The Annual Report on the Most Valuable Belgian Brands July 2018 Foreword

Belgium 10 2018 The annual report on the most valuable Belgian brands July 2018 Foreword.

What is the purpose of a strong brand: to attract customers, to build loyalty, to motivate staff? All true, but for a commercial brand at least, the first answer must always be ‘to make money’.

Huge investments are made in the design, launch, and ongoing promotion of brands. Given their potential financial value, this makes sense. Unfortunately, most organisations fail to go beyond that, missing huge opportunities to effectively make use of what are often their most important assets. Monitoring of brand performance should be the next step, but is often sporadic. Where it does take place, it frequently lacks financial rigour and is heavily reliant on qualitative measures, poorly understood by non-marketers.

David Haigh As a result, marketing teams struggle to communicate the value of their work and CEO, Brand Finance boards then underestimate the significance of their brands to the business. Sceptical finance teams, unconvinced by what they perceive as marketing mumbo jumbo, may fail to agree necessary investments. What marketing spend there is, can end up poorly directed as marketers are left to operate with insufficient financial guidance or accountability. The end result can be a slow but steady downward spiral of poor communication, wasted resources, and a negative impact on the bottom line.

Brand Finance bridges the gap between marketing and finance. Our teams have experience across a wide range of disciplines from market research and visual identity to tax and accounting. We understand the importance of design, advertising, and marketing, but we also believe that the ultimate and overriding purpose of brands is to make money. That is why we connect brands to the bottom line.

By valuing brands, we provide a mutually intelligible language for marketing and finance teams. Marketers then have the ability to communicate the significance of what they do, and boards can use the information to chart a course that maximises profits. Without knowing the precise, financial value of an asset, how can you know if you are maximising your returns? If you are intending to license a brand, how can you know you are getting a fair price? If you are intending to sell, how do you know what the right time is? How do you decide which brands to discontinue, whether to rebrand and how to arrange your brand architecture? Brand Finance has conducted thousands of brand and branded business valuations to help answer these questions.

Brand Finance’s research revealed the compelling link between strong brands and stock market performance. It was found that investing in highly-branded companies would lead to a return almost double that of the average for the S&P 500 as a whole.

Acknowledging and managing a company’s intangible assets taps into the hidden value that lies within it. The following report is a first step to understanding more about brands, how to value them and how to use that information to benefit the business.

The team and I look forward to continuing the conversation with you. Notre équipe et moi-même seraient ravis d’en discuter davantage avec vous.

Brand Finance Belgium 10 July 2018 3. About Brand Finance. Contents.

Brand Finance is the world’s leading independent Foreword 3 brand valuation and strategy consultancy. About Brand Finance 4 Brand Finance was set up in 1996 with the aim of ‘bridging the gap between marketing and finance’. Contact Details 4 For more than 20 years, we have helped companies and organisations of all types to connect their brands Definitions 6 to the bottom line. Executive Summary 8 We pride ourselves on four key strengths: • Independence Full Table 12 • Technical Credibility • Transparency Methodology 14 • Expertise. Understand Your Brand’s Value 15 Brand Finance puts thousands of the world’s biggest Consulting Services 16 brands to the test every year, evaluating which are the strongest and most valuable. Communications Services 17

For more information, please visit our website: www.brandfinance.com

Contact Details.

For business enquiries, For further information on Brand Finance®’s services and valuation experience, please contact: please contact your local representative: Richard Haigh Managing Director Country Contact Email Address [email protected] Asia Pacific Samir Dixit [email protected] +65 906 98 651 Australia Mark Crowe [email protected] +61 282 498 320 Canada Charles Scarlett-Smith [email protected] +1 647 3437 266 For media enquiries, Caribbean Nigel Cooper [email protected] +1 876 8256 598 please contact: China Scott Chen [email protected] +86 1860 118 8821 East Africa Jawad Jaffer [email protected] +254 204 440 053 Konrad Jagodzinski Germany Holger Mühlbauer [email protected] +49 1515 474 9834 Communications Director India Savio D’Souza [email protected] +44 207 389 9400 [email protected] Indonesia Jimmy Halim [email protected] +62 215 3678 064 Ireland Simon Haigh [email protected] +353 087 6695 881 Italy Massimo Pizzo [email protected] +39 230 312 5105 For all other enquiries, Japan Jun Tanaka [email protected] +8190 7116 1881 please contact: Mexico & LatAm Laurence Newell [email protected] +52 1559 197 1925 [email protected] Middle East Andrew Campbell [email protected] +971 508 113 341 Nigeria Babatunde Odumeru [email protected] +234 012 911 988 +44 (0)207 389 9400 Romania Mihai Bogdan [email protected] +40 728 702 705 Spain Teresa de Lemus [email protected] +34 654 481 043 South Africa Jeremy Sampson [email protected] +27 828 857 300 linkedin.com/company/ Sri Lanka Ruchi Gunewardene [email protected] +94 114 941 670 brand-finance Turkey Muhterem Ilgüner [email protected] +90 216 3526 729 UK Richard Haigh [email protected] +44 207 389 9400 USA Laurence Newell [email protected] +1 917 794 3249 facebook.com/brandfinance Vietnam Lai Tien Manh [email protected] +84 473 004 468

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4. Brand Finance Belgium 10 July 2018 Brand Finance Belgium 10 July 2018 5. Definitions.

Definitions.

Brand Value Brand Strength

+ Enterprise Value Brand Strength is the efficacy of a brand’s Each brand is assigned a Brand Strength Index (BSI) The value of the entire enterprise, made performance on intangible measures, relative to its score out of 100, which feeds into the brand value up of multiple branded businesses. competitors. calculation. Based on the score, each brand is assigned a [AB InBev] corresponding rating up to AAA+ in a format similar to a Where a company has a purely mono- In order to determine the strength of a brand, we look at branded architecture, the ‘enterprise value’ credit rating. is the same as ‘branded business value’. Marketing Investment, Stakeholder Equity, and the impact Enterp of those on Business Performance. Analysing the three brand strength measures helps inform rise Va managers of a brand’s potential for future success. lue + Branded Business Value The value of a single branded business Bra operating under the subject brand. nded Bu si [Stella Artois] A brand should be viewed in the context of ne Marketing Widely recognised factors deployed by marketers to create brand loyalty and ss the business in which it operates. Brand V Investment market share. a Finance always conducts a branded Bran lu d C e business valuation as part of any brand on tr valuation. We evaluate the full brand value ib u t chain in order to understand the links io n between marketing investment, brand- Stakeholder Perceptions of the brand among different stakeholder groups, with customers tracking data, and stakeholder behaviour. Equity being the most important.

+ Brand Contribution Brand The overall uplift in shareholder value Quantitative market and financial measures representing the success of the Value that the business derives from owning Business

the brand rather than operating a Brand Strength Index brand in achieving price and volume premium. [Stella Artois] Performance generic brand.

The brand values contained in our league tables are those of the potentially transferable brand assets only, making ‘brand contribution’ a wider concept. An Marketing Investment assessment of overall ‘brand contribution’ to • A brand that has high Marketing Investment but low Stakeholder Equity may be on a a business provides additional insights to path to growth. This high investment is likely to lead to future performance in Stakeholder help optimise performance. Equity which would in turn lead to better Business Performance in the future. Investment • However, high Marketing Investment over an extended period with little improvement in Stakeholder Equity would imply that the brand is unable to shape customers’ preference. + Brand Value The value of the trade mark and Stakeholder Equity associated marketing IP within the • The same is true for Stakeholder Equity. If a company has high Stakeholder Equity, it is branded business. Equity [Stella Artois] likely that Business Performance will improve in the future. • However, if the brand’s poor Business Performance persists, it would suggest that the Brand Finance helped to craft the brand is inefficient compared to its competitors in transferring stakeholder sentiment internationally recognised standard on to a volume or price premium. Brand Valuation – ISO 10668. It defines brand as a marketing-related intangible Performance Business Performance asset including, but not limited to, names, • Finally, if a brand has a strong Business Performance but scores poorly on Stakeholder terms, signs, symbols, logos, and designs, Equity, it would imply that, in the future, the brand’s ability to drive value will diminish. intended to identify goods, services or • However, if it is able to sustain these higher outputs, it shows that the brand is entities, creating distinctive images and particularly efficient at creating value from sentiment compared to its competitors. associations in the minds of stakeholders, thereby generating economic benefits.

6. Brand Finance Belgium 10 July 2018 Brand Finance Belgium 10 July 2018 7. Executive Summary.

Executive Summary.

value growth to €2.4 billion. 2017 was a year of change Top 10 Most Valuable Brands for BDO leadership, with Keith Farlinger taking over as CEO, but business as usual throughout much of the rest Rank 2018: 1 2017: 1 of the organisation. BV 2018: EUR 3,592m 1 +7% BV 2017: EUR 3,362m Stella Artois – rising star Brand Rating: AA+

One of AB InBev’s beer brands also made the Brand Rank 2018: 2 2017: 2 BV 2018: EUR 2,458m Finance Belgium 10 league table. Stella Artois (brand 2 -1% BV 2017: EUR 2,479m value up 14% to €1.4 billion) is the fastest-growing brand Brand Rating: AA+ in the ranking this year, with increased international awareness spreading through the brand’s continued Rank 2018: 3 2017: 3 association with the Wimbledon tennis tournament as the BV 2018: EUR 2,377m 3 +10% official beer of the Championships. BV 2017: EUR 2,155m Brand Rating: AA AB InBev has had a remarkably successful year, with their family of brands growing strongly across the world Rank 2018: 4 2017: 4 BV 2018: EUR 1,931m to dominate the global beer industry. 4 -3% BV 2017: EUR 1,993m This includes their ownership of the world’s most Brand Rating: AAA- valuable and second-most valuable beer brands, the American Bud Light (brand value up 7% to €6.3 billion) Rank 2018: 5 2017: 6 and Budweiser (brand value up 15% to €6.0 billion). 5 BV 2018: EUR 1,410m -4% BV 2017: EUR 1,467m Despite a decade of decline in American sales, these two Brand Rating: AA- KBC keeps the crown iconic brands have benefited from their leadership positions across other mainstream beer markets. KBC retained the leading position as Belgium’s most KBC remains Belgium’s most Rank 2018: 6 2017: 7 BV 2018: EUR 1,406m valuable brand as its value grew by 7% over the past 6 +14% year to €3.6 billion. KBC enjoyed a strong year as it valuable brand because it is Brand Value Change 2017-2018 (%) BV 2017: EUR 1,237m continued to expand its digital offerings and maintain recognised by customers as a Brand Rating: AA+ a loyal customer base. trusted financial partner across Stella Artois 14% Rank 2018: 7 2017: 5 BV 2018: EUR 1,203m Looking ahead, KBC’s brand is reaffirming its 7 -19% both banking and insurance. As AB InBev BV 2017: EUR 1,493m commitment to Ireland by making that jurisdiction a 10% Brand Rating: AA- fully-fledged core country for their group, alongside KBC continues to develop its an established presence across Belgium, the Czech Telenet 10% brand across Europe, its Rank 2018: 8 2017: 10 Republic, Bulgaria, Slovakia and Hungary. In Ireland, BV 2018: EUR 916m customers will increasingly be 8 +10% KBC is aiming to lead the industry as a ‘Digital First’ KBC 7% BV 2017: EUR 835m customer-centred bank, with lessons to then be able to rely upon the growing Brand Rating: AA+ shared across the rest of the KBC group strength of the bank in 1% BDO internationally. Rank 2018: 9 2017: 9 challenging times for the banking BV 2018: EUR 872m -3% Colruyt 9 -15% BDO retains second place BV 2017: EUR 1,025m industry. Brand Rating: AA- -4% Solvay David Haigh In second place, the auditing, accounting and CEO, Brand Finance Rank 2018: 10 2017: NEW consulting brand, BDO (brand value down 1% to €2.5 -15% Belfius BV 2018: EUR 741m billion), remained just ahead of third ranked AB InBev 10 which has narrowed the gap following 10% brand -19% Proximus Brand Rating: A+

8. Brand Finance Belgium 10 July 2018 Brand Finance Belgium 10 July 2018 9. 10. Brand Value bySector Brand Value OverTime Executive Summary. Brand Finance Brand Value (EUR m) 1000 1500 2000 2500 3000 3500 4000 Belgium 2012 10 July 2018

2013

2014 Year 2015 Colour 2016 Total Insurance Chemicals Retail Services Commercial Telecoms Beers Banks Sector 2017 2018 16.9 0.7 0.9 1.2 2.5 1.7 3.8 5.0 (EUR bn) Brand Value

100% 4% 5% 7% 15% 17% 22% 30% % oftotal postpaid servicesgrowinpopularityacrossBelgium. challenges, especiallyasitsTV, mobileandinternet domestic brandallowsittoweatherinternational losses. ThisdemonstrateshowProximus’sstrong Belgian businesshaspartiallyoffsetsomeofthose result ofinternationalrevenueerosion,itsdomestic 100. Whilebrandvaluehassubsidedprimarilyasa strongest brandthisyearwithascoreof81.2out Telecommunications giantProximusisBelgium’s Proximus ringsinasstrongest investments instaff, efficiencyandsustainability. in check,thebrandhasalsocontinuedits margins. WhilstColruytGroupistryingtokeepcosts price” guarantee,whichhasreflectedinthebrand’s every competitor’spricecutstomaintainits“lowest attract newcustomers,theColruytchainreactsto Belgium istakingitstollonthebrand.Ineffortsto Belgian foodretailindustryfromthelikesofCarrefour had adifficultyear, provingthatthecompetitionin Colruyt (brandvaluedown19%to€1.2billion)has Colruyt shopstillitdrops Top 5StrongestBrands Brand Finance 75.2 75.5 78.3 79.3 81.2 BSI Score BSI Score BSI Score BSI Score BSI Score Executive Summary. Belgium 10 July 2018 11. Methodology. Understand Your Brand’s Value.

A Brand Value Report provides a complete Each report includes expert recommendations for growing Brand Finance calculates the values of the breakdown of the assumptions, data sources, and brand value to drive business performance and offers a brands in its league tables using the Royalty calculations used to arrive at your brand’s value. cost-effective way to gaining a better understanding of Relief approach – a brand valuation method your position against competitors. compétiteurs. compliant with the industry standards set in Brand Strength ISO 10668. Index (BSI) Brand strength This involves estimating the likely future revenues that What is a Brand Value Report? expressed as a BSI What are the benefits of a Brand are attributable to a brand by calculating a royalty rate score out of 100. Brand Valuation Summary that would be charged for its use, to arrive at a ‘brand Value Report? + Internal understanding of brand value’ understood as a net economic benefit that a + Brand value tracking licensor would achieve by licensing the brand in the + Competitor benchmarking Insight open market. + Historical brand value Provide insight as to how the brand is The steps in this process are as follows: performing vs. key competitors on Brand Brand Strength Index underlying measures and drivers of 1 Calculate brand strength using a balanced scorecard Royalty Rate + Brand strength tracking brand value and brand strength. of metrics assessing Marketing Investment, BSI score applied to an + Brand strength analysis Stakeholder Equity, and Business Performance. Brand appropriate sector + Management KPIs Strategy strength is expressed as a Brand Strength Index (BSI) royalty range. + Competitor benchmarking Understand where brand value is being score on a scale of 0 to 100. generated by region and channel in 2 Determine royalty range for each industry, reflecting Royalty Rates order to identify areas of opportunity the importance of brand to purchasing decisions. In + Transfer pricing that warrant further investigation. luxury, the maximum percentage is high, in extractive + Licensing/franchising negotiation industry, where goods are often commoditised, it is + International licensing Benchmarking lower. This is done by reviewing comparable licensing + Competitor benchmarking Track year-on-year changes to brand agreements sourced from Brand Finance’s extensive value and set long-term objectives database. Brand Revenues Cost of Capital against which high-level brand 3 Calculate royalty rate. The BSI score is applied to the Royalty rate applied to + Independent view of cost of capital for internal performance can be benchmarked. royalty range to arrive at a royalty rate. For example, if forecast revenues to valuations and project appraisal exercises the royalty range in a sector is 0-5% and a brand has derive brand value. Education a BSI score of 80 out of 100, then an appropriate Customer Research Provide a platform of understanding royalty rate for the use of this brand in the given sector + Utilities which the company can use to educate will be 4%. + Insurance employees on the importance of the + Banks brand. 4 Determine brand-specific revenues by estimating a + Telecoms proportion of parent company revenues attributable Communication to a brand. Brand Value Communicate your brand’s success to 5 Determine forecast revenues using a function of Post-tax brand For more information regarding our Brand Value shareholders, customers, and other historic revenues, equity analyst forecasts, and revenues discounted to Reports, please contact: strategically selected audiences. economic growth rates. a net present value (NPV) which equals the brand 6 Apply the royalty rate to the forecast revenues to value. Richard Haigh Understanding derive brand revenues. Managing Director, Brand Finance Understand and appreciate the value of 7 Brand revenues are discounted post-tax to a net [email protected] your brand as an asset of the business. present value which equals the brand value. entreprise.

Disclaimer Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions produced in this study are based only 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 report are not to be construed as providing investment or business advice. Brand Finance does not intend the report to be relied upon for any reason and excludes all liability to any body, government or organisation.

12. Brand Finance Belgium 10 July 2018 Brand Finance Belgium 10 July 2018 13. Consulting Services. Communications Services.

We offer a variety of services to help communicate your brand’s success. 1. Valuation: What are my intangible 2. Analytics: How can I improve assets worth? marketing effectiveness? Valuations may be conducted for technical Analytical services help to uncover drivers purposes and to set a baseline against of demand and insights. Identifying the CEO Quote Social Media which potential strategic brand factors which drive consumer behaviour Supply a quote in Coordinate with your scenarios can be evaluated. allows an understanding of how brands recognition of your social media activity N 2. brand’s performance to communicate your IO AN create bottom-line impact. for you to use in brand’s success more + Branded Business Valuation T A A L external and internal effectively. + Trademark Valuation U Y Market Research Analytics + communications. Awards L T + Intangible Asset Valuation A I Return on Marketing Investment + Press Release Produce an accolade V C Assist with the creation plaque and hand-written + Brand Contribution . S Brand Audits + certificates, personally 1 of a press release Brand Scorecard Tracking + communicating your signed by our CEO, to Brand & brand’s success. recognise your brand’s performance.

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. more depth. 4 brands to be leveraged to grow endorsement stamp for Transaction services help buyers, your website and investor sellers, and owners of branded businesses businesses. Scenario modelling will relations use. get a better deal by leveraging the value of identify the best opportunities, ensuring their intangibles. resources are allocated to those activities which have the most impact on brand and business value. + M&A Due Diligence + Franchising & Licensing Brand Governance + + Tax & Transfer Pricing Brand Architecture & Portfolio Management + + Expert Witness Brand Transition + Brand Positioning & Extension +

Strongest

MARKETING FINANCE TAX LEGAL Global Brand 2018

We help marketers to We provide financiers and We help brand owners We help clients to enforce connect their brands to auditors with an and fiscal authorities to and exploit their business performance by independent assessment understand the intellectual property rights Your Brand evaluating the return on on all forms of brand and implications of different by providing independent investment (ROI) of intangible asset tax, transfer pricing, and expert advice in- and brand-based decisions valuations. brand ownership outside of the courtroom. and strategies. arrangements.

Example digital endorsement stamp for use on your website as well as in investor relations and advertising, to recognise your brand’s performance.

14. Brand Finance Belgium 10 July 2018 Brand Finance Belgium 10 July 2018 15. Contact us.

The World’s Leading Independent Brand Valuation and Strategy Consultancy T: +44 (0)20 7389 9400 E: [email protected] www.brandfinance.com