· Shell remains number one in oil and gas while PetroChina beats Sinopec to second
· Total and BP move up to top 5 as American giants fall down the table
· ExxonMobil loses over a third of brand value, more than any other brand in the ranking, but Valero wins fastest-growing title with 39% surge
· PETRONAS reaps benefits of efficiency improvements as brand value grows by US$1 billion
· Future performance of Equinor depends on successful transfer of Statoil’s brand equity
Shell remains the world’s most valuable oil and gas brand as its value grew 7% over the past year to US$39.4 billion, according to a new report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
The 7% brand value boost to Shell, the world’s 23rd most valuable brand across all industries, kept it at the top of the Brand Finance Oil & Gas 50 rankings. The boost was primarily driven by rising oil prices, leading to increased revenue forecasts and therefore higher brand value.
PetroChina (brand value up 7% to US$31.2 billion) jumped one place to second, overtaking fellow Chinese brand Sinopec (down 20% to US$23.6 billion) which suffered a significant loss to their brand valuation over the last year as a result of a weakening brand strength, down from AA+ to AA.
French brand Total (up 13% to US$21.0 billion) jumped from seventh place to fourth with a very strong result, while BP (up 4% to US$19.6 billion) moved up one rank as the two most valuable American brands fell down the table. Total’s brand value grew largely due to the success of its exploration and production division, which increased net revenue by 86%. Unlike some of its competitors, Total was able to substantially harness the full benefit of oil prices increasing by more than 20% over the previous year.
David Haigh, CEO of Brand Finance, commented:
“In an uncertain year for the oil and gas industry, Shell has remained solid at the top of the 2018 brand value rankings. Meanwhile, American brands have fallen out of the top five for the first time, replaced by Chinese and European brands."
While most US brands decline, Valero surges
The two most valuable American oil and gas brands, Chevron (down 18% to US$18.1 billion) and ExxonMobil (down 36% to US$13.3 billion) both suffered over the past year.
The 36% reduction in brand value at ExxonMobil, larger than for any other brand in the league table, was caused by a fall in forecast revenues and a reduction in the valuation of the brand’s recoverable oil reserves last year. This was further compounded by financial reports last year recording the company’s lowest earnings in twenty years.
In general, impacted by high stocks and sluggish prices, two out of every three US brands in the Brand Finance Oil & Gas 50 league table lost brand value this year, with Oxy (down 36% to US$2.7 billion) recording a similar proportional loss as ExxonMobil albeit from a lower base.
This trend has left Valero (up 39% to US$7.1 billion) as one of the few positive US highlights in this year’s ranking. Coming in as the 12th most valuable brand in the sector, up from 18th, Valero is the world’s fastest-growing oil and gas brand of 2018.
PETRONAS reaps benefits of efficiency improvements
The most valuable ASEAN brand in the Brand Finance Oil & Gas 50 ranking, and the only non-Chinese brand from Asia in the top 10, Malaysia’s PETRONAS has moved up the league table from 9th to 8th spot. The brand added nearly US$1 billion or 9% to its value, reaching US$11.5 billion this year. PETRONAS had a strong 2017, boosted by growing oil prices as well as increased efficiency. In an industry as dependent on commodity price changes as oil and gas, keeping costs under control and improving productivity can give brands an important edge against competition.
Will Equinor match Statoil’s success?
Statoil (up 8% to US$8.2 billion) enjoyed a strong year of brand value growth over 2017 due to higher global oil prices leading to increased revenue forecasts, earning 10th rank in the Brand Finance Oil & Gas 50 2018 league table. Subsequently, the company changed its name to Equinor, to reflect its new brand strategy as a broad energy company, and not merely an oil company. The name change is just one demonstration of its new brand focus, with the increasing diversification of Equinor towards a low carbon future. This includes plans to develop long-term value on the Norwegian continental shelf and growing alternative energy sources. Last year, the company acquired its first major solar energy development (in Brazil) and now operates three offshore wind farms.
David Haigh, CEO of Brand Finance, commented:
“Statoil’s brand performance reflected its reputation as a trusted partner, delivering on its promise. Built upon the solid foundations of its oil business, the company now faces a challenge of transferring that equity to a new brand, encompassing a more diversified business portfolio. If the new brand is implemented well, it will help Equinor achieve long-term success, even if the rebranding process itself causes some initial erosion of the brand’s strength and value.”
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 50 most valuable oil and gas brands are included in the Brand Finance Oil & Gas 50 2018 league table.
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 Oil & Gas 50 2018 report.
Brand Finance helped craft the internationally recognised 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.