The world’s biggest companies are set to lose up to US$1tn in brand value as a result of the Coronavirus outbreak, with the aviation sector being the most affected, according to the latest analysis by Brand Finance, the world’s leading independent brand valuation consultancy.
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, as at 18 March 2020, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. Each sector has been classified into 3 categories based on the severity of enterprise value loss observed for the sector in the period between 1st January 2020 and 18th March 2020.
David Haigh, CEO of Brand Finance, commented:
"The COVID-19 pandemic and its impact on global markets is very real. Worldwide, brands across every sector are braced for the Coronavirus to massively affect their business activities, supply chain and revenues in a way that eclipses the 2003 SARS outbreak.
Now is the ideal moment for Middle Eastern brands to remain ever present in their stakeholders’ minds, engage across digital channels, show resilience and adaptability in these unprecedented times.”
Middle East’s top 50 brands
Brand Finance today released the Middle East 50 report on the region’s top 50 most valuable and strongest brands, of which 20 are Saudi Arabian brands, 17 from the UAE, 9 from Qatar and 4 from Kuwait.
Since its IPO last year, oil and gas giant Saudi Aramco are a new entrant at the top of the table with a brand value of US$46.8 billion, claiming the title of the Middle East’s most valuable brand. Saudi Aramco is focused on leveraging its strength in upstream, while growing its downstream operations through acquisitions, both in Saudi Arabia and key global markets. In order to clinch the title of the world’s most valuable oil and gas brand from rival Shell, Saudi Aramco must now focus on developing international perceptions of the brand in order to open it up further for partnerships and investment.
David Haigh, CEO of Brand Finance said:
“The harsh reality is that many Middle Eastern brands are not going to make their 2020 targets due to the unprecedented challenges of the Coronavirus outbreak. Having a strong brand is more crucial now than ever, as this might which will truly help to weather the storm and bounce back from this crisis.”
ADNOC breaks US$11 billion barrier
Abu Dhabi National Oil Company (ADNOC) is the Middle East’s second most valuable brand, up 29% to US$11.4 billion. The brand is also the first UAE brand to achieve a brand valuation of more than US$11 billion, a testament to the success of the Group’s ongoing transformation strategy. Since 1971, ADNOC has created thousands of jobs, driven the growth of a diverse knowledge-based economy, and played a key role in Abu Dhabi’s global emergence. ADNOC continues to look for new and innovative ways to maximise the value of its resources, pioneering those approaches and technologies that will ensure it is able to meet the demands of an ever-changing energy market, especially now amidst the steep slide in oil prices.
Etisalat Middle East and Africa’s most valuable consumer brand AAA rating
Emirati telecoms giant Etisalat is the most valuable consumer brand in the Middle East 50 2020 ranking for the third year in a row. With a brand value of US$8.5 billion, Etisalat has demonstrated a consistent performance over the years. The brand is also the strongest telecoms brand in the Middle East and Africa – making it the sole brand in the region to maintain the prestigious AAA Brand Rating.
The brand’s growing role in fulfilling the UAE’s National Innovation Strategy and its dominant influence in shaping the region’s digital future are behind its continued success.
Etisalat’s footprint in 16 countries across Asia, Middle East, and Africa makes it home to an impressive portfolio of brands including Mobily, Ufone, Maroc Telecom, PTCL, and Etisalat Misr with a combined portfolio brand value of US$11.0 billion.
Banking brands dominate
Of the Middle East’s top 50 brands, 21 are from the banking sector, with Qatar’s QNB (up 20% to US$6 billion) leading the charge as the region’s biggest lender. QNB’s brand value has grown solidly since 2019 – despite a regional embargo on Qatar – as the bank has been pursuing expansion across new markets, with a notable strategic focus on Southeast Asia.
Following last year’s three-way merger between Union National Bank and Al Hilal Bank, ADCB is the region’s fastest growing brand, up 41% since last year to US$2.7 billion. Up five places to be named the Middle East’s 13th most valuable brand, ADCB is to be commended for a successful roll out its new brand across physical and digital channels only five months after completion of the merger.
Aviation worst impacted by Coronavirus
Assessed by Brand Finance as the hardest hit sector under COVID-19 are airlines, leisure and tourism, aviation, aerospace and defence. The global airline industry has said most carriers will run out of money within two months as a result of the closure of borders for arrivals as governments order shutdowns to contain the coronavirus outbreak. A large number of major airlines, including Emirates (up 9% to US$6.8 billion) and Etihad (down 38% to US$0.8 billion) have grounded most of their fleets as they now confront a crisis unlike anything ever seen before in the airline industry.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value.
According to these criteria, Emirates is the Middle East’s strongest brand with a Brand Strength Index (BSI) score of 86.2 out of 100 and it is this brand strength and positive sentiment amongst its passengers worldwide which will help support the airline, as it significantly reduces passenger flights across the network in response to the Coronavirus pandemic.
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. 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 the efficacy of a brand’s performance on intangible measures relative to its competitors.
Data compiled for the Brand Finance rankings 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 has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on Enterprise Value, as at 18/03/2020 compared to what it was on 1st January 2020. Based on this impact on Business Value, Brand Finance estimated the likely impact on Brand Value for each sector. Each sector has been classified into 3 categories based on the severity of Business Value loss observed for the sector in the period between 1st Jan 2020 and 18th March 2020.
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.