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Johnson & Johnson Looking Pretty with Top Cosmetics Brands

·         Johnson’s tops Brand Finance Cosmetics 50 ranking as sector’s most valuable brand

·         Another Johnson & Johnson brand, Neutrogena, is sector’s strongest

·         Chanel and Guerlain surge in brand value, entering top 10 as fastest-growing brands

·         L’Oréal Paris and Gillette retain second and third rankings on steady growth

·         Consumer brand preferences are polarising to global luxury or local artisanal

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

Johnson's, the flagship of the Johnson & Johnson brand family, is the world’s most valuable cosmetics brand, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Johnson’s brand value has grown by 5% over the last year to US$17.7 billion.

Despite the global cosmetics industry facing some challenges, Johnson’s baby and adult products performed well, especially as consumers are changing their shopping habits to take advantage of new, digital retail channels. Consequently, Johnson’s has been able to use the global scale of their parent company to address various specific customer needs in different parts of the world.

Neutrogena (up 7% to US$6.6 billion) is the fourth most valuable cosmetics brand in the world, jumping ahead of Nivea (down 3% to US$6.5 billion) which fell from 4th place to 5th. Neutrogena is also owned by Johnson & Johnson, and benefits from the global reach of their parent too as it seeks to spread its products to new jurisdictions in the coming years.

Neutrogena is world’s strongest cosmetics brand
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Along with the level of revenues, brand strength is a crucial driver of brand value.

According to these criteria, Neutrogena is the world’s strongest cosmetics brand, earning an elite AAA+ rating, one of just a handful of brands in the world across all industries to achieve such status. Interestingly, one other AAA+ brand is Johnson’s, making Johnson & Johnson one of only two companies in the world (alongside The Walt Disney Company) to own not one, but two brands with an AAA+ brand strength rating. Both Neutrogena and Johnson’s benefit from extraordinary levels of customer trust and respect.

Richard Haigh, Managing Director of Brand Finance, commented:

“The value of the biggest cosmetics brands does not come just from successful marketing campaigns, but rather, they each build upon a deep intimacy with their customers. If you are going to put a product on your skin – or your child’s skin – you want to trust that it will honour its brand commitment to you. In that context, Johnson & Johnson boasts a remarkable achievement to have built a pair of brands with AAA+ brand strength.”

Chanel and Guerlain surge in brand value, entering top ten as fastest growing brands
Chanel (up 36% to US$5.9 billion) and Guerlain (up 67% to US$5.3 billion) both achieved remarkable brand growth over the last year, entering the top 10 of the most valuable cosmetics brands in the world. Chanel jumped five places from 11th to 6th, and Guerlain improved by nine spots from 16th to 7th. Chanel benefits from an exceptionally large social media presence and is recognised as the “most social” luxury brand. It has built the largest following and is delivering on a well-planned content strategy.

L’Oréal Paris and Gillette retain second and third rankings on steady growth
L'Oréal Paris (up 2% to US$8.8 billion) retained its status as the world’s second most valuable cosmetics brand. It is also the strongest cosmetics brand in France, as it improved its perception amongst customers as a trusted luxury label. Shaving brand Gillette (up 6% to US$7.5 billion) retained third ranking, despite a modern trend of artisanal shaving brands marketing razors to a new generation of millennial consumers. These competitors have sought to differentiate themselves by selling razors on a subscription basis, undercutting Gillette’s long-established distribution channels and existing brand equity with customers.

Consumer brand preferences are polarising to global luxury or local artisanal
The big luxury brands are benefiting from changes in the global cosmetics industry which are leading to increasing polarisation amongst brands. While the majority of the premium brands have maintained or grown their brand value, large non-premium brands have fallen, such as Palmolive (down 25% to US$1.8 billion) and Avon (down 47% to US$1.2 billion).

Increasingly, customers are developing an affinity for either the biggest and most premium brands, or, alternatively, various smaller, organic, and local brands. These local brands are each too small to be recorded in a global ranking but are particularly attractive to consumers who are apprehensive of mass-manufactured chemical cosmetics.

View the full Brand Finance Cosmetics 50 2018 report here


Note to Editors

Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 50 most valuable cosmetics brands in the world are included in the Brand Finance Cosmetics 50 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 are available in the Brand Finance Cosmetics 50 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
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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