View the full Brand Finance Australia 100 2020 here
London, 29th January 2020
Woolworths has reclaimed the title of Australia’s most valuable brand, overtaking reigning champion Telstra, after recording a 5% uplift in brand value to AU$11.8 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy.
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. Alongside revenue forecasts, brand strength is a crucial driver of brand value. Woolworths’ increasing brand strength, up 4.2 to a Brand Strength Index (BSI) score of 81.9, has enabled it to overcome a tough market, where retail activity is contracting, and economic growth forecasts are gloomy.
Fellow supermarket brand, Coles (brand value AU$7.5 billion), has also been feeling the pinch as shoppers are becoming increasingly careful with their spending habits. However, its small brand value increase (up 0.2%) is a very positive result following its demerger with Wesfarmers, the country’s largest ever demerger. Coles has achieved a AAA- brand strength rating for the first time, a reflection of the brand’s solid reputation for value for money.
Mark Crowe, Managing Director, Brand Finance Australia, commented:
“We are witnessing a decreasingly optimistic market, where many of the country’s biggest consumer brands are suffering. Household names, Woolworths and Coles, are bucking the trend, supported by their long-standing position in the marketplace. Woolworths is facing a difficult year ahead after the damaging investigation into staff’s pay - how the brand responds in the coming year will be pivotal if it is to retain its title of the most valuable Australian brand.”
Telstra calls for help
The country’s largest mobile network provider, Telstra, has recorded a considerable drop in brand value over the past year, down 20% to AU$11.7 billion. The NBN rollout has significantly affected the brand’s profits, which dropped 40% in 2019, and the long-term economic outlook for the brand looks challenging. Telstra is grappling with, along with the majority of key players globally, the rise in challengers in the Telco-OTT space, as well as rapidly diminishing margins as a result of fierce price competition.
Telstra’s BSI score has improved, however, up 1.9 to 84.0, largely due to a greater level of customers recommending the telecoms giant, a testament to the brand’s first-class customer service and solid customer satisfaction scores.
Mark Crowe, Managing Director, Brand Finance Australia, commented:
“Despite the drop in brand value, Telstra’s brand strength index score has increased by 1.9 points to 84.0, highlighting the importance of its brand to drive long term growth. Telstra and other telecos are facing significant challenges to implement effective strategies to fend off rising competition from newer, alternative media and communications brands. The way in which we consume telecommunications has changed for good and all telecoms brands will have to adapt if they want to survive this shift in the sector.”
Optus nation’s strongest
Optus (down 11% to AU$4.7 billion) claims the title of Australia’s strongest brand with a BSI score of 86.3 out of 100 and a corresponding AAA brand strength rating. This boost in brand strength has simultaneously knocked last year’s strongest brand Qantas (down 18% to AU$3.1 billion) off the top of the podium.
Mark Crowe, Managing Director, Brand Finance Australia, commented:
“Optus’ solid reputation for excellent customer service and value for money, is reflected in the one million new post‑paid customers that subscribed in the last year. Among the top 10 strongest brands, Coles and NRMA Insurance have experienced significant strengthening (over 5 BSI points increase) of their brands.”
Banking sector nosedives
Australian banks are facing turbulent times, as the delayed effects of the global economic slowdown are being felt across the country. This, paired with the sector’s public scandals and the ongoing fallout from the Royal Commission, has created a less than favourable environment, resulting in all banking brands losing brand value this year.
The country’s biggest lender, Commonwealth Bank, lost 3% of its brand value down to AU$10.2 billion, amid weak forecast revenue growth. Nevertheless, the bank’s brand strength has recovered this year, regaining its AAA brand strength rating (BSI 84.9).
ANZ suffered the second biggest monetary brand value loss in the ranking (down AU$2.3 billion to AU$6.8 billion) and the highest percentage loss in the top 20 (down 26%). The brand’s revenue has been falling consistently over the past few years, and with the high costs of customer remediation following the inquiry needing to be factored in, the bank’s position seems unlikely to change in the coming year.
Shortly after Westpac (down 21% to AU$5.7 billion) began to rebuild its reputation, following the Royal Commission scandal, the brand has been plagued with millions of breaches of anti-money laundering laws, further hindering its reputation.
Mark Crowe, Managing Director, Brand Finance Australia, commented:
“Financial institutions are certainly familiar with being scrutinised closely and with the country’s banks feeling the heat following the Royal Commission, the spotlight will be closely on them as they try to rebuild and repair their damaged reputations. Australia’s banks all face the same brand challenge in the coming year, to restore trust, customer retention and satisfaction, and ultimately to rebuild their brand value.”
Bottoms up to new entrants
There are 11 new entrants into the ranking this year, with engineering and construction brand Downer (brand value AU$1.3 billion), the highest ranked in 29th position. Downer has celebrated success through winning high value contracts nationally and internationally, through its acquisition of Repurpose it, a waste resource company, and through winning multiple awards for its sustainability efforts.
Six wine brands have entered the ranking this year, with five of these owned by Treasury Wine Estates. Following nearly a decade-long wine glut – significant oversupply of product – the sector is now entering a period of growth, largely thanks to the exports business boosting profits across the board. The highest new wine brand entrant, Lindeman's (brand value AU$774 million), in 50th position, is enjoyed in over 100 countries globally and produces the top selling Australian wine in three countries. Last year, the brand launched its first alcohol-free range in response to the decline in alcohol consumption, particularly in the millennial age bracket.
Worley is fastest growing
Engineering and construction brand, Worley, is this year’s fastest-growing Australian brand recording an impressive 88% brand value growth to AU$584 million. Following Worley’s acquisition of Jacobs ECR in May, and its subsequent rebrand, the company’s reach has expanded considerably, entering key high growth markets, including Europe, Canada, the Middle East and India.
Mining brands climb ranks
BHP and Rio Tinto are climbing the ranks, entering the top 5 and top 10 respectively. BHP has remained Australasia’s most valuable B2B brand, recording a 2% increase in brand value to AU$8.4 billion. BHP’s brand value has relied solely on its strong revenue forecasts in the face of a brand strength decline (down 1.8 to BSI 71.0) caused by weakening corporate social responsibility scores. Fellow mining brand, Rio Tinto, has also recorded steady brand value growth, up 4% to AU$4.8 billion.
Both brands are negotiating the increasing intolerance of new mining projects, among the Australian public and internationally; a strong brand becomes increasingly important in keeping other influential stakeholders, such as regulators, on side to maintain growth and profitability. As BHP and Rio Tinto operate across borders, they are exposed to fluctuating global trade and have suffered as a result of softening demand in China, a key market.
7 Australian brands feature in Global 500
Seven Australian brands feature in the newly released Brand Finance Global 500, with Woolworths ranked the highest. Defending its position as the world’s most valuable brand for the third consecutive year, Amazon has broken the so far unattainable US$200 billion brand value mark. Following 18% growth from US$187.9 billion last year, Amazon’s brand value has now reached US$220.8 billion, over US$60 billion more than Google’s and US$80 billion more than Apple’s.
The world’s largest online marketplace, Amazon has also branched out into cloud computing, artificial intelligence, consumer electronics, digital streaming, logistics, and is looking to enter other industries. With a diverse product and service portfolio, and thanks to continued investment in fast-growing sectors and innovative technologies, Amazon is not only the leader of today, but also seems primed for tomorrow.
Nevertheless, the majority of Amazon’s revenue still comes from retail, and challenges to the growth of the company’s core operations may result in brand value stagnation in the future. In November 2019, it was announced that Nike would no longer be selling its merchandise on the platform, to develop its own direct sales channels. Amazon may have to contend with other big brands following Nike’s lead, which would undermine its reputation as the ‘Everything Store’. Another potential sticking point is the future of Amazon’s international business. From environmentalist opposition in Europe, to backlash from local retailers in India, to saturation of China’s e-commerce market by Alibaba and its subsidiaries – matching globally the status that Amazon enjoys in the US, may prove difficult.
David Haigh, CEO of Brand Finance, commented:
“The disrupter of the entire retail ecosystem, the brand that boasts the highest brand value ever, Amazon continues to impress across imperishable consumer truths: value, convenience, and choice. Today, Amazon’s situation seems more than comfortable, but what will the roaring twenties hold in store?”
View the Brand Finance Global 500 press release here
View the full Brand Finance Global 500 here
View the full Brand Finance Australia 100 2020 here
ENDS
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 100 most valuable Australian brands are included in the Brand Finance Australia 100 2020 report.
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 Australia 100 2020 report.
Data compiled for the Brand Finance 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.
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Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined 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. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
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 Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings 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, while 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 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.
