Brand Finance plc, the world's leading independent brand
valuation consultancy, recently revealed the impact of recession on
the 100 leading Global and US brands.
In March 2008 Brand Finance released the 2008 version of its report
on the 500 most valuable Global Brands.
In the months since this year’s annual report was released, the
world has been gripped by a significant economic crisis that has
had a deep and profound impact on enterprises all over the planet.
The economy has been hit by commodity prices rises, the credit
crunch, rising unemployment and tumbling share prices. As a
result of this Global economic crisis, Brand Finance has revisited
its findings and has updated the values of the top 100 Global and
top 100 US brands.
The study is calculated by Brand Finance based on the widely used
and technically superior “Royalty from Relief” methodology, which
assumes that a company does not own its brand name, and then
calculates how much it would have to pay to license it from a third
party.
The update reveals that:
Global trends:
- Between January and September the enterprise value of the 100
most valuable Global branded businesses has decreased by 13.3
percent, a drop of US$1.6 trillion.
- Between January and September the brand value of the 100 most
valuable Global brands has decreased by 4.2 percent, a drop of
US$67 billion.
Sector trends:
- As the price of oil continues to rise so does the value of the
leading petrochemical brands. Four of the top five brands that
record an increased in brand value belong to leading brands in the
oil and gas sector. These include; ExxonMobil (19.4 percent), BP
(18.3 percent), Chevron (17.9 percent) and Shell (12.8
percent).
- The only other sector to record a significant increase in
overall brand value is healthcare, suggesting that despite a
decrease in spending, consumers are prioritizing health and
well-being. Johnson & Johnson does especially well and
outperforms its competitors by jumping an impressive 16 places to
84 in the table, illustrating the trend across the sector.
- The retail sector’s total enterprise value has risen by 9.1
percent. During the current recession low-priced retailers are
leveraging their position by providing customer with value for
money goods.
- Everyday consumer brands have benefitted as consumers
trade-down and rediscover good value products. McDonald’s is an
example of a brand that has benefitted from successful
re-positioning as a healthier, value for money option. Trading on
its heritage and consumer brand equity, McDonald’s brand value
increases by 9percent to US$23,968m. On the other hand, brands such
as Starbucks struggle to gain share of (shrinking) wallet as
consumers cut unnecessary spending habits and turn to more
essential goods.
- With the current economic conditions, it is not
surprising that the financial services sector has decreased in
brand value across the board. Financial service institutions need
to refocus attention on the key value drivers of their brands and
develop longer term strategies.
Brand Rankings:
- Wal-Mart has overtaken Coca-Cola, to become the most valuable
global brand in the BrandFinance500. The value of the brand has
increased 9percent since December, to US$42,567m driving a 23.5
percent increase in Wal-Mart’s enterprise value over same period.
Wal-Mart has turned the recession to its advantage by leveraging
its reputation for low prices.
- CITI tumbled out of the top ten to fifteenth place with a brand
value of US$24,058m (a 14 percent decrease) reflecting its poor
performance in the current sub-prime crisis. This allows Vodafone
to enter the top ten in ninth place as the leading
telecommunications brand (with a brand value of US$26,688m) closely
followed by Nokia (with a brand value of US$26,564m)
“In the current climate, it is essential to understand the absolute
value of brands and what drives their value,” said David Haigh, CEO
of Brand Finance plc. “The Brand Finance™Global 500 report provides
an insight into the effect of recession on leading brands.”
“There is clear evidence that basic, value for money brands like
WalMart, AT&T, Exxon and McDonalds are performing very
strongly, particularly when they invest consistently in advertising
and marketing. By contrast unnecessary or discretionary
brands like Starbucks, Nike, Coca Cola and L’Oreal are declining in
value as consumers watch their finances more carefully.”
“There is also evidence at the global level that developing world
brands are growing rapidly. Samsung, Tata, Bank of China and Lukoil
are all good examples of this phenomenon.”
To get your FREE copy of the Brand Finance Top 100 Update Report,
click here.
Or, to learn more about how Brand Finance can provide a deeper
evaluation of your brand, contact us at (212) 521-4240.
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Brand Finance plc, is a leading independent valuation advisory
firm which advises strongly branded organizations on how to
maximize shareholder value through effective management of their
intangible assets.
© 2008 Brand Finance plc