The best of British brand performers
Oil and gas firms’ brand value has soared, according to this year’s 50 most valuable British brands list, but supermarkets and banks have dropped down the table.
Sainsbury’s is the only one of the big four supermarkets to boost brand value
British oil and gas firms appear to be on the road to reputational recovery as Shell and BP are two of the best performing brands in this year’s list of the 50 most valuable brands of British origin seen exclusively by Marketing Week.
See the top 50 most valuable brands below
Shell tops the list this year, having seen its brand value rocket 35 per cent £19.5bn, knocking Vodafone off the number one spot for the first time in three years. Meanwhile, BP’s value has gone up 17 per cent to £7.8bn, according to Brand Finance, which compiles the list. Environmental disasters have damaged the reliability of both Shell and BP in recent years, but each company has made a concerted effort to fix up their act.
Brand Finance chief executive David Haigh says: “It has been a good year for almost all oil and gas brands worldwide, which have benefited from the strong oil price. BP has exemplified this trend but has also strengthened its brand, as it continues a slow reputational recovery following the Deepwater Horizon disaster in 2010.”
The oil spill plagued the company’s image but a number of sustainability initiatives, including BP Target Neutral being appointed as the official carbon offset partner to the London 2012 Olympic Games, have helped clean up its muddied profile.
BP, despite growing in value, remains ninth in the rankings.
Shell was widely criticised for the way it handled the decommissioning and disposal of the Brent Spar, a redundant oil storage installation in the North Sea, as well as oil spills in the Niger Delta, but the company was the first to proactively address these shortcomings, according to Haigh, and to some extent the company is now benefiting from a “first loser advantage”.
The firm also implemented centralised brand management in order to improve ‘appreciation, control and care’, plus the appointment of Peter Voser as chief executive in 2009 led to a shift in the way the business is run. He pushed for more transparent communication with stakeholder audiences and a more customer-focused approach to innovation and partnerships. An example of this is the firm’s social media activity, in particular on Facebook, which it uses to discuss topics with its 3.7 million followers.
Brand Finance calculates brand value using a ‘royalty relief’ model. In compiling the brand list, it assesses the revenue contribution each makes to its parent company by estimating the amount it would cost to licence the brand if the business didn’t already own it. It takes into account the current worth of future cashflows that can be attributed to the brand alone.
Looking at the biggest individual winners, confectionery brand Cadbury comes top with a 57 per cent increase in brand value. Kit Kat has also seen a big improvement, with its brand value going up by 31 per cent.
But while it has been a good year for energy and chocolate firms, telecoms businesses, supermarket brands and banks have generally not fared so well.
In addition to being knocked into second place, Vodafone’s brand value has fallen 10 per cent to £17.7bn, and it isn’t the only phone operator brand to suffer a decline.
Orange’s brand value is down 12 per cent to £10.7bn, which sees it drop one place to sixth; BT falls two places to 12th after its brand value dropped 9 per cent to £5.9bn, and O2 has seen a 1 per cent decline to £4.4bn but, despite the drop, it actually moved up one place to 15th.
Haigh singles out reduced demand as consumers cut back on spending by using less data and fewer talk minutes, particularly in the eurozone, as one of the key reasons for the drop in the sector. The shift in power from the operators to the handset manufacturers has also been highlighted as an influencing factor.
Conversely, Virgin Media, which encompasses mobile and fixed line telephone, as well as broadband and TV has seen its brand value rise by 6 per cent to £3.3bn. Rival media company Sky has a slight increase in brand value, moving up 2 per cent.
The big supermarket brands have also fared badly this year, with the exception of Sainsbury’s, with Tesco, Asda and Morrisons ranking as the fourth, fifth and sixth worst performing brands on Brand Finance’s biggest loser list (see MWlinks.co.uk/BiggestLoserList).
Although Tesco is still ranked fourth overall, its brand value dropped 11 per cent to £11.7bn, which can be largely attributed to its unsuccessful bid to crack the US with its Fresh & Easy chain.
“There seems a general consensus that management have taken their eyes off the ball somewhat since the departure of former chief executive Terry Leahy,” says Haigh. “The failure and subsequent halting of Fresh & Easy stores in the US has stunted growth. Meanwhile, the lack of investment in UK stores because of foreign distractions mean that Tesco interiors are looking tired and it lacks differentiation from competitors.”
Haigh also highlights a Which? survey of 11,000 consumers who voted Tesco the worst UK supermarket based on measures including customer satisfaction, store environment and quality of fresh produce.
Tesco’s annual profits have also fallen for the first time in 20 years, it reported last week.
Morrisons, meanwhile, has seen an even greater drop in brand value, falling 15 per cent to £3.5bn and moving down three places to 21.
The UK’s fourth largest supermarket had a poor Christmas trading period, when sales fell 2.5 per cent compared with 2011, plus it has been slow off the mark in setting up its online offer. The chain plans to start selling groceries online at the end of this year, so is already at a disadvantage compared to its competitors, all of which have established digital presences.
Morrisons is also only now building a network of convenience stores after buying 49 stores from collapsed business Blockbuster. These will be converted into Morrisons’ M Local stores by the end of the summer.
The supermarket chain says it intends to open at least 70 local stores by the end of 2013, focusing initially on London and the South East.
“Its lack of competitiveness in the two fastest growing areas of grocery retail has affected its profitability,” adds Haigh.
Elsewhere, Asda’s brand value fell 16 per cent to £5.2bn, moving it down to 13th place and Waitrose dropped out of the top 50 altogether after occupying position 41 in 2012.
Sainsbury’s, on the other hand, has bucked the trend. It has seen a 3 per cent rise in brand value to £3.9bn, which has helped it move up one place to 18th.
UK banks have suffered a series of damaging scandals over the past few years, including the mis-selling of payment protection insurance and regulatory violations, which have had an impact on how the sector performed.
While retail banks such as RBS, Lloyds TSB, Halifax and NatWest have seen an increase in brand value by 34, 19, 15 and 22 per cent respectively, HSBC is the biggest loser across all sectors over the year, according to the findings.
“HSBC, last year’s most valuable banking brand (worldwide, not just in the UK) was hit with almost $2bn (£1.3bn) in fines following a money laundering scandal that surfaced in July 2012. It has also divested itself of several major investments and the resulting lost revenues have contributed to a 17 per cent brand value fall,” says Haigh.
Barclays and Standard Chartered Bank have also seen their brand value depreciate, falling 1 and 8 per cent, respectively.
He adds: “Barclays seems to have carried most of the weight in the Libor fixing scandal, having been fined $450m (£295m) in the US and UK, and losing chief executive Bob Diamond, while Standard Chartered faced threats of having its US banking licence revoked on the back of allegations of laundering in Iran.”
|Rank 2013||Rank 2012||Brand||Brand value (£bn)|
|11||13||Ernst & Young||6.6|
|24||24||Marks & Spencer||3.1|
|44||-||Tate & Lyle||1.5|
|46||-||Legal & General||1.4|
We ask marketers whether our ‘trends’ research matches their experience on the ground
Chief marketing officer
Virgin Media (23rd on the list - a non-mover)
Brand value: £3.3bn
Virgin Media had a very strong year in 2012. Looking at our business performance alone, revenues were up 2.7 per cent, which took us over £4bn and we were 4 per cent up on operating cash flow.
We did some really significant things too. At the beginning of the year, we announced the doubling of broadband speeds for customers. It was the first full year of TiVo, and we finished the year with more than 1.3 million customers using the service. We launched Virgin TV Anywhere and we put Wi-Fi on London Underground.
From a business perspective, these are fundamental things and, coupled with how we took those things to market, this has been really exciting.
The campaign with Usain Bolt and Richard Branson telling customers we’re doubling broadband speeds is a good example of how we did this. It’s a serious message about a customer-focused piece of activity, presented in a ‘Virgin way’ that enabled us to have a bit of fun with it.
We also repackaged our services midway through the year and used David Tennant and Stephen Fry to talk about our new collection.
Following the Olympic Games, we signed Mo Farah as a brand ambassador and we sponsor Britain’s Got Talent. There was so much activity last year but, fundamentally, it all started from the same place with Virgin Media - we consider what we can do to move the game on and put the customer at the heart of our decisions.
Head of sponsorship
Sainsbury’s (18th on the list, up one place)
Brand value: £3.9bn
We have been trading for more than 140 years. During that time, generations have trusted us to provide the food on their tables and the clothes on their backs. Today’s customers want products that are responsibly sourced, safe to eat and at an affordable price. Continually delivering on this is key to how we are perceived as a brand.
Our business performance is intrinsically linked to our values and, therefore, the overall value of our brand. As we have set out in our 20x20 vision, we look at five key areas for which we outline specific commitments. These are: sourcing with integrity; respect for the environment; making a positive difference to the community; best for food and health; and a great place to work.
For Sainsbury’s, 2012 was a year like no other. Not only did we sponsor several key Diamond Jubilee events, our brand value rose following our landmark sponsorship of the Paralympic Games. No other brand had previously taken the opportunity to sponsor the Paralympic Games solely, and this had an extremely positive impact on how Sainsbury’s is viewed by our customers.
We are constantly reviewing how our customers feel about our brand by speaking and listening to them. This allows us to review and revise our approach - from individual customer concerns to national customer initiatives. A great example of how this works in practice is our recent launch of Tell Sainsbury’s - our customer feedback initiative.
About Brand Finance
Brand Finance plc, the world's leading brand valuation consultancy, advises strongly branded organisations on maximising their brand value through effective management of their brands and intangible assets. Founded in 1996, Brand Finance has performed thousands of branded business, brand and intangible asset valuations worth trillions of dollars.
Its clients include international brand owners, tax authorities, Intellectual Property lawyers and investment banks. Its work is frequently peer-reviewed by the big four audit practices and its reports have been accepted by various regulatory bodies, including the UK Takeover Panel.
Brand Finance is headquartered in London and has a network of international offices in Amsterdam, Bangalore, Barcelona, Cape Town, Colombo, Dubai, Geneva, Helsinki, Hong Kong, Istanbul, Lisbon, Madrid, Moscow, New York, Paris, Sao Paulo, Sydney, Singapore, Toronto and Zagreb.
For further information contact:
Robert Haigh +44 (0) 20 7389 9400.