View the full Brand Finance Russia 50 report here
View the Russian press release here
It is the third consecutive year that Sberbank retains its leading position in the Brand Finance Russia 50 ranking of the country’s most valuable brands. Following brand value growth of 26% to ₽842.2 billion, Sberbank looks well-positioned to defend the lead for years to come.
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating 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, with a Brand Strength Index (BSI) score of 93.1 out of 100, Sberbank is the strongest brand in Russia and the second strongest brand in the world, just after Ferrari.
The three pillars of Sberbank’s brand success are innovative solutions, focus on customer experience, and improved business effectiveness. An agreement between SberCloud (a subsidiary of Sberbank) and NVIDIA, reached at the St. Petersburg International Economic Forum (SPIEF) 2019, will enable development and implementation of AI in the Russian banking sector. In customer experience, Sberbank is also leading the way as access to loans has increased with one-day turnaround for applications. Finally, growth in retail loans and the mortgage portfolio have contributed to Sberbank’s healthy financial performance which is reflected in brand value improvement.
David Haigh, CEO of Brand Finance, commented:
“Sberbank’s high-quality services and products create the kind of loyalty that results in long-term customer relationships. Unparalleled within Russia, the bank can deepen its relationship with customers and extend into new products, services and even industries”.
Oil and gas giants dominate
Although Sberbank is the country’s most valuable brand, on the whole, the oil and gas industry contributes more brand value to the Brand Finance Russia 50 ranking than banking. Together, the nine oil and gas brands featured in the top 50 are worth nearly ₽1.7 trillion, and five largest dominate in the top 10: Gazprom (₽552.3 bn), Lukoil (₽397.3 bn), Rosneft (₽246.9 bn), Tatneft (₽132.5 bn), and Novatek (₽120.0 bn).
Lenta stands out in retail
Lenta stands out against the backdrop of mixed results in retail – the country’s third largest industry by brand value. While most of the smaller retail brands moved down in the rankings, Lenta went up from 22nd to 18th, thanks to an impressive 48% brand value growth. The brand has been successfully deploying a low-price strategy combined with ambitious expansion in both the hypermarket and supermarket segments across Russia and particularly in Moscow.
The most valuable Russian retail brand, Magnit retained its 6th position in the ranking following a 17% brand value growth, while Pyaterochka, despite a 29% increase in brand value, dropped out of the top 10 and is currently ranked 11th.
Telecoms fight for market share
The telecoms industry is well known for its cut-throat competition which can be observed also in Russia. The biggest telecommunications companies – MTS (up 6%), Megafon (down 3%), Beeline (up 19%), and Rostelecom (up 32%) – varied in their brand value performance this year. While the former three companies prefer to grow their market shares organically expanding operations into new segments, as evidenced by a range of partnership agreements signed at SPIEF 2019, Rostelecom is aiming to finalise an ongoing merger with Tele2 and preserve the Tele2 brand. Although less valuable than its competitors, Rostelecom has recorded fastest growth in the industry, with brand value increasing 32% over the past year.
NLMK is fastest-growing
The fastest brand value growth across all industries this year came from the mining company NLMK. Consistent growth in revenues combined with one of the highest EBIDTA margins in the sector boosted the company’s brand value by more than 82% and catapulted NLMK 10 spots up the ranking from 41st last year to 31st in 2019.
Aeroflot – reaching new highs
The airline industry’s reliance on external factors, such as volatile oil prices and consumer disposable income, impacts profitability. Despite that, Aeroflot’s brand value and brand strength continue to improve year on year and Aeroflot is on the trajectory to carry 100 million passengers by its 100th anniversary in 2023. In the 2019 rankings, with a Brand Strength Index (BSI) score of 89.9 out of 100 and an elite AAA+ brand rating, Aeroflot retained its position as the world’s strongest airline brand and the second strongest brand in Russia after Sberbank. In addition, due to an increased demand for flights, Rossiya joined Aeroflot in the Brand Finance Russia 50 ranking for the first time.
Other new entrants to the ranking include Stroygazmontazh (30th), Alrosa (39th), Prostokvashino (40th), and Russian Post (48th).
View the full Brand Finance Russia 50 report here
END
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 50 most valuable Russian brands are included in the Brand Finance Russia 50 2019 ranking.
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.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Russia 50 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.
Brand Finance is a chartered accountancy firm regulated by ICAEW and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
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.
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About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Methodology
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand 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. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
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 rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables 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, 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 Brand revenues are discounted post-tax to a net present value which equals the brand value.
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.
