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Nivea is the Strongest German Brand

10 May 2017
This article is more than 4 years old.

Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. The 50 most valuable German brands are included in the Brand Finance Germany 50.

Nivea is Germany’s most powerful brand with a Brand Strength Index (BSI) score of 88. Nivea has developed high levels of consumer trust for the superior quality and reliability of its products but this has been complemented by increasingly innovative advertising. Its sunscreen has been promoted with creative campaigns including a doll that turns red in hot weather to remind children of the risk of sunburn, a waterslide that dispenses waterproof sunscreen and even a model seagull that dispenses sun cream from its rear end. Though derided by some, it is an example of the commitment to improving customer wellbeing that has built Nivea’s brand over many years. That being said, its communications strategy has not always been so astute. Nivea attracted condemnation this year for its ‘white is purity’ campaign, perceived by many as racially insensitive.

The strength of Nivea’s brand has enabled it to ride out this missteps, however greater oversight of its marketing communications may be required to ensure it remains the nation’s most powerful brand. Nivea’s standing is also supported by the stable financial situation of the brand’s owner, which has reported another margin increase this year by 0.6 percentage points to the record 15%. Hamburg-based Beiersdorf’s sound results allow for new investments into brand development and extension.

Valued at €33 billion, BMW has maintained its position as the most valuable German brand for the third year in a row. BMW celebrated its 100th anniversary in 2016; its heritage is a key driver of demand and customer loyalty. At the same time, investments in innovation, such as the BMW i electric car sub-brand, are positioning BMW well for the future. 2016 saw BMW set new records with net profit at €6.9 billion and revenue at €94.2 billion.

The automotive industry remains Germany’s top sector by brand value, with many other car brands placing highly. Mercedes-Benz claims third place in Brand Finance Germany 50 with a brand value of €31.6 billion. Record demand for the brand’s vehicles since the launch of the new E-Class Saloon last year was a particular source of strength. Like BMW, Mercedes-Benz is preparing for the growing spending power of the millennial generation. A new marketing strategy has been announced, based on “human-centred innovation” and “customised agencies”. Its humorous Superbowl advert is one of the first examples of the new approach. The more “casual” and “light-hearted” image is intended to make the brand more appealing to young people, for whom the technical specifications of Mercedes’ engineering excellence may be less relevant.

Volkswagen has a brand value of €22.255 billion, regaining traction after the 2015 emissions scandal. Other Volkswagen Group brands include Audi which is ninth, with a brand value of €11.2 billion, and Porsche which is tenth place with a brand value of €11 billion.

T (Deutsche Telekom) defends second place with a brand value of €32.4 billion. T is Europe’s most valuable telecoms brand (as noted in the Brand Finance Telecoms 500 report), though its growth can largely be attributed to performance outside the continent. T-Mobile US regularly records strong results and announced plans for expansion following its $8 billion offer in the government airwaves auction, accounting for almost half of the volume of all bids. In Q1 2017, new customer acquisitions in the US exceeded market expectations, continuing the rapid growth which saw 4.1 million new subscribers join the network in 2016. T is also reinforcing its brand at home however. It is investing in bringing faster internet connection to 1.4 million German households, and on promotions including creative projects such as the recently launched Lenz App, which reacts to anything magenta, the brand’s colour.

With a record brand value decline year on year of 43%, Deutsche Bank must hope that strong financial results for the first three months of 2017 are the first signs of its long-awaited recovery. In serious trouble throughout the fi nancial crisis, Deutsche’s brand value has continuously fallen from €11.036 billion in 2013 to €4.402 billion this year.

ENDS

Note to Editors

For more definitions of key terms, methodology and more stories, please consult the Brand Finance Germany 50 report document.

Brand values are reported in USD. For conversions into local currency, please consult the hover over the ‘i’ button on the web version of the table and select.

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Konrad Jagodzinski
Communications Director
Brand Finance
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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