The total value of Russia’s top 50 most valuable brands has grown by 4% year on year, bucking the global trend as brands across most markets worldwide have seen devastating losses caused by the COVID-19 pandemic. The value of all brands in the national ranking has increased from ₽4.6 trillion in 2020 to ₽4.8 trillion in 2021, according to the latest Brand Finance Russia 50 2021 report.
Richard Haigh, Managing Director, Brand Finance, commented:
“While the fight with the economic crisis continues, top Russian brands have won the first battle. Posting year-on-year growth at a time of a commercial slowdown – when total brand value in Europe has dropped by 10% – is no easy feat and testament to how well-managed brands can withstand the most challenging market conditions.”
Sber unrivalled at the top
With a brand value of ₽730.6 billion, Sber remains indisputably Russia’s most valuable brand. To put it in context, Russia’s top brand is worth more than all brands ranked 26th to 50th in this year’s league table put together. In addition, despite a 13% year-on-year dip this year, not dissimilar from the performance of other brands in the banking sector globally – affected by macroeconomic conditions caused by the COVID-19 pandemic, Sber is still nearly a quarter of a trillion ruble ahead of second-ranked Gazprom.
In addition to measuring 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. According to these criteria, Sber has increased in brand strength year-on-year to reclaim the titles of the strongest brand in Russia as well as the world’s strongest banking brand, and to become the third strongest brand in the world across all sectors in the Brand Finance Global 500 2021 ranking. With a Brand Strength Index (BSI) score of 92.0 out of 100 and the coveted AAA+ brand strength rating, Sber ranks only behind iconic Ferrari and China’s WeChat.
Sber commands very high levels of customer loyalty, which can only be boosted by its recent rebranding into an ecosystem brand encompassing all services it provides – from banking to its more recent digital ventures. The company’s pledge to double the spending on its brand over the next three years is likely to help reinforce the new identity and recover brand value lost because of the COVID-19 pandemic.
In Brand Finance’s Global Brand Equity Monitor, Sber consistently outperforms its peers posting top market research results for reputation and familiarity – it is widely known, always top-of-mind, and well-regarded. As a result, recommendation is high. Its ubiquitous presence and – in consumers’ eyes – by far the best digital offering ensure high mental and physical availability, which are strong foundations for brand strength.
Richard Haigh, Managing Director, Brand Finance, commented:
“Sber’s innovative and committed approach to its brand can be an example to all Russian companies. Despite being an undisputed market leader, Sber is not afraid to put itself in the position of a challenger and pioneer completely novel strategies. Its brand audacity helps it power through tough times, anticipate market disruption, and – ultimately – consolidate its dominance further.”
Anastasia Kourovskaia, Executive Vice President, Global Strategy, commented:
“Thanks to the strength of its brand, not only high recognition, but also the trust and attractiveness of Sber brand, the company was able to successfully make the transition from a financial giant to an ecosystem of products and services.”
Oil & gas most valuable sector
Gazprom (brand value ₽496.0 billion), Lukoil (₽423.4 billion), and Rosneft (272.8 billion) follow Sber as the 2nd, 3rd, and 4th most valuable Russian brands. Overall, oil and gas is the nation’s most valuable sector in terms of brand value – at nearly ₽1.7 trillion it accounts for more than one-third of the total worth of the Brand Finance Russia 50 2021 ranking.
Oil and gas brands play a significant role in the global economy, and for national oil companies (NOCs), contribution to national wealth is paramount to their mandate. 2020 was a difficult year for many oil and gas brands worldwide as consumption and prices fell.
However, while globally, on average, oil and gas brands have lost 16% of brand value over the past year, Russian industry leaders saw an average 6% increase. Novatek and Tatneft are the only two major players to record minor drops in brand value of 4% and 5% respectively, which has cost them their spots in the national top 10 as they fell to 11th and 12th in this year’s ranking.
Pyaterochka takes top 10 by storm
While Novatek and Tatneft dropped out, Pyaterochka made a potent entrance into the top 10. Nearly doubling in brand value from ₽118.8 billion last year to ₽234.8 billion, it overtook rival retail chain Magnit (₽169.1 billion) to become Russia’s 6th most valuable brand of 2021.
Pyaterochka operates soft discount stores located in close proximity to its consumers across most of Russia. A mixture of rising inflation, multiple lockdowns in Russian cities, and changing consumer habits led to higher sales in 2020. The creation of 5Post logistics unit helped drive additional traffic to Pyaterochka stores, boosting revenues even further. Pyaterochka’s brand strength has also significantly improved year-on-year, up from A+ to AA-.
Pyaterochka’s parent company – X5 Group – has a range of innovative projects in the pipeline. The focus is on online sales, as the average ticket value for online purchases has more than five times surpassed in-person store visits. Under its new 2021-2023 strategy, online business is going to be established as a separate unit within the company, with additional financing most likely obtained from external investors.
While Pyaterochka is the most valuable, Lenta is the strongest Russian retail brand with an AA+ rating. Its combined scores are higher than competition’s, but it is the larger chains –Pyaterochka and Magnit – that get the highest 10 out of 10 market research scores for customer familiarity, consideration, and reputation in Brand Finance’s Global Brand Equity Monitor.
Thanks to Pyaterochka’s extraordinary growth, retail as a whole is the fastest growing among large industries in Russia this year, up 21%, solidifying its position as the nation’s third most valuable sector, behind only oil and gas and banking, with over ₽0.5 trillion of cumulative brand value.
Less valuable overall but posting similar growth this year is the mining, iron and steel sector, where all brands included in the Brand Finance Russia 50 2021 ranking have seen increases this year, leading to an overall 21% brand value rise for the sector. Nornickel remains the sector’s most valuable and strongest brand in the national ranking, claiming 20th spot.
Pobeda flies high
Recording even faster growth than Pyaterochka is airline carrier Pobeda, up 113% and entering the ranking for the first time, claiming 38th position. Despite the decline in global demand for air travel, Pobeda’s results and forecasts are on the up, boosted by the growing interest in domestic flights. According to the company’s Strategy 2028, Pobeda is expected to annually carry between 55-65 million passengers, as opposed to just over 10 million in 2019. The expansion is to be achieved thanks to the growing demand for affordable domestic air travel and a fleet enlargement to match it. The extensive size of Russia’s territory presents Pobeda with opportunities unknown to European or Asian competitors who have to navigate travel regulations and border controls – complicated even further by the COVID-19 pandemic.
Meanwhile, Pobeda’s parent – Aeroflot – is once again the world’s strongest airline brand, with a Brand Strength Index (BSI) score of 89.5 out of 100 and a corresponding AAA+ brand strength rating. Aeroflot has recently undertaken a shift in strategy towards becoming a more premium class travel option. As many other major airlines are being forced to make cuts in capital expenditure and suspend aircraft deliveries, Aeroflot is awaiting new generation aircrafts to gradually replace its older fleet.
As one of the oldest airlines in the world, Russia’s national flag carrier has clearly demonstrated that despite reduced air travel it continues to have a strong presence in consumers’ mind, with its reputation improving from 84.0 to 90.0 out of 100 this year, according to Brand Finance’s Global Brand Equity Monitor. Across the globe, flag carriers on average receive both higher global and domestic Brand Strength Index (BSI) scores.
Savio D’Souza, Valuation Director, Brand Finance, commented:
“Once again, Aeroflot has been named the world’s strongest airline brand. The airline’s strong and vast heritage, paired with its constant strive to innovate and improve its strategy, stand it in good stead to put itself in a solid position in the global airline market once international travel restrictions ease.”
Note to Editors
Every year, Brand Finance puts 5,000 of the biggest brands to the test, evaluating their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across all sectors and countries. The top 50 most valuable Russian brands are included in the Brand Finance Russia 50 2021 report.
The full Brand Finance Russia 50 2021 ranking, additional insights, charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Russia 50 2021 report.
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. Please see below for a full explanation of our methodology.
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.
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 value refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, published brand values can be different.
These differences are similar to the way equity analysts provide business valuations that are different to one another. The only way you find out the “real” value is by looking at what people really pay.
As a result, Brand Finance always incorporates a review of what users of brands actually pay for the use of brands in the form of brand royalty agreements, which are found in more or less every sector in the world.
This is known as the “Royalty Relief” methodology and is by far the most widely used approach for brand valuations since it is grounded in reality.
It is the basis for our public rankings but we always augment it with a real understanding of people’s perceptions and their effects on demand – from our database of market research on over 3000 brands in over 30 markets.
Brand Valuation Methodology
For our rankings, Brand Finance uses the simplest method possible to help readers understand, gain trust in, and actively use brand valuations.
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.
Our Brand Strength Index assessment, a balanced scorecard of brand-related measures, is also compliant with international standards (ISO 20671) and operates as a predictive tool of future brand value changes and a control panel to help business improving marketing.
We do this in the following four steps:
1. Brand Impact
We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands.
This results in a range of possible royalties that could be charged in the sector for brands (for example a range of 0% to 2% of revenue).
2. Brand Strength
We adjust the rate higher or lower for brands by analysing Brand Strength. We analyse brand strength by looking at three core pillars: “Investment” which are activities supporting the future strength of the brand; “Equity” which are real perceptions sourced from our original market research and other data partners; “Performance” which are brand-related measures of business results, such as market share.
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.
3. Brand Impact x Brand Strength
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. Brand Value Calculation
We determine brand-specific revenues as a proportion of parent company revenues attributable to the brand in question and forecast those revenues by analysing historic revenues, equity analyst forecasts, and economic growth rates.
We then apply the royalty rate to the forecast revenues to derive brand revenues and apply the relevant valuation assumptions to arrive at a discounted, post-tax 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.