Petrochemicals giant SABIC is fastest-growing brand in Saudi Arabia, up 78%
· STC is most valuable brand in Saudi Arabia, valued at US$6.7 billion
· Banking brands dominate Brand Finance Saudi Arabia 25 league table
· National carrier Saudia’s brand value soars 30% to US$0.9 billion
· Saudi Electricity Company powers up brand strength score to 82.4
The 25 most valuable Saudi brands have been announced today in the first ever Brand Finance Saudi Arabia 25 report. Set against the backdrop of Saudi Arabia’s Vision 2030 goals and the Saudi market’s growing interest in brands, Brand Finance has complemented its wider Middle East league table with a Saudi-specific publication for the first time. Brand Finance Saudi Arabia 25 ranks petrochemicals giant SABIC as the fastest-growing brand in the country and STC as the most valuable.
In the wider Brand Finance Middle East 50 report, Saudi Arabian brands feature more prominently than in previous years, with 21 brands represented in 2018, up from 18 brands in 2017. The overall brand value represented by Saudi Arabian brands swelled by 3%, up from 32% in 2017 to 35% in 2018.
Andrew Campbell, Managing Director of Brand Finance Middle East, commented:
“All 25 of these top ranking Saudi Arabian brands are playing crucial roles working towards realising Saudi Arabia's Vision 2030 and National Transformation Plan. The rankings are also a testament to the Saudi government’s US$19.0 billion stimulus package aimed at empowering the private sector and bringing in more commercial global standards into government entities.”
STC charge towards Vision 2030
Top of the inaugural Brand Finance Saudi Arabia 25 report is STC, valued at US$6.7 billion. The Riyadh-based telecom operator has turned the dial up with a 7% increase to its brand value, cementing its place as a key contributor towards Saudi Arabia’s Vision 2030.
Alongside its 5G rollout plans, STC’s new digital transformation strategy includes investment in digital media content and advertising services, creating opportunities outside of its core business. STC is firmly focused on introducing and investing in the latest digital technologies such as cybersecurity, cloud computing, Internet of Things, data analytics and digital identity; positioning itself as regional leader in the technologies of the new economy.
STC’s results prove reassuring, particularly amidst speculation that Saudi Arabia’s telecom sector’s profitability will be hurt this year by reforms being undertaken across the Kingdom and changes in policies of the Communications and Information Technology Commission.
Petrochemicals giant SABIC is Saudi’s fastest-growing brand
Saudi Arabia’s fastest-growing brand, displaying a whopping 78% brand value growth since last year is petrochemicals manufacturer SABIC. Contributing to this notable increase in brand value to US$3.7 billion are SABIC’s renewed efforts to capitalise on the US shale boom by growing its business in America. Having recently announced plans for a new head office in Houston, Texas, SABIC is a major supplier of polyethylene and other commodity resins across the Western Hemisphere. SABIC has designated the United States as a focus of its future growth plans as fracking and horizontal drilling in shale formations have unearthed cheap US natural gas that made the country among the most profitable places to produce chemicals, even trumping the Middle East in attracting projects.
Saudi banks dominate rankings
Of the 25 Saudi Arabian brands valued in the ranking, 11 (44%) are banking brands, with Al Rajhi Bank taking the top rank (up 22% to US$2.6 billion). Al Rajhi Bank is the largest Islamic Bank in the world by total assets and one of the largest financial institutions in the region in terms of customer base, network, and number of transactions. Other banks in the top 10 showing robust performance include National Commercial Bank (up 16% to US$2.3 billion), Samba Financial Group (up 14% to US$1.0 billion), and SABB (up 3% to US$0.8 billion). The dominant position of the banking sector can be attributed to consistent efforts by Saudi banks to manage operating costs effectively alongside a committed drive towards investing in digital strategies.
Saudia soars to new heights
Amongst otherwise turbulent times for Gulf carriers and the airline industry as a whole, there are positive signs coming from Saudia which has grown its brand value 30% since last year to US$0.9 billion. The Kingdom’s national carrier currently flies to 89 destinations across four continents and operates a fleet of narrow-body and wide-body Airbus and Boeing aircraft. The airline has just announced new seasonal services for the upcoming summer period with flights to Malaga, Spain starting 9 June and a daily service to Izmir, Turkey launching from 8 June.
Saudi Electricity Company powers up brand strength score
Of all 25 Saudi Arabian brands, Saudi Electricity Company holds the highest Brand Strength Index (BSI) score of 82.4 out of 100. In a landmark move towards full digitalisation at the beginning of the year, the utility brand introduced electronic bills instead of paper-based bills for all of its customers. Multiple efforts have also been made in the community awareness sphere as the brand rolled out a highly successful national campaign on electrical safety.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 25 most valuable brands in Saudi Arabia are included in the Brand Finance Saudi Arabia 25 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 Saudi Arabia 25 2018 report.
Data compiled for the Brand Finance Saudi Arabia league table and report is provided for the benefit of the media and is 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.