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British brand values boosted by Brexit opportunities

23 April 2018
This article is more than 3 years old.

On St George’s Day, Brand Finance plc releases its 12th annual brand valuation survey of the UK’s most valuable 150 brands, which reveals that Brexit is proving to be an opportunity and stimulus for many British brands.

Total brand value of the top 150 brands, as at 1st January 2018, increased by 3%, from $327 billion to $337 billion, despite uncertainty as the Brexit negotiations moved forward. On average, 14% of the top 150 UK branded businesses’ enterprise value was contributed by their brands.

By January 2018, the value date for the report, all UK macro-economic indicators had significantly improved from January 2017:

· Consensus economic growth forecasts for 2018-2020 revised upwards to 1.8%.

· £:$ exchange rate recovered from its 18% fall, following the Brexit vote in June 2016.

· Inflation falling from 3% to 2.5%.

· Unemployment at an all-time low of 4.3%.

· Average wages rising, budget deficit decreasing, and interest rates rising.

Against this increasingly favourable macro-economic environment, many British brands are thriving.

David Haigh, CEO of Brand Finance, commented:

“Project Fear predicted that Brexit would be the end of the world as we know it, with catastrophe for UK businesses and UK brands. It is becoming clear that the UK economy is far more resilient than predicted and that UK brands are responding well to the challenge posed by Brexit.

Demand is high for British brands, both by B2C consumers, B2B customer trading partners, and as takeover targets. Brexit will only increase this frenetic activity of world-beating UK brands.”

British auto brands accelerate

The stand out result is that British auto brands are powering ahead in world markets, undeterred, and arguably assisted, by Brexit:

· Land Rover’s brand value has increased from £5.5 billion to £8.9 billion, a 61% increase, moving up from 13th to 7th place in the table.

· Aston Martin, favoured by James Bond and the younger members of the Royal Family, has seen its brand value grow from £0.7 billion to £2.7 billion, a 261% increase, and has leapt from 103rd to 33rd place in the table.

· Mini’s brand value has grown from £2.1 billion to £2.5 billion, a 20% increase, moving from 45th to 37th in the table.

· Jaguar’s brand value has increased from £1.1 billion to £2.3 billion, a 101% increase, moving from 77th to 41st in the table.

· Bentley’s brand value has increased from £1.5 billion to £1.9 billion, a 27% increase, moving from 63rd to 48th in the table.

· The McLaren brand value is stable at £0.6 billion while only the Rolls Royce brand has declined in value from £1.0 billion to £0.8 billion.

David Haigh, CEO of Brand Finance, commented:

“The outperformance of British luxury and premium auto brands is the result of great design, great marketing, strong manufacturing quality, and a competitive pound. All these brands have brand strength scores between AA+ to AAA and all are sold worldwide to discerning customers, particularly in Asia and America. This will only increase post Brexit.”

Britain – home to world-class brands

The second insight from the Brand Finance UK 150 is the wide diversity of world-class brands in the UK 150 table, including Shell (Oil & Gas £29.7 billion AAA-), Sky (Media £7.7 billion AAA-), BBC (Media £4.3 billion AAA-), BHP (Mining £3.8 billion AA), Burberry (Luxury Fashion £3.5 billion AAA-), Johnnie Walker (Alcoholic Drinks £3.2 billion AAA-), GSK (Pharmaceutical £2.3 billion AA), and EY (Professional Services £12.9 billion AAA+).

EY is Britain’s strongest brand

With a Brand Strength Index (BSI) score of 89.7 out of 100 and an elite AAA+ brand rating, EY is the strongest UK brand and is part of a diverse professional services industry in the UK which is both global and unaffected by the Brexit tariff debate. Some other leading professional service brands in the Brand Finance UK 150 table include Willis Towers Watson, (Risk and Insurance Advisory £2.3 billion AA-), Bunzl (Procurement Services £1.5 billion A+), Capita (Business Process Outsourcing £1.3 billion A+).

British SMEs thrive

As the Brand Finance UK 150 focuses on the leading publicly quoted brands, it does not reflect the wide range of brands in the architecture, accounting, actuarial, advertising, design, legal and many other professional services sectors. It also excludes many of the small specialist manufacturing and engineering brands which are thriving across the UK. But a proxy for the strength of this middle economy is NatWest (Banking £4.9 billion AA+, up from £2.5 billion AA, a 96% increase in one year). NatWest serves a vast number of Small and Medium Enterprises across the UK and is thriving as they thrive.

Brands and M&A

The UK’s vibrant, service-based economy leads the world. The UK marketing industry keeps producing brands which are bought by foreign predators, for example Orange which is now, ironically the most valuable brand in the Brand Finance France 100 table (£16.7 billion AA-). Takeover activity in the UK has never been higher, with 1,700 deals worth £50 billion including Ladbrokes (Gambling £0.8 billion AA), one of the oldest British brands in its field.

Valuable royal brand endorsements

The GREAT campaign is driving tourism ever higher, fuelling greater activity in hotels, transport, and catering. Meanwhile, the Monarchy brand, with powerful Royal Warrant endorsements, is supporting high-quality product brands. Many of the brands in the Brand Finance UK 150 table benefit from Royal Warrants which drive value growth on a global stage. For example, Aston Martin, Bentley, Rolls Royce, Johnnie Walker, and Twinings.

View the full Brand Finance UK 150 2018 report here

ENDS

Note to Editors

Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 150 most valuable UK brands are included in the Brand Finance UK 150 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 UK 150 2018 report.

Data compiled for the Brand Finance league tables and reports 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.

Media Contacts

Konrad Jagodzinski
Konrad Jagodzinski
Communications Director
Brand Finance
Florina Cormack-Loyd
Florina Cormack-Loyd
Associate Communications Director
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations 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 nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation 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.

Methodology

Definition of Brand

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

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 Valuation Approach

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.

Disclaimer

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.

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