Brands defy downturn, Coke tops $67bn in value: Report

Despite a year of financial turmoil, the value of the top 100 brands increased by 2 per cent to $2 trillion from 2008 to 2009.

Published recently by research agency Millward Brown Optimor, the fourth annual BrandZ Top 100 2009 ranking confirmed the "resiliency of brands"​, heralding brands as among a company's most valuable assets and a powerful tool to beat the economic downturn.

"Brands matter now more than ever,"​ states the Brandz report.

Brand value depends on consumer sentiment - the power of the brand in the mind of the consumer - but is also intricately linked to the company's ability to translate that sentiment into shareholder value.

" Customers are not holding their breath during this economic volatility. They are adjusting their coping strategies, while remaining determined to purchase brands that contribute to the pleasure, quality, purpose, and security of their lives,"​ continued the analysts.

For the report dynamics, brand value is the financial value of a brand, defined as the sum of all earnings that a brand is expected to generate.

Soft drink success​

With a brand value of $67.6bn Coca-Cola rose from number four slot in 2008 to number three in the 100 ranking, a 16 per cent rise in brand value on the previous year.

While overall, in terms of value, the soft drinks category in the 100 line up – that includes Pepsi and Red Bull – grew by a healthy 23 per cent.

Pulling in a brand value of $15bn Pepsi reached the 44th position, a fall of 3 per cent on the previous year, with energy drink Red Bull reaching $8bn and number 79 in the ranking.

Wrigley's, a luxury brand?​

Wrigley's, that ranked 64 in the listing, pulled in nearly $11bn in brand value.

A pack of gum is still affordable to most people, which explains the relatively stable figures for the gum market.

But Millward Brown Optimor asks why people choose Wrigley's. Analysing the success of the Wrigley brand in the eye of the consumer, the report suggests the brand is normally ‘front-of-shelf’, making it ‘front-of-mind’, and the "only place to be when the shopper is making a spontaneous decision about whether, and what, to purchase".​

"Wrigley’s is, in a sense, a luxury brand,"​ states the Brandz report.

And in the same vein, this gum brand, say the analysts, provides a "little daily luxury"​ at an affordable price that discourages trading down "because the savings would be insignificant".​

Consumers switch to small luxuries at home​

And as consumers save pennies and reduce their trips to coffee houses, purchases for premium coffee at home helped boost the coffee category by 18 per cent.

"Increased at-home consumption is also driving brand value increases in the beer and spirits categories,"​ claim the analysts.

Whisky brand Johnnie Walker’s witnessed a colossal 42 per cent growth in brand value making it the biggest growing spirits brand and one of the 'top 10 risers' in the report.

Millward Brown Optimor suggests that a hefty chunk of the spirit's gain can be attributed to its push into the fast-growing BRIC economies, as opposed to the European and North American markets that have "suffered from economic disruption".​

Search engine Google hit the number one spot as the world's most valuable brand, with a flourishing brand value of $100bn, a 16 per cent rise on 2008 figures.

Report infrastructure​

For the BrandZ ranking, Millward Brown Optimor values brands in three steps.

First, they establish a company's intangible earnings and allocate them to individual brands and countries of operation. The figures are based on publicly available financial data from Bloomberg, Datamonitor and Millward Brown Optimor's own research.

Secondly, they determine the portion of intangible earnings attributable to brand alone, as opposed to other factors such as price. This metric, known as Brand Contribution, reflects the share of earnings from a product or service's most loyal consumers or users. For this second step, the research firm tapped its BrandZ database, based on more than one million consumer interviews.

Thirdly, using data from BrandZ database, Bloomberg and Millward Brown Optimor's own research, they project the brand value forward based on market valuations, the brand's risk profile, and its growth potential.

Using these growth inputs, Millward Brown Optimor creates the final metric available from the BrandZ ranking, Brand Momentum, the index of the brand's short-term growth potential.

The Brandz ranking, that covers brands from 23 different categories spanning financial servies to technolgy, also includes beer, coffee, soft drinks, and bottled water.

The Brandz report can be accessed here.