On June 23, Britain pressed the exit button from the European Union when its citizens voted to opt out. Since then there has been a lot of action in the financial markets and enough and more commentary on how much Britain will face the heat because of its actions. While the economic implications are still being dissected, there are some who question the impact on brands.
Will Brexit affect brands of British origin is a question relevant to many Indian companies as well. After all, Indian companies own several marquee British brands. Leading the pack is tea-to-transport conglomerate, the Tata Group. Over the past few years, the Tatas have acquired two of the leading British brands. They include Tetley tea and auto brands Jaguar and Land Rover. Of course, there are others such as Wipro whose consumer care business owns the famous Yardley brand in most markets across the world. Then there is the Apeejay Surrendra Group which owns Typhoo tea, another British brand.
There is no denying that there is a strong anti-British sentiment, particularly in the rest of Europe. So how does that impact the fortunes of a global brand such as Vodafone? It is headquartered in the UK but has business interests across the world. “Such brands would be expected to take a more global stance even though their pedigree lies in Britain,” says Priya Jayaraman, co-founder, Propaganda India, a 360-degree branding and digital agency. John Bernard, the global marketing director of web browser brand Mozilla, was quoted by
A report in The Guardian estimated that Brexit could cause a drop in profits to the extent of $1 billion by 2020 for car maker Jaguar Land Rover (JLR). This is because of a tariff on exports and inbound tariffs on components. It’s estimated that around a quarter of the output sold by JLR last year was in European markets. However, a company statement after the Brexit vote said that for the company it would be business as usual and it would manage the long-term impact and implications of this decision. “Nothing will change for us, or the automotive industry, overnight,” the statement said, adding that Europe is a key strategic market for the business and it remains absolutely committed to customers in the EU. For Tetley, outside of the UK, Europe is not as significant in its global plans. Apart from the UK, Tata Global Beverages focuses on markets such as the US and Canada.
Advantage, after a while? There are other questions. Will the backlash over Britain exiting the European Union affect either the perception of the brands, hence taking a toll on sales? Brand experts are firm that there will be little or no impact on brands of British origin. At present, most companies are in a state of shock because of the uncertainty. But once the cloud of uncertainty disperses, some experts feel the brands will be at an advantage. Pranesh Misra, chairman and managing director, Brandscapes Worldwide, says that in the long term with the value of the pound going down, it will make brands from Britain competitive. “In general, it will be positive for consumers,” says Misra, quickly adding that in the first 3-4 months politics will hype most conversations on the issue. However, Misra is confident that any impact over Brexit on brands is just going to be a blip and it will even out over the next one-two years. He finds support from Abheek Singhi, senior partner, BCG. “The only area where it may have some impact is in the Euro Zone.” Singhi adds that brands such as Tetley will not be hugely affected as the exposure of these brands to EU is very limited. Jayaraman says that as consumers globally become more and more insular, the local retail brands in Britain, such as Sainsbury’s or Tesco, could actually ride the nationalistic wave and use Brexit to their advantage.