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Norway’s Biggest Brands Suffer in Difficult Times

23 May 2016
This article is more than 4 years old.

· Statoil is Norway’s most valuable brand, valued at 55.8 billion NOK

· SpareBank 1 is Norway’s fastest growing brand, with 19% year on year growth

· Storebrand’s brand has lost a significant amount of value, it is down 37%

Every year, leading brand valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test. They are evaluated and ranked to determine which are the most powerful by country, by industry and against all other brands worldwide. Norway’s most valuable brands can be found in the Brand Finance Norway 10.

Statoil tops the table with a brand value of 55.8 billion NOK. Plunging oil prices have caused sector wide revenue cuts and uncertain times lies ahead, however Statoil recently delivered strong exploration results and added significantly to its resource base, helping to offset the impact of falling prices and deliver a 2% increase in brand value.

Second-placed Telenor also experienced mediocre brand value growth (a 1% increase to 55 billion NOK). While the international mobile operator achieved record high revenues in 2015, rising costs and increased competition in some key markets stifled progress. For the first time, over 50% of annual revenue came from their Asia-Pacific operations and future success is likely to depend on increased penetration in the region.

Norway’s banks have been the success stories this year. SpareBank 1’s recent acquisition of Oslo-based mobile payment network, mCash demonstrates its awareness of the increasing challenges retail banks are facing. Nimble competitors that rely heavily innovative digital technology are snapping at the heel of the larger players. Chair of the SpareBank 1 Alliance, Jan Frode Janson, commented, “We have the attitude that we are more afraid to stagnate than to fail”. Brand value is up 19% to 4.9 million NOK.

On the other hand Storebrand, has suffered significantly this year. Brand value is down 37% to 3.9 billion NOK. Its brand equity has been damaged and Weighted Average Cost of Capital (WACC), has increased significantly, indicating investors’ uncertainty about the brands prospects and making financing (of all operations including marketing) significantly more difficult and expensive.

ENDS

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Konrad Jagodzinski
Konrad Jagodzinski
Communications Director
Brand Finance
Florina Cormack-Loyd
Florina Cormack-Loyd
Senior Communications Manager
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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