the Almarai brand to make it work for both for the GCC and international markets.
The key here is for Arab firms to broaden their vision, put brand on the agenda, and obtain a much better view of the world; there’s a huge market out there to dip into, and they cannot remain complacent forever. As the region liberalizes further and, step by step, integrates even deeper into the world community, local brands will be forced to become more proactive and view business through a truly global lens. If these brands don’t go international, there will be an additional wave of international brands that venture here and make a significant impact in the Middle East’s seemingly safe home markets.
After all, it’s not just Arab brands that want to go global…
1 September 2009, posted by Jamil Armanazi
