World’s top alcoholic drinks brands could lose $33bn from COVID-19
The world’s most valuable alcoholic drinks brands could lose up to US$33 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Alcoholic Drinks 2020 report. Brand Finance’s analysis shows that different alcoholic drinks brands across the sector are likely to be impacted differently, with beer brands heavily impacted, facing a potential 20% brand value loss, and spirits and champagne & wine brands likely to be moderately impacted, facing a potential 10% brand value loss.
Looking beyond the alcoholic drinks sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
Richard Haigh, Managing Director, Brand Finance, commented:
“We are witnessing mixed fortunes across the alcoholic drinks industry as a result of the COVID-19 pandemic. On the one hand, the almost global lockdown and closures of bars and restaurants has resulted in the standstill of on-trade sales. Off-trade sales, however, in the supermarkets and bottle shops, have spiked as consumers shift towards consuming alcoholic drinks at home. It is yet to be seen whether this spike can offset the loss and therefore how brands will fare in the coming year.”
Brand Finance Beers 50
Corona crowned #1
For the first time, the Brand Finance Beers 2020 ranking has been expanded to 50 brands, with Corona topping the ranking with a brand value of US$8.1 billion. The leading Mexican brand is imported into a staggering 120 countries and sales remain solid across its key markets, including China and South Africa. The brand has focused on expanding its local production across several countries including China, Colombia, Brazil, Argentina, the UK and Belgium, which not only allows the brand to serve its local communities better but tackles its carbon footprint. Corona has sought to broaden its appeal to both a wider range of occasions and consumers, within the US market, through the launch of new drinks Corona Premium and Corona Familiar – marking the first major Corona innovations in more than 25 years - and Corona Refresca, the brand’s foray into the alcohol-spiked refresher market.
With China being Corona’s largest market, outside of Mexico, the unfortunate combination of the coincidence in name and strict nationwide lockdown across the nation at the beginning of the year over Chinese New Year has caused a decline in sales. The makers of Corona have, however, hit back at allegations that the pandemic has damaged its brand, claiming that consumers understand that there is no link between the two.
Tuborg up 26%
Danish beer brand, Tuborg, is the world’s fastest growing beer brand following a 26% brand value increase to US$968 million. Part of the Carlsberg Group since 1970, Tuborg posted a solid year in sales, with strong performances in China and India, the latter market accounting for more than two thirds of the brand’s annual sales.
Last year, the brand entered a five-year partnership with Northern Europe’s largest festival, Roskilde Festival, which focuses on community and sustainability. This partnership saw the world premiere of a new organic lager and beer bars running on green electricity.
The king of beers is sector’s strongest
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. According to these criteria, Budweiser (brand value down 14% to US$6.4 billion) is the world’s strongest beer brand with a Brand Strength Index (BSI) score of 85.2 out of 100 and a corresponding AAA brand strength rating.
In Brand Finance’s global brand monitor study Budweiser performed particularly well in the consideration and familiarity metrics, unsurprising as Budweiser is a truly global brand with a strong presence and awareness thanks to its high-profile advertising and sponsorship deals, including with the Premier League and La Liga.
AB InBev has positively exploited the strength of its flagship brand, Budweiser, rebranding the company name to Budweiser Brewing Group in the UK and Ireland as of March 2019 to boost its profile in those two markets.
Richard Haigh, Managing Director, Brand Finance, commented:
“Despite AB InBev citing a drop in revenue for its global brands, including Budweiser, from the pandemic, the trend for consumers to pivot towards well-known brands rather than trying new beers stands the brand in good stead in the coming year compared to its lesser known counterparts.”
Brand Finance Spirits 50
Chinese baijiu brands dominate
Chinese spirits brands continue to dominate the top 3 in the Brand Finance Spirits 25 2020 ranking with Moutai (up 29% to US$39.3 billion) in first, Wuliangye (up 30% to US$20.9 billion) in second and Yanghe (down 15% to US$7.7 billion) in third.
The spirits market in China is flourishing as disposable income and living standards continue to rise across the nation. Consumers are now turning towards top quality and middle to high end premium baijiu brands. In this year’s ranking, Chinese spirits’ brand values increased by 14% on average, while non-Chinese spirits brands decreased by 0.1% on average.
Moutai continues to dominate as the biggest player in the Chinese baijiu market and has focused on expanding its footprint and presence globally, with international sales reaching a record US$369 million last year. Wuliangye is the fastest growing brand in the top 10, its brand value rising an impressive 30% - a notable feat given the sheer size of the brand already. The brand has recently signed a strategic partnership with Pernod Ricard to support both brands’ goal of accelerated development within the Chinese and wider Asian markets. Furthermore, the brand has opened marketing centres in the Asia Pacific, Europe and America, to promote its ‘East meets West’ liquor.
Baileys sores 105%
Irish giant, Baileys, is the fastest growing spirits brand, recording a staggering 105% brand value growth to US$1.3 billion. The brand has committed to its three-year long strategy of repositioning the brand, transforming it to a drink that can be consumed on many occasions. This, paired with the exponential sales growth of the brand over the previous four years, has placed the spirits giant in a strong position.
Don Julio is sector’s strongest
Don Julio (up 79% to US$958 million) is the world’s strongest spirits brand with a Brand Strength Index (BSI) score of 88.7 out of 100 and a corresponding AAA brand strength rating.
Available in over 40 countries, Don Julio has registered a strong sales increase of 14.5% this year, reaching 1.7 million nine litre cases and being subsequently named the Tequila Brand Champion of 2020. With a strong brand equity and CSR performance, Don Julio’s success has undoubtedly been fuelled by the brand’s heavy investment in social and digital media for its “For Those Who Know” campaign – the first of its kind in over 6 years.
Baileys and Don Julio’s parent company, global drinks giant Diageo, has however warned of a significant sales hit, estimated at just over €200 million, as the brand suffers with bar and pub closures as well as travel restrictions, which are significantly impacting airport sales.
Brand Finance Champagne & Wine 2020
Moët et Chandon bubbles to the top
Moët et Chandon (brand value US$1.4 billion) has claimed the title of the world’s most valuable champagne & wine brand in Brand Finance’s inaugural ranking. As one of the largest and oldest champagne producers in the world, the Moët et Chandon brand is instantly recognisable as a prestigious luxury item – aided by its association with LVMH – and a staple in popular culture, recently celebrating its 29th anniversary as the official champagne of the Golden Globes.
Moët et Chandon is also the world’s strongest champagne & wine brand with a Brand Strength Index (BSI) score of 79.0 out of 100 and a corresponding AA+ brand strength rating.
As the leading Champagne brand in the industry, Moët et Chandon has enjoyed an improved financial performance and brand equity score this year, also remaining a firm favourite amongst consumers, scoring highly for customer recommendation and consideration. Over the last year, the brand has worked hard at remaining accessible by focusing on charitable endeavours, sponsoring high-profile events, and most recently launching a social media campaign highlighting its sustainable ingredients and heritage.
Changyu claims 2nd spot
Chinese winery, Changyu closely follows Moët et Chandon in second place in the Brand Finance Champagne & Wine 2020 ranking, with a brand value of US$1.3 billion. Founded in 1819 during the Qing Dynasty, Changyu is China’s oldest and largest winery and is one of the most prolific brands both domestically and abroad. Ranking highly for familiarity and reputation and enjoying a high profit margin, Changyu has spent the last few years expanding its reach by building numerous European-style chateaux across China and increasing its exports to Europe and Australia.
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 50 most valuable beer brands, 50 most valuable spirit brands and the 10 most valuable champagne & wine brands are included in the Brand Finance Alcoholic Drinks 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 Alcoholic Drinks 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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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.
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (0% brand value loss), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the severity of enterprise value loss observed for the sector in the period between January and March 2020
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 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 Brand 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.