· Orange remains France’s most valuable brand at €18.9 billion as Total narrows the gap in second-place
· Cosmetics brands are France’s strongest with five achieving high AAA rating
· All luxury apparel brands in the league table record growth as world appreciates French quality, with Hermès overtaking Louis Vuitton in the ranking
· Renault, Peugeot, Renault Trucks and Michelin all prosper in the auto industry
Telecommunications operator Orange has maintained the title of the most valuable French brand despite its value decreasing slightly by 1% over the last year to €18.9 billion according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
In its first ever ranking of 100 most valuable French brands, having in previous years released league tables of 50, Brand Finance has ranked a host of new entrants such as media giant Canal+ (up 35% to €2.0 billion), flagship carrier Air France (up 11% to €1.5 billion), and popular champagne brand Moët & Chandon (up 19% to €0.9 billion). The extension of the league table is an answer to the elevated awareness and heightened commitment of French brands in their pursuit of achieving a growing global presence.
Orange challenged by new telcos
While Orange remains the preeminent French brand, its growth has been hampered over the last year by a very saturated and competitive telecommunications market in France. Consequently, it is seeking to grow its brand in new and innovative ways, such as by launching personal financial services to consumers.
David Haigh, CEO of Brand Finance, commented:
“Orange has built a valuable brand in the telecommunications business in France and beyond. Its value does not come just from successful marketing campaigns, but rather, it is based on providing genuine value to customers. Future brand value growth is now dependent upon Orange leveraging their brand in new industries.”
Increasingly, transition to 4G mobile telephone services has presented an opportunity to smaller operators to grow their brands more aggressively by differentiating themselves with different reach, pricing, and quality options for customers. Free Mobile (up 33% to €2.5 billion) has taken advantage of this situation to improve brand strength and growth in reported revenue. Free Mobile has made significant investments to roll out 4G services in France and is expected to grow faster than its peers.
Total narrows the gap
Having enjoyed a strong year, Total (up 8% to €17.8 billion) reduced the gap behind Orange but remained in second place. Total’s brand value grew largely due to the success of its oil and gas exploration and production division, which increased net revenue by 86%. Unlike some of its competitors, Total was able to substantially harness the full benefit of oil prices increasing by more than 20% over the previous year.
Cosmetics brands are France’s strongest
While the leading French cosmetics brands had a mixed year in terms of brand value, they remain amongst the country’s strongest brands. In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, through the Brand Strength Index (BSI) – a balanced scorecard of factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation.
According to these criteria, L'Oréal has claimed the title of France’s strongest brand, following a big improvement from a BSI score of 81.9 out of 100 in 2017 to 89.2 this year, even though its brand value went down 5% to €8.2 billion. Elvive enjoyed a similar story – despite brand value dropping 8% to €1.7 billion, its brand strength improved from 87.5 to 88.3 – becoming the second-strongest brand in France.
France’s fourth, fifth, and sixth-strongest are also cosmetics brands: Lancôme (86.5), Guerlain (86.2), and Garnier (86.2), each gaining the same high AAA brand rating as L'Oréal and Elvive. Michelin (86.9) is the only brand from outside the cosmetics industry to rank among France’s six strongest brands, claiming third spot.
The big luxury cosmetics brands such as L’Oréal, Elvive, and Lancôme are benefiting from changes in the global cosmetics industry, which are leading to growing polarisation. Increasingly, customers are developing an affinity for either the biggest and most premium brands, or alternatively, smaller, organic, and local brands. This is largely to blame for the strongest brand of 2017, Garnier, dropping to sixth place this year. Similarly, fellow mid-range brand L'Occitane fell from being the 10th strongest French brand to just 21st.
Apparel grows as French quality appreciated
All luxury apparel brands ranked in the Brand Finance France 100 league table have recorded strong brand value growth over the last year, each boasting an increase between 12% and 42%, as consumers are distinguishing the quality that French luxury apparel represents compared to mass market brands.
Hermès (up 30% to €9.6 billion) has assumed a leadership position, overtaking Louis Vuitton and jumping to 6th rank in the overall league table. With growing brand focus on product and independence, Hermès has developed a remarkable brand perception that is impossibly exclusive but still widely available to deliver strong revenue growth.
Auto industry prospers
The car-making industry has also recorded significant brand value growth over the last year. The fifth-most valuable French brand, Renault (up 12% to €10.3 billion), grew strongly as it benefited from increased consolidation and cooperation in the global automobile industry, demonstrated through the growing Renault-Nissan-Mitsubishi alliance. Albeit from a lower base, Peugeot can boast a similar growth rate with 14% year on year increase to €2.2 billion and 47th position nationally. Entering the league table ranked 67th, Citroën (down 11% to €1.2 billion) is the only major French marque to lose brand value this year. Outperforming all other brands in the league table, Renault Trucks, originally part of Renault and owned by Volvo since 2001, is the fastest-growing brand in France this year, up 74% to €1.3 billion.
Michelin (up 24% to €6.7 billion) not only has one of the strongest brands in France, but has also taken pole position as the world’s most valuable tyre brand of 2018. Michelin’s brand value grew over the last year thanks to the company successfully leveraging the brand to pass increased rubber costs onto customers. Sustainability and technology initiatives have further strengthened the brand, including a concept for a 3D-printed tyre that can be adapted to road conditions and never needs replacing.
New entrants to the ranking, auto component manufacturers Valeo (36th) and Faurecia (66th) complete this year’s representation of the car-making industry in the Brand Finance France 100 league table.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 100 most valuable brands in France are included in the Brand Finance France 100 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 France 100 2018 report.
Brand Finance helped craft the internationally recognised 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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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 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.