· Canada’s Big Brands Show Remarkable Stability
· Top Five Brand Rankings Unchanged
· Tim Horton’s Gaining Fast
Toronto – As a nation, Canada prides itself on stability and predictability, and those traits were reinforced in the latest rankings of the country’s most valuable brands, according to Brand Finance’s Canada 100 report.
Brand Finance’s Canada 100 ranks brands by monetary value and also calculates the most ‘powerful’ brands, as defined by the companies whose enterprise value is most positively impacted by the strength of their brand.
Royal Bank of Canada retained its rank as the country’s most valuable brand, with a brand value of $16.6 billion, while its brand value grew by 26%. It was followed closely by TD Bank, with a brand value of $16.5 billion, telecommunications giant Bell ($12.7 billion), Scotiabank ($11.3 billion) and Bank of Montreal ($10.2 billion).
“The ranking is an interesting snapshot of corporate Canada and our domestic economy - banks and telcos at the top, with movement between retail companies, branded producers and resource producers,” says Mack Ferguson, a senior advisor to Brand Finance in Toronto.
One of the big gainers in 2017 is the fast-expanding Tim Horton’s food chain, which jumped to number 6 from 9 a year ago and enjoyed a 43% gain in its brand value ($10.1 billion).
At the other end of the spectrum, embattled drug maker Valeant saw its rank plunge from 16th a year ago to 33rd, and its brand value fell 41% to $1.9 billion.
Globally, Google has replaced Apple as the world’s most valuable brand, with a brand value of US$109.5 billion, according to Brand Finance’s Global 500, the annual ranking from the leading valuation and strategy consultancy. Lego has replaced Disney as the most powerful brand in the world.
In order to determine a brand’s value, Brand Finance first evaluates factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation to determine the ‘strength’ or ‘power’ of a brand. Brand power determines the proportion of overall business revenue that is contributed by a brand.
Google’s brand value rose during 2016 by 24% (from US$88.2bn) while Apple’s declined from US$145.9 billion to US$107.1 billion. Google last occupied the position of the world’s most valuable brand in 2011. The company remains largely unchallenged in its core search business, which is the mainstay of its advertising income. Advertising revenues were up 20% in 2016 as budgets are increasingly directed online, and Google finds more lucrative revenue streams from digital consumers.
David Haigh, CEO of Brand Finance, says: “Apple has struggled to maintain its technological advantage. New iterations of the iPhone have delivered diminishing returns, and there are signs that the company has reached a saturation point for its brand. The Chinese market, where Apple has enjoyed a dominant market share, is becoming far more competitive with local players entering the market in a meaningful way. Samsung has also been successful in taking market share, and financial analysts are projecting declining revenues and margins.”
Lego (196) has regained its status as the world’s most powerful brand, with a brand strength score of 92.7. Much of its success is owed to its media licensing deals and partnerships which have driven growth and introduced the likes of Lego Star Wars, Lego Harry Potter and Lego Batman. The Lego Batman Movie will premiere in February with further movies planned for the franchise. This will contribute significantly to Lego’s already significant licensing income but, as importantly, the exposure – to both children and adults – will reinforce Lego’s brand strength for years to come.
Google (1), Nike (28), Ferrari (258) and Visa (57) complete the rest of the top 5 most powerful brands in the world, with the latter seeing an 8 percentage point gain in brand strength – the most of any company in the top 10.
David Haigh adds: “A powerful brand can protect a company’s value during turbulent market conditions or challenging times for a business. The share price resilience of Samsung and Wells Fargo, after a difficult year, is testimony to how a brand can help a company ride out a storm. This is why a brand is such an important intangible asset and should be valued as such. Particularly during M&A scenarios, the fact that brand values are not factored into company accounts can mitigate against fair value being paid. Sellers ought to recognise the full worth of their brand, whilst buyers ought to factor in how far the asset of a brand can be stretched and monetised.”
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.