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Holier Than Dow – BASF Defends Title of World’s Most Valuable Chemicals Brand

  • With brand value of US$7.9 billion, BASF retains title of world’s most valuable chemicals brand and is sector’s strongest brand with AAA rating
  • Dow & DuPont are Brand Finance Chemicals 25 2020 ranking’s fastest-falling as products moved under new brand Corteva following demerger
  • SABIC is top 10’s fastest-growing brand, paving way for sustainability in sector
  • Linde jumps into 5th spot as brand value hits US$2.9 billion following merger with Praxair
  • China’s Rongsheng Petrochemical among new entrants as ranking extended to encompass sector’s 25 most valuable brands for first time

View the full Brand Finance Chemicals 25 2020 report here

German giant BASF defends its title as the world’s most valuable chemicals brand, according to the leading independent brand valuation consultancy Brand Finance. Despite suffering a 5% decrease in value since 2019, the brand has comfortably held on to its top spot in the Brand Finance Chemicals 25 2020 ranking, the latest iteration of the annual classification of the industry’s most valuable brands, extended to encompass 25 entries for the first time this year. Despite the decrease, caused by the general slowdown in the chemicals industry, BASF is valued at US$7.9 billion – over US$3 billion more than Dow in second place.

Over the last year, BASF has been expanding its business endeavours in Asia-Pacific, focusing on developing agricultural solutions in the region and encouraging climate-friendly farming methods, in line with BASF’s sustainable brand ethos. Recently announced plans to invest US$45 million to build a production plant in Tuas, Singapore, will boost the brand’s existing operations in the city-state to cover over 6,000 square metres.

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. According to these criteria, BASF is also the sector’s strongest brand, and the only brand in the industry to boast an AAA brand rating this year.

Savio D’Souza, Valuation Director at Brand Finance, commented:

“BASF’s dominance is twofold – on one hand the result of a realignment towards customer proximity, competitiveness, and profitable growth, and on the other, the consequence of competitors’ weaknesses, as Dow and DuPont have spent the last year rearranging their capabilities following a demerger.”

Dow & DuPont’s value fragmented

The merger and demerger of Dow (down 29% to US$4.8 billion) and DuPont (down 33% to US$2.2 billion) has resulted in a noticeable drop in both brands’ values, making them the fastest falling in the Brand Finance Chemicals 25 2020 ranking. Their contraction follows wider merger and acquisition trends in the chemicals industry, which have slowed down this year due to rising interest rates, stock market volatility, ongoing trade tensions, and diminishing economic growth. In the case of Dow and DuPont, the dwindling brand values can be attributed in particular to the carving out of a third entity, Corteva (brand value US$1.8 billion), entering the ranking in 12th position.

SABIC continues growth

Saudi Arabian petrochemicals giant, SABIC (valued at US$4.3 billion), remains the third most valuable brand in the Brand Finance Chemicals 25 2020 ranking, enjoying a 9% boost to become the fastest-growing brand in the top 10. Over the last year, SABIC has been a shining star in the chemicals sector, heavily investing in its regions of operation, enshrining CSR at the centre of its brand ethos, and paving the way for sustainable innovation. This has most recently culminated in the brand’s intentions to develop its TruCircle initiative, aiming to close the loop on plastic recycling in association with global leaders in business and policy.

Savio D’Souza, Valuation Director at Brand Finance, commented:

“SABIC has demonstrated a considerable growth in brand strength over the last year, rising from an AA+ to an AAA- brand strength rating. It will be interesting to see how SABIC’s first global marketing campaign as well as the brand’s proposed acquisition by Saudi Aramco impact SABIC’s brand equity in the future.”

Linde jumps into top 5

Linde has taken the Brand Finance Chemicals 25 2020 ranking by storm, jumping into fifth place with a brand value of US$2.9 billion. The brand’s rise can be attributed to the decision to continue as Linde following the merger of equals with US gases giant, Praxair. This allows the brand to branch out into new territory, as it was not previously well-known in the US. Linde has also advanced its brand visibility in Asia by expanding operations in Shanghai, starting up a new air separation plant to supply nitrogen, oxygen, and argon to the world’s largest industrial gases group, HLMC.

China gains foothold

China is present in Brand Finance's ranking of the world's most valuable chemicals brands for the first time this year, following its extension to include 25 entries. Claiming 18th position with a brand value of US$1.4 billion, Rongsheng Petrochemical is exemplar of China’s aim to gain prominence in the chemicals industry, transitioning into a pioneer of innovation and trade prevailing in international markets. Rongsheng’s solid performance in the study has been boosted by increasing Chinese investment into the industry and is likely to advance further in the coming years with the increase in crude oil imports to the region.

View the full Brand Finance Chemicals 25 2020 report here

 

Note to Editors

Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable chemicals brands are included in the Brand Finance Chemicals 25 2020 ranking.

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 the efficacy of a brand’s performance on intangible measures relative to its competitors.

Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Chemicals 25 2020 ranking.

Data compiled for Brand Finance’s rankings 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.

Media Contacts

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M: +44 (0)7508 304 782
k.jagodzinski@brandfinance.com

Florina Cormack-Loyd
Communications Manager
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f.cormackloyd@brandfinance.com 

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About Brand Finance          

Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.

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

Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).

Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.

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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