· Nokia is Finland’s most valuable, fastest-growing, and strongest brand
· Fortum brand records strong 28% growth with more potential ahead
· Kone remains steady on the second floor
· Elisa and Kesko swap rankings
Nokia’s brand value has grown by 63% over the last year to €7.1 billion, extending its leadership as Finland’s most valuable brand, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. After reaching a nadir in 2014 due to several years of significant brand struggles, Nokia’s brand value has sustained strong brand growth ever since.
Nokia’s brand value peaked in 2008 at over €22 billion, making it the world’s 9th most valuable brand at the time. The subsequent rise of smartphones at the expense of feature phones – a sector dominated by Nokia – caused the Finnish brand value leader to decline to just €1.5 billion in 2014. After involvement in various corporate ownership changes, the Nokia brand has rebounded strongly, and now, in 2018, it has led Finland in all three categories of most valuable, fastest-growing, and strongest brand for two consecutive years. It is the only Finnish brand to attain an AA+ brand strength rating.
Nokia now has a refocused corporate strategy concentrated on four key areas: high-performance end-to-end networks for communication service providers; network equipment and services for enterprises; building a standalone software business; and finally, consumer-facing business and licensing based upon its strong IP portfolio. In that context, Nokia’s solid performance has put it in an excellent position to lead the global transition to 5G that is now underway.
David Haigh, CEO of Brand Finance, commented:
“Nokia has focused the brand on its core networks activities as well as extending into new licensing areas over the last year. It is a perfect example of how reinvigorating a well-loved brand through licensing can be a route to success. We expect to see significant growth of Nokia’s brand value in the future as the implementation of the new strategy accelerates.”
Fortum grows strongly with potential ahead
Energy company Fortum (up 28% to €0.7 billion) was the second-fastest growing brand amongst Finland’s top ten most valuable brands. During 2017, Fortum made investments in new businesses and geographical areas. In addition, improved market conditions increased revenues in Fortum’s power production. Looking forward, Fortum’s planned takeover of Uniper and other growth projects will be a key issue for the brand to manage.
Kone remains steady on the second floor
Kone maintained its brand value at just under €1.5 billion last year, securing second place on the Finnish ranking again. The lift and escalator brand is a global leader in the sector, with sales of €8.9 billion during last year, a small increase from €8.8 billion the previous year. As the global population continues to urbanise, Kone’s strategic direction is to achieve significant brand differentiation by improving customer focus. This will lead to a particular service-minded emphasis on construction of new equipment, as well as maintenance and modernisation of existing buildings.
Elisa and Kesko swap rankings
Telecommunications company Elisa (up 3% to €0.9 billion) moved from fourth place to third in the Brand Finance Finland 10 league table this year, swapping positions with retailer Kesko (down 7% to €0.8 billion). Despite EU roaming changes coming into force and leading to data roaming price reductions by almost 90%, Elisa’s revenue increased from €1.6 billion in 2016 to €1.8 billion in 2017. This was achieved through close cooperation with Vodafone and Telenor, and a small increase in customer subscriptions.
Meanwhile, Kesko’s brand subsided despite net sales growing in comparable terms by 1.8% as they continue their transformation project to introduce a new brand alignment across their large chain of retail stores. Kesko’s brands have benefited from a strong year for the grocery trade, and business sales are well-positioned to pick up from any long-term customer behaviour changes towards food service in restaurants and away from home-consumption of food and drink. In addition, now that the last remaining Siwa and Valintatalo stores have been converted into K-Markets, Kesko will be better positioned to focus growing its main brand in the future.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 10 most valuable brands in Finland are included in the Brand Finance Finland 10 2018 league table.
Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.
More information about the methodology as well as definitions of key terms is available in the Brand Finance Finland 10 2018 report.
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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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.
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 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.