· Qatari brands making strides in the Brand Finance Middle East 50
· Year-on-year brand value growth 6% globally, 11% Middle East, 21% Qatar
· The table includes the Middle East’s 50 most valuable brands
· Emirates remains the region’s most valuable brand at US$7.7bn
· Brands from Bahrain, Jordan and Egypt forced out of the top 50
Every year, leading brand valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test to determine which are the most powerful and most valuable. The top 50 brands from the Middle East are featured in the Brand Finance Middle East 50.
Emirates is the region’s most valuable brand and it continues to soar, with brand value growth of 17% taking its total to over US$7.7 billion. The airline continues to invest in ventures that enhance its brand. In mid-2015, Emirates spent US$20m to secure ‘Friends’ star Jennifer Aniston in an advertising campaign, which appears to have translated into improving brand strength. The scores for metrics such as preference, satisfaction and recommendation have all improved this year but those most closely tied to advertising, familiarity and consideration, have improved the most.
The UAE and KSA continue to dominate the list, contributing 16 and 21 of the brands respectively to the list. Qatar has the third most significant presence in the table with 8 brands. Qatar Airways continues to lead the way, with a brand value of US$3.5 billion. It is growing faster than Emirates, with year-on-year growth of 26%, though it remains a long way off rivalling the Emirati brand for brand strength and international renown.
Qatari brands as a group are growing faster than those from any other country in the Middle East. The average year-on-year growth rate for brands globally is 6%. In the Middle East it is an impressive 11%. However Qatari brands have an exceptional growth rate of 21%. Brand Finance CEO David Haigh comments, “The exceptional growth of Qatari brands reflects both the major strides the nation has made in developing a broader-based economy and the level of investment and expertise applied to its brands. We expect to see a continuation of this trend as Qatar rivals the UAE and KSA for dominance in the Middle East’s brand landscape.”
Brands from other nations have not fared so well. As recently as 2013 and 2014, brands from Bahrain, Iraq, Jordan and Egypt featured in Brand Finance’s list. As a consequence of instability, perceptions of weak, corrupt governance and excessive government intervention in the economy, the Iraqi, Jordanian and Egyptian brands have fallen out of the table. Meanwhile those from Bahrain (Batelco and Al Baraka) have been squeezed out by the growth of Qatari brands.
Kuwait and Oman may suffer the same fate. In 2015, there were 6 Kuwaiti brands in the table. This year, there are only four, though Kuwait’s most valuable brand, NBK, continues to grow strongly. This trend suggests that while the countries of the Middle East outside the GCC have much more significant economic issues to address before their brands can thrive, smaller GCC nations (Oman, Kuwait and Bahrain) should take steps to encourage brand investment, monitoring and management.
Alexander Todoran, Managing Director, Brand Finance Nordic
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Joslyn Pannu, Communications Manager
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Robert Haigh, Communications Director
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Note to Editors
2016 brand values are calculated in USD with a valuation date of 1/1/16.
About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 15 countries. We provide clarity to marketers, brand owners and investors 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 clients make the right decisions to maximise brand and business value and bridges the gap between marketing and finance.
Definition of Brand
In the very broadest sense, a brand is the focus for all the expectations and opinions held by customers, staff and other stakeholders about an organisation and its products and services. However when looking at brands as business assets that can be bought, sold and licensed, a more technical definition is required. Brand Finance helped to craft the internationally recognised standard on Brand Valuation, ISO 10668. That defines a brand as “a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value.”
However, a brand makes a contribution to a company beyond that which can be sold to a third party. ‘Brand Contribution’ refers to the total economic benefit that a business derives from its brand, from volume and price premiums over generic products to cost savings over less well-branded competitors.
Brand Strength is the part of our analysis most directly and easily influenced by those responsible for marketing and brand management. In order to determine the strength of a brand we have developed the Brand Strength Index (BSI). We analyse marketing investment, brand equity (the goodwill accumulated with customers, staff and other stakeholders) and finally the impact of those on business performance. Following this analysis, each brand is assigned a BSI score out of 100, which is fed into the brand value calculation. Based on the score, each brand in the league table is assigned a rating between AAA+ and D in a format similar to a credit rating. AAA+ brands are exceptionally strong and well managed while a failing brand would be assigned a D grade.
Brand Finance calculates the values of the brands in its league tables using the ‘Royalty Relief approach’. This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand, i.e. what the owner would have to pay for the use of the brand—assuming it were not already owned.
The steps in this process are as follows:
1 Calculate brand strength on a scale of 0 to 100 based on a number of attributes such as emotional connection, financial performance and sustainability, among others. This score is known as the Brand Strength Index.
2 Determine the royalty rate range for the respective brand sectors. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database of license agreements and other online databases.
3 Calculate royalty rate. The brand strength score is applied to the royalty rate range to arrive at a royalty rate. For example, if the royalty rate range in a brand’s sector is 0-5% and a brand has a brand strength 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 estimating a proportion of parent company revenues attributable to a specific brand.
5 Determine forecast brand specific 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.