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Chinese Spirits Dominate Brand Value Rankings

·         Chinese spirits brands take top three rankings, outpacing Johnnie Walker

·         Baijiu brand Wuliangye is fastest growing, up 161% to US$14.6 billion

·         Mexico’s Don Julio tequila is world’s strongest spirits brand, with AAA rating

View the full list of the world’s 50 most valuable spirits brands here

Leaders of the Chinese baijiu market: Moutai, Wuliangye, and Yanghe are the world’s most valuable spirits brands, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Moutai defended its status as the world’s most valuable with its brand value increasing by 73% to US$21.2 billion.

Second-ranked Wuliangye was at the same time the fastest-growing brand in the Brand Finance Spirits 50 2018 ranking, up a remarkable 161% year on year to US$14.6 billion. Because of its popularity amongst customers across the country, Wuliangye has been dubbed the ‘magic liquor of China’. A testament to its prominence, Wuliangye will shortly follow Moutai’s example as one of the only two commercial brands in the world to have airports named after them, with Yibin Wuliangye Airport due to join Zunyi Maotai Airport later this year.

Yanghe (up 82% to US$7.8 billion) leapt ahead of Johnnie Walker (down 6% to US$4.3 billion) to become the world’s third-most valuable spirits brand, ensuring that the top three spots were all occupied by Chinese baijiu brands.

David Haigh, CEO of Brand Finance, commented:

“The big three Chinese baijiu brands have taken the podium because of the extraordinary celebratory culture that the Chinese customers hold for their products. These are brands that have remarkable value based upon centuries of tradition. It will now be interesting to see whether they will translate this success across China to global markets as they make their first steps in Europe, the United States, Canada, and further afield.”

British brands trail China on value
Whilst Moutai, Wuliangye, and Yanghe filled the top three positions, the other two Chinese brands in the Brand Finance Spirits 50 2018 ranking: Luzhou Laojiao (up 52% to US$3.8 billion) and Gujing Gong Jiu (up 67% to US$2.5 billion) have also performed well, claiming their spots in the top ten. With an aggregate value of US$49.9 billion, Chinese spirits accounted for 54% of the total brand value in the league table. Although the United Kingdom contributed 12 brands to the ranking, compared to China’s 5, their combined value was almost five times lower at US$10.4 billion. The value of British brands is more dispersed amongst numerous whisky and gin labels.

Don Julio Tequila is strongest spirits brand
Aside from determining overall brand value, Brand Finance also evaluates the relative strength of brands through a balanced scorecard of metrics on marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.

According to this criteria, luxury tequila brand Don Julio is the strongest in the ranking, with a Brand Strength Index (BSI) score of 87.4 and a corresponding brand rating of AAA. Don Julio prides itself on being the pioneer in the luxury tequila market as well as bottling tequila in a truly unique square bottle. The brand has a very strong celebrity fan following, with devoted fans amongst their core customer base coupled with memorable advertising campaigns and high-profile global brand ambassadors. This success has meant Don Julio has taken the title from last year’s strongest brand, Crown Royal, the Canadian whisky also owned by Diageo.

View the full Brand Finance Spirits 50 2018 report here

ENDS

Note to Editors

Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 50 most valuable spirit brands in the world are included in the Brand Finance Spirits 50 2018 league table.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is assessed through a balanced scorecard of factors (such as marketing investment, stakeholder equity, and business performance) and used to determine what proportion of a business’s revenue is contributed by the brand.

Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Spirits 50 2018 report.

Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.

Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.

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Sehr Sarwar
Communications Manager
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s.sarwar@brandfinance.com

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About Brand Finance          
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.

Methodology
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post-tax to a net present value which equals the brand value.

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