· Germany’s BASF retains title of world’s most valuable chemicals brand, with brand value of US$8.3bn
· DowDupont merger results remain to be seen
· SABIC flying flag for Saudi Arabian chemicals brands, brand value grows 6% since last year to US$4.0 bn
· LG Chem is world’s fastest growing chemicals brand, brand value rising by 38% to US$3.3 bn
Germany’s BASF is once again the world’s most valuable chemicals brand after a year in which its brand value grew by 11% to US$8.3 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
BASF’s brand value was boosted by the unveiling of a new strategy which included ambitious new targets, more focus on organic growth and greater emphasis on expansion in Asia, notably across China.
BASF has been recognised within the industry for its corporate climate action and water security efforts. The company has also launched an initiative to make BASF Carbon Dioxide neutral by 2030 and to keep its “greenhouse” gases flat between 2018 and 2030, whilst also launching innovative climate friendly chemical production methods. The brand is pioneering revolutionary new technology and digitalising its chemical plants, such as its 600,000 networked sensors which are being used at its main production facility in Ludwigshafen on the Rhine.
David Haigh, CEO of Brand Finance, said:
“BASF’s brand, which has a powerful track record over a number of years, could come under real pressure from the combined DowDupont merger, which brings two compelling brands under one umbrella. The modernising of chemical plants is now more crucial than ever as brands compete to update their production facility processes and also ensure that all work in research and development is underpinned by digital solutions.”
While BASF is the leading chemicals company by brand value, it looks set to face stern competition from the DowDuPont company, which merged in 2017. The Chemicals sector continues its path of consolidation and M&A remained buoyant in 2018, with US$100 billion spent on transactions.
Although the new DowDupont organization still operates under the Dow and DuPont brands, despite the new company being split into three new entities, the combination of the two brands – US$6.8 billion and US$3.3 billion respectively – exceeds BASF’s US$ 8.3 billion.
DuPont, which will front the DowDupont specialty chemicals division within the new structure, undertook a rebranding exercise which included, after half a century, a new logo. Over the past year, the company has seen its brand value increase by an impressive 21%, the third highest rate of growth across the sector.
Notable high value mergers in chemicals world
Similarly, other high-profile mergers from the sector have resulted in established legacy brands being allowed to continue, a clear indication of the value of their names and reputations within the chemicals industry. Further evidence of this is found in the growth rate of the top 10 brands, which are up by 8%. Other high-profile mergers, including Linde-Praxair (up 14% to US$2.3 bn) and Air Liquide-Airgas (up 10% to US$2.6 bn), have resisted the opportunity to tamper with existing brands in the market.
SABIC holds firm in 3rd place
A new entrant to the Brand Finance Chemicals 10 ranking last year, Saudi Arabian petrochemicals giant SABIC has held firm in third place and seen a solid brand value growth of 18% to achieve a brand value of US$4.0 billion. This success can be attributed to the brand’s continued expansion of investments across China, despite an expected slowdown in the country’s economic growth. SABIC has also continued to raise its presence in Africa which remains a promising lucrative market.
Fastest growing brand is South Korea’s LG Chem
South Korea’s LG Chem brand grew faster than any other chemicals brand, its brand value rising by 38% to US$3.3 billion and moving them the company from fifth to fourth to overtake DuPont. LG Chem has enhanced its brand visibility in Asia, largely due to increased sales and expansion of the company’s battery plants in China.
A new entrant to the table is Lyondellbasell of the US (brand value up 32% to US$3.1bn), just a year on from its major rebranding exercise. This impressive spike in growth is the second highest rate of improvement across the chemicals sector. The brand’s public image has arguably been boosted by its commitment to help end plastic waste through chemical recycling and a variety of plastic recycling ventures.
Strongest Chemicals Brands
Aside from determining overall brand value, Brand Finance also evaluates the relative strength of brands through a balanced scorecard of metrics on marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
According to these criteria, DowDuPont is the world’s strongest chemicals brand with a Brand Strength Index (BSI) score of 84.8 out of 100 and a corresponding AAA brand rating, making Dow the first chemicals company to achieve a AAA rating. Behind Dow, DuPont is unchanged at 82.3 out of 100 and BASF (81.55 out of 100) is in third position. Notable fallers by brand strength include Japan’s Asahi Kasei Group, which dropped to 63.36 out of 100, a decrease of 7% since last year.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest chemical brands. The 10 most valuable chemical brands in the world are included in the Brand Finance Chemicals 10 2019 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 assessed through a balanced scorecard of factors (such as marketing investment, stakeholder equity, and business performance) and used to determine what proportion of a business’s revenue is contributed by the brand.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Chemicals 10 2019 report.
Brand Finance helped craft the internationally recognized 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.