Will the Rs. 55 billion Dialog brand get hit by Covid-19?
View(s):It is said that the lifeblood of an organization are the brands it owns. However, when an economy like Sri Lanka crashes from a +2.5% GDP growth experienced in 2019 to a -0.5% as per the latest forecast by the World Bank in 2020, it will sure have an impact to the overall value of the brands in a country.
The reality is that no one knows the impact of the Covid 19 virus will have different ecosystems of Sri Lanka. It is obvious that the apparel industry will be more impacted than the telecommunication industry of Sri Lanka given that the demand chain is has been severely impacted on the former as the consumer is on lockdown mode in the US and Europe. On the latter, the consumer is also in lockdown in Sri Lanka but they want to be connected and the usage of the mobile phone/data might be actually higher.
Telecom sector advertising spend Rs. 10.8 billion in 2019 will be impacted in 2020
What is a brand?
Typical definitions indicate that a brand is a name or a symbol that defines to a seller the products that one markets which helps to differentiate one from the competitors. One can also argue that a brand is a tool that helps create and form a relationship between the enterprise and a customer.
Dialog the brand
Dialog Axiata is a subsidiary of Axiata Group Berhad. If we analyze the performance of the brand in 2016 Dialog was valued at 34.1 billion rupees whilst Bank of Ceylon (BOC) was leading the country with a 41.4 billion rupees.
2017 was a tough year with the total FMCG consumption declining quarter-on quarter but Dialog registered a 11.9% growth to reach a 38.1 billion rupee performance whilst BOC declined by -2% to settle at 40.6 billion.
In 2018 Dialog grew by +41.9% to 54.1 billion whilst BOC registered a 42.8 billion at a +6% growth. Dialog catapulted to become the most valued brand in Sri Lanka on the promise ‘ The Future Today’ with the imagery of a sleek sharp innovative brand which is an example to Sri Lanka.
Dialog deep dive
If one does a deep dive on the 2018 performance the company grew the top-line at a +15.8% growth to 109.1 billion rupees. Operating profit at +12.1% to 16.7 billion rupees whilst profit before tax dipped by -11.2% to 9.5 billion rupees due to strategic investment. The beauty about the management style is the continued investment in strategic marketing that has driven brand value by 41.9% to 54.2 billion rupees. It demonstrated the companies commitment to building the brand equity so that the company can leverage in the future in new products. It’s a lesson for Sri Lanka. I guess time will tell what impact the 55 billion rupee brand will be faced Post the Covid-19 virus.
( The author heads an US- Indian Artificial Intelligence company for Sri Lanka, Maldives and Pakistan)