· USA’s nation brand strengthens, with brand rating improving to AAA and brand value up 23% to US$25.9tn
· China continues growth, with brand value up 25% to US$12.8tn, despite trade war fears
· Germany solidifies third position with fastest-growing brand value in top 50, up 28% to US$5.1tn
· Despite Brexit uncertainties, UK brand value increases 20% to US$3.8tn
· African players advance, with 6 out of 10 fastest-growing nation brands coming from the continent
Topping the table as the world’s most valuable nation brand, the USA’s brand value has gone up 23% over the past year to US$25.9 trillion, according to the latest Brand Finance Nation Brands report.
The US economy has expanded at a speedy pace with growth expected to continue in the months to come. Alongside the GDP, also consumer sales, construction orders, car output and other indicators of growth have each seen an increase – proving the US economy truly is booming.
In addition, thanks to the falling tax rates, which have created a more business-friendly environment, the USA’s Brand Strength Index (BSI) score has improved from 83.8 in 2017 to 85.6 out of 100 this year. As a result, America’s brand rating has been upgraded from AAA- to AAA, and the brand value leader has also moved up the brand strength ranking, replacing Sweden as the 8th strongest nation brand in the world.
David Haigh, CEO of Brand Finance, commented:
“As Donald Trump approaches the start of his third year at the White House, in the longer run, negative perceptions of his personal brand have turned out to have little impact on the nation brand as a whole. Rather, the new free-market policies have resonated with business leaders and the economy is growing, driving an improvement in America’s brand strength and brand value alike.”
China’s Boom Continues
China maintains its spot as the second most valuable nation brand, with brand value up 25% to US$12.8 trillion. China performs well despite the prospects of a protracted trade war with the US, displaying the established robustness of the Chinese economy. This rise in brand value is also a credit to booming cities like Beijing and Shanghai, for their world-class infrastructure and well-educated workforce, which make them some of the world's best places to do business.
Whilst China’s brand strength remains relatively low at 73.5, it has grown faster than for any other big nation brand, with whole two points added to the country’s Brand Strength Index (BSI) score over the past year. The improvement comes as China steps up its role on the global stage, championing free trade and leading the efforts to combat climate change at a time when the USA is turning towards protectionism and prioritising own interests over a collaborative energy policy.
Recent years have also seen China shift focus from commoditised production to building world-class brands, such as Huawei and Alibaba, whose success in turn reinforces the strength of the nation brand.
David Haigh, CEO of Brand Finance, commented
“The rise of China’s nation brand is down to global leadership, pro-business outlook, and a steely determination for the country to create brands rather than just products. The current government’s renewed commitment towards free trade, opening up of the Chinese market, and enhancing protection of intellectual property will make for a yet improved business environment in the years to come.”
Germany Gets Ahead
The fastest-growing brand in the top 50 of the Brand Finance Nation Brands 2018, Germany has seen a 28% brand value jump to US$5.1 trillion over the past year. This has solidified the country’s position as Europe’s most valuable nation brand and the world’s third. Following strong growth, Germany has more than doubled the lead over the fourth brand in the table, from US$582 billion in 2017 to US$1.4 trillion this year. Reinforced by the country’s status as the leading force in the European Union and its growing global role both economically and at the political negotiating table, Germany’s brand strength has also improved, leading to a lift in brand rating from AAA- to AAA.
Britain Strong and Stable
Perceived vulnerability undermines Britain’s standing on the global stage, reflected in the nation brand’s strength falling slightly since last year, from 85.3 to 84.8, but a healthy economy and positive growth forecasts show Britain’s resilience in the face of Brexit. The UK’s nation brand has recorded a solid 20% growth year on year to US$3.8 trillion, replacing Japan in fourth place.
David Haigh, CEO of Brand Finance, commented:
“Britain’s performance in this year’s study of the world’s nation brands shows that perceptions of Brexit go against the economic reality. What the exact scenario and consequences of exiting the EU will be still remains to be seen, but both current market conditions and economic forecasts for the coming years reaffirm Britain’s ability to make the most of its post-Brexit future.”
Turmoil Threatens Turkey
The ongoing economic crisis alongside the fall in value of the lira have seen Turkey’s brand value decline by one third to US$382 billion from US$570 billion last year. Turbulent political times in the wider region, such as the ongoing crises in Syria and Iraq, have also played a part. The mission ahead is to nurture global Turkish brands, such as the national carrier Turkish Airlines, which has shown a promising rise in its brand value since last year, up 6% to over US$2.0 billion.
Six out of ten fastest-growing nation brands this year are from Africa. Democratic Republic of the Congo, Egypt, Kenya, Tanzania, Ethiopia, and Ghana have all recorded outstanding growth between 28% and 38% year on year.
David Haigh, CEO of Brand Finance, commented:
“Starting from a low economic base and still troubled by political instability, Africa is nonetheless beginning to demonstrate its true potential. Following in the footsteps of Asian tigers with remarkable advances in this year’s ranking, African lions are the future of global economic growth.”
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest nation brands.
2018 brand values are calculated in USD with a valuation date of 1st July 2018.
For full results, expert insights, and a detailed explanation of methodology, please consult the Brand Finance Nation Brands 2018 report.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
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.
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.