The Annual Report on the World's Most Valuable Drinks Brands May 2015
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Drinks 50 2015The annual report on the world’s most valuable drinks brands May 2015 Contents About Brand Finance About Brand Finance 3 Brand Finance is the world’s leading regulatory bodies around the world. We are one independent brand valuation and strategy of the few companies certified to provide brand Methodology 4 consultancy. Brand Finance was set up in 1996 valuations that are fully compliant with ISO with the aim of ‘bridging the gap between 10668, the global standard on monetary brand Sector Analysis 6 marketing and finance’. For almost 20 years we valuations. Understand Your Brand’s Value 12 have helped companies to connect their brands to the bottom line, building robust business cases Transparency How We Can Help 14 for brand decisions, strategies and investments. There are no black boxes. Our approach is to In doing so, we have helped finance people to work openly, collaboratively and flexibly with Contact Details 15 evaluate marketing programmes and marketing clients and we will always reveal the details of people to present their case in the Board Room. our modelling and analysis. This means our clients always understand what lies behind ‘the Independence number’. Brand Finance is impartial and independent. We assess and help to manage Expertise brands, but we do not create or own them. We We possess a unique combination of skills are therefore able to give objective, unbiased and experience. We employ functional experts Foreword. advice because we have no vested interest in with marketing, research and financial particular outcomes of a project and our backgrounds, as well as ex-client-side senior recommendations are entirely independent. We management who are used to ‘making things What is the purpose Brand Finance bridges the gap between the are agency agnostic and work collaboratively happen’. This gives us the mindset to think of a strong brand; to marketing and financial worlds, connecting with many other agencies and consultancies. beyond the analysis and to consider the likely attract customers, to brands to the bottom line. By valuing brands we impact on day-to-day operations. We like to think build loyalty, to provide a mutually intelligible language for Technical credibility this differentiates us because our team has real motivate staff? All marketers and finance teams. Marketers then Brand Finance has high technical operational experience. true, but for a have the ability to communicate the significance standards. Our work is frequently peer- commercial brand at of what they do and boards can use the reviewed by the big four audit practices and our For more information, please visit our website: least, the first answer information to chart a course that maximizes work has been accepted by tax authorities and brandfinance.com must always be ‘to profits. make money’. As with any asset, without knowing the precise, Brand Finance puts thousands of the world’s biggest brands to the test every year, evaluating which are financial value, how can you know if you are Huge investments are made in the design, the most powerful and most valuable. The Drinks 50 covers the top 50 drinks brands and is just one maximising your returns? If you are intending to launch and ongoing promotion of brands. Given of many annual reports produced by Brand Finance. Visit www.brandfinance.com to discover more. their potential financial value, this makes sense. license a brand, how can you know you are Unfortunately most organisations fail to go getting a fair price? If you are intending to sell, beyond that, missing huge opportunities to how do you know what the right time is? Brand effectively make use of what are often their most Finance has conducted hundreds of brand and important assets. Sceptical finance teams, branded-business valuations to help answer unconvinced by what they perceive as marketing these questions. The following report is a first step mumbo jumbo may fail to agree necessary to understanding more about brands, how to investments. What marketing spend there is can value them and how to use that information to end up poorly directed as marketers are left to benefit the business. The team and I look operate with insufficient financial guidance or forward to continuing the conversation with you. accountability. David Haigh, CEO, Brand Finance 2. Brand Finance Drinks 50 May 2015 Brand Finance Drinks 50 May 2015 3. Methodology What do we mean by ‘brand’? Brand strength Brand Brand revenues Brand value index (BSI) ‘Royalty rate’ Definitions + Enterprise Value – the value of the Strong brand E.g. entire enterprise, made up of Brand ‘Branded LVMH multiple branded businesses investment Enterprise’ ‘Branded Brand Business’ equity + Branded Business Value – the value of a single branded business Brand ‘Brand’ Hennessy operating under the subject brand Weak brand Business performance Forecast revenues Brand strength BSI score applied to an Royalty rate applied to Post-tax brand revenues expressed as a BSI appropriate sector forecast revenues to are discounted to a net + Brand Value – the value of the score out of 100. royalty rate range. derive brand values. present value (NPV) trade marks (and relating which equals the brand Hennessy Brand marketing IP and ‘goodwill’ value. attached to it) within the branded ® business Brand Finance calculates the values of the 2 Determine the royalty rate range for the brands in its league tables using the respective brand sectors. This is done by ‘Royalty Relief approach’. This approach reviewing comparable licensing agreements Definition of ‘Brand’ Brand Strength involves estimating the likely future sales that are sourced from Brand Finance’s extensive attributable to a brand and calculating a royalty database of license agreements and other In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most rate that would be charged for the use of the online databases. for all the expectations and opinions held by directly and easily influenced by those brand, i.e. what the owner would have to pay for 3 Calculate royalty rate. The brand strength score customers, staff and other stakeholders about an responsible for marketing and brand the use of the brand—assuming it were not is applied to the royalty rate range to arrive at a organisation and its products and services. management. In order to determine the strength already owned. royalty rate. For example, if the royalty rate However when looking at brands as business of a brand we have developed the Brand range in a brand’s sector is 0%-5% and a brand assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing The steps in this process are as follows: has a brand strength score of 80 out of 100, more technical definition is required. Brand investment, brand equity (the goodwill then an appropriate royalty rate for the use of Finance helped to craft the internationally accumulated with customers, staff and other 1 Calculate brand strength on a scale of 0 to 100 this brand in the given sector will be recognised standard on Brand Valuation, ISO stakeholders) and finally the impact of those on based on a number of attributes such as approximately 4%. 10668. That defines a brand as “a marketing- business performance. Following this analysis, marketing investment, emotional connection 4 Determine brand-specific forecast revenues related intangible asset including, but not limited each brand is assigned a BSI score out of 100, and financial performance, among others. This using a function of case sales, average prices to, names, terms, signs, symbols, logos and which is fed into the brand value calculation. score is known as the Brand Strength Index. and equity analyst forecasts to determine the designs, or a combination of these, intended to Based on the score, each brand in the league This year, Brand Finance has incorporated proportion of a parent company’s revenues identify goods, services or entities, or a table is assigned a rating between AAA+ and D market research from BAV Consulting to help attributable to a specific brand combination of these, creating distinctive images in a format similar to a credit rating. AAA+ inform the process of calculating this score. 5 Apply the royalty rate to the forecast revenues and associations in the minds of stakeholders, brands are exceptionally strong and well The data provided by BAV Consulting relates to to derive brand revenues. thereby generating economic benefits/value” managed while a failing brand would be measures such as awareness, preference and 6 Brand revenues are discounted post tax to a assigned a D grade. loyalty which have been derived from panels of net present value which equals the brand value. respondents across 20 countries. 4. Brand Finance Drinks 50 May 2015 Brand Finance Drinks 50 May 2015 5. Sector Analysis – Drinks Rank 2015: 1 2014: 1 Rank 2015: 6 2014: 8 BV 2015: $1,946m 1 BV 2015: $5,603m +13% 6 +9% BV 2014: $4,966m BV 2014: $1,788m Brand Rating: AAA Brand Rating: AAA- Rank 2015: 2 2014: 2 Rank 2015: 7 2014: 5 BV 2015: $1,908m 2 BV 2015: $4,483m +8% 7 -6% Drinks BV 2014: $4,165m BV 2014: $2,022m Brand Rating: AAA- Brand Rating: AA+ Rank 2015: 3 2014: 3 Rank 2015: 8 2014: 10 3 BV 2015: $3,379m +21% 8 BV 2015: $1,764m +9% BV 2014: $2,787m BV 2014: $1,615m Brand Rating: AA+ Brand Rating: AA 50 Rank 2015: 4 2014: 6 Rank 2015: 9 2014: 7 4 BV 2015: $2,474m +23% 9 BV 2015: $1,679m -6% BV 2014: $2,019m BV 2014: $1,796m Brand Rating: AA+ Brand Rating: AA- Rank 2015: 5 2014: 4 Rank 2015: 10 2014: BV 2015: $1,521m 5 BV 2015: $2,118m -6% 10 BV 2014: $2,259m BV 2014: Brand Rating: AAA- Brand Rating: AA Despite slowing growth in emerging economies in the US may be in a state of decline, the brand result of increased appeal to women – selling a domestic and international spirits brands alike.