Brand Finance Germany 50 2017

Germany 50 2017 The annual report on the most valuable German brands May 2017

Foreword. Contents

steady downward spiral of poor communication, Foreword 2 wasted resources and a negative impact on the bottom line. Definitions 4 Methodology 6 Brand Finance bridges the gap between the marketing and financial worlds. Our teams have Executive Summary 8 experience across a wide range of disciplines from market research and visual identity to tax and Full Table (EURm) 12 accounting. We understand the importance of design, advertising and marketing, but we also Full Table (USDm) 13 believe that the ultimate and overriding purpose of Understand Your Brand’s Value 14 brands is to make money. That is why we connect brands to the bottom line. How We Can Help 16

By valuing brands, we provide a mutually intelligible Contact Details 17 language for marketers and finance teams. David Haigh, CEO, Brand Finance Marketers then have the ability to communicate the significance of what they do and boards can use What is the purpose of a strong brand; to attract the information to chart a course that maximises customers, to build loyalty, to motivate staff? All profits. true, but for a commercial brand at least, the first Without knowing the precise, financial value of an answer must always be ‘to make money’. asset, how can you know if you are maximising your returns? If you are intending to license a brand, how Huge investments are made in the design, launch can you know you are getting a fair price? If you are and ongoing promotion of brands. Given their intending to sell, how do you know what the right potential financial value, this makes sense. time is? How do you decide which brands to Unfortunately, most organisations fail to go beyond discontinue, whether to rebrand and how to arrange that, missing huge opportunities to effectively make your brand architecture? Brand Finance has use of what are often their most important assets. conducted thousands of brand and branded Monitoring of brand performance should be the business valuations to help answer these questions. next step, but is often sporadic. Where it does take place it frequently lacks financial rigour and is Brand Finance’s recently conducted share price heavily reliant on qualitative measures poorly study revealed the compelling link between strong understood by non-marketers. brands and stock market performance. It was found that investing in the most highly branded companies As a result, marketing teams struggle to would lead to a return almost double that of the communicate the value of their work and boards average for the S&P 500 as a whole. then underestimate the significance of their brands Acknowledging and managing a company’s to the business. Skeptical finance teams, intangible assets taps into the hidden value that lies unconvinced by what they perceive as marketing within it. The following report is a first step to mumbo jumbo may fail to agree necessary understanding more about brands, how to value investments. What marketing spend there is can them and how to use that information to benefit the end up poorly directed as marketers are left to business. The team and I look forward to continuing operate with insufficient financial guidance or the conversation with you. accountability. The end result can be a slow but

2. Brand Finance AustraliaGlobalAirlinesGermany 500 30 10050 30February May MarchFebruary 2017 20162016 2015 Brand Finance Germany 50 May 2017 3. Definitions

Effect of a Brand on Stakeholders E.g. Definitions Volkswagen + Enterprise Value – the value of the entire enterprise, made up of Directors AG Potential Middle ‘Branded‘Branded multiple branded businesses Customers Managers Enterprise’Enterprise’

Existing All Other ‘Branded‘Branded + Branded Business Value – the Customers Employees Business’ E.g. Business’ Porsche value of a single branded business operating under the subject brand ‘Brand’ Contribution’ Influencers Production + Brand Contribution– The total e.g. Media Brand E.g. economic benefit derived by a Porsche business from its brand ‘Brand Value’ Trade Sales Channels + Brand Value – the value of the E.g. trade marks (and relating Porsche Strategic marketing IP and ‘goodwill’ Debt Allies & providers attached to it) within the branded Suppliers Investors business

Branded Business Value Brand Contribution Brand Value Brand Strength

A brand should be viewed in the context of the The brand values contained in our league tables In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most business in which it operates. For this reason are those of the potentially transferable brand for all the expectations and opinions held by directly and easily influenced by those Brand Finance always conducts a Branded asset only, but for marketers and managers customers, staff and other stakeholders about an responsible for marketing and brand Business Valuation as part of any brand valuation. alike, an assessment of overall brand organisation and its products and services. management. In order to determine the strength Where a company has a purely mono-branded contribution to a business provides powerful However, when looking at brands as business of a brand we have developed the Brand architecture, the business value is the same as insights to help optimise performance. assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing the overall company value or ‘enterprise value’. more technical definition is required. investment, brand equity (the goodwill Brand Contribution represents the overall uplift accumulated with customers, staff and other In the more usual situation where a company in shareholder value that the business derives Brand Finance helped to craft the internationally stakeholders) and finally the impact of those on owns multiple brands, business value refers to from owning the brand rather than operating a recognised standard on Brand Valuation, ISO business performance. the value of the assets and revenue stream of the generic brand. 10668. That defines a brand as “a marketing- business line attached to that brand specifically. related intangible asset including, but not limited Following this analysis, each brand is assigned We evaluate the full brand value chain in order to Brands affect a variety of stakeholders, not just to, names, terms, signs, symbols, logos and a BSI score out of 100, which is fed into the understand the links between marketing customers but also staff, strategic partners, designs, or a combination of these, intended to brand value calculation. Based on the score, investment, brand tracking data, stakeholder regulators, investors and more, having a identify goods, services or entities, or a each brand in the league table is assigned a behaviour and business value to maximise the significant impact on financial value beyond combination of these, creating distinctive images rating between AAA+ and D in a format similar returns business owners can obtain from their what can be bought or sold in a transaction. and associations in the minds of stakeholders, to a credit rating. AAA+ brands are exceptionally brands. thereby generating economic benefits/value”. strong and well managed while a failing brand would be assigned a D grade.

4. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 5. Methodology League Table Valuation Methodology Brand Finance Typical Project Approach Brand Finance calculates the values of the 2 Determine the royalty rate range for the respective brands in its league tables using the ‘Royalty brand sectors. This is done by reviewing comparable Relief approach’. This approach involves licensing agreements sourced from Brand Finance’s estimating the likely future sales that are extensive database of license agreements and other attributable to a brand and calculating a royalty online databases. Brand Equity Stakeholder Brand Inputs Performance rate that would be charged for the use of the 3 Calculate royalty rate. The brand strength score is Value Drivers Behaviour Contribution brand, i.e. what the owner would have to pay for applied to the royalty rate range to arrive at a royalty the use of the brand—assuming it were not rate. For example, if the royalty rate range in a brand’s already owned. sector is 0-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty 1 2 3 4 The steps in this process are as follows: rate for the use of this brand in the given sector will Brand Audit Trial & Preference Acquisition & Valuation Modelling be 4%. Retention 1 Calculate brand strength on a scale of 0 to 100 based 4 Determine brand specific revenues estimating a on a number of attributes such as emotional proportion of parent company revenues attributable Audit the impact Run analytics to Link stakeholder Model the impact of behaviour on connection, financial performance and sustainability, to a specific brand. of brand understand how behaviour with core financial performance and among others. This score is known as the Brand key financial isolating the value of the brand 5 Determine forecast brand specific revenues using a management and perceptions link to Strength Index, and is calculated using brand data investment on behaviour value drivers contribution function of historic revenues, equity analyst forecasts from the BrandAsset® Valuator database, the world’s brand equity and economic growth rates. largest database of brands, which measures brand 6 Apply the royalty rate to the forecast revenues to equity, consideration and emotional imagery derive brand revenues. attributes to assess brand personality in a category 7 Brand revenues are discounted post tax to a net agnostic manner. present value which equals the brand value. Brand strength Brand Brand revenues Brand value index ‘Royalty rate’ How We Help to Maximise Value (BSI)

6. Build scale through licensing/franchising/partnerships Brand Strong brand investment 5. Build core business through market expansion

4. Build core business through product development Brand

equity Maximising a strong brand 3. Portfolio management/rebranding Group companies

2. Optimise brand positioning and strength Brand Weak brand performance Forecast revenues 1. Base-case brand and business valuation (using internal data), growth strategy Evaluate ongoing performance formulation, target-setting, scorecard and Brand strength BSI score applied to an Royalty rate applied to Post-tax brand tracker set-up expressed as a BSI appropriate sector forecast revenues to revenues are score out of 100. royalty rate range. derive brand values. discounted to a net Current brand and Target brand and present value (NPV) business value business value which equals the brand value.

6. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 7.

Executive Summary

Rank 2017: 1 2016: 1 Rank 2017: 6 2016: 7 BV 2017: EUR 33,029m BV 2017: EUR 16,007m 1 +3% 6 +11% BV 2016: EUR 32,172m BV 2016: EUR 14,364m Brand Rating: AAA- Brand Rating: AAA-

Germany Rank 2017: 2 2016: 2 Rank 2017: 7 2016: 6 BV 2017: EUR 13,521m 2 BV 2017: EUR 32,414m +6% 7 -11% BV 2016: EUR 30,540m BV 2016: EUR 15,113m Brand Rating: AA+ Brand Rating: AA

Rank 2017: 3 2016: 3 Rank 2017: 8 2016: 10 BV 2017: EUR 31,623m 8 BV 2017: EUR 13,486m 50 3 +7% +61% BV 2016: EUR 29,487m BV 2016: EUR 8,379m Brand Rating: AAA- Brand Rating: AA-

Rank 2017: 4 2016: 5 Rank 2017: 9 2016: 8 BV 2017: EUR 11,162m 4 BV 2017: EUR 22,255m+28% 9 +23% BV 2016: EUR 17,410m BV 2016: EUR 9,050m Brand Rating: AAA Brand Rating: AAA-

Rank 2017: 5 2016: 4 Rank 2017: 10 2016: 18 BV 2017: EUR 20,541m 5 +17% 10 BV 2017: EUR 11,029m BV 2016: EUR 17,483m BV 2016: EUR 4,106m+169% Brand Rating: AAA- Brand Rating: AAA

Nivea is Germany’s most powerful brand with a enabled it to ride out this misstep, however the brand’s vehicles since the launch of the new T (Deutsche Telekom) defends second place with Brand Strength Index (BSI) score of 88. Nivea greater oversight of its marketing communications E-Class Saloon last year was a particular source of a brand value of €32.4 billion. T is Europe’s most has developed high levels of consumer trust for may be required to ensure it remains the nation’s strength. Like BMW, Mercedes-Benz is preparing valuable telecoms brand (as noted in the Brand the superior quality and reliability of its products most powerful brand. for the growing spending power of the millennial Finance Telecoms 500 report), though its growth but this has been complemented by increasingly generation. A new marketing strategy has been can largely be attributed to performance outside innovative advertising. Its sunscreen has been Valued at €33 billion, BMW has maintained its announced, based on “human-centred innovation” the continent. In Q1 2017, new customer promoted with creative campaigns including a position as the most valuable German brand for and “customised agencies”. Its humorous acquisitions in the US exceeded market doll that turns red in hot weather to remind the third year in a row. BMW celebrated its 100th Superbowl advert is one of the fi rst examples of expectations, continuing the rapid growth which children of the risk of sunburn, a waterslide that anniversary in 2016; its heritage is a key driver of the new approach. The more “casual” and “light- saw 4.1 million new subscribers join the network in dispenses waterproof sunscreen and even a demand and customer loyalty. At the same time, hearted” image is intended to make the brand 2016. T is also reinforcing its brand at home model seagull that dispenses sun cream from its investments in innovation, such as the BMW i more appealing to young people, for whom the however. It is investing in bringing faster internet rear end. Though derided by some, it is an electric car sub-brand, are positioning BMW well technical specifi cations of Mercedes’ engineering connections to 1.4 million German households, example of the commitment to improving for the future. 2016 saw BMW set new records excellence may be less relevant. and on promotions including creative projects customer wellbeing that has built Nivea’s brand with net profi t at €6.9 billion and revenue at €94.2 such as the recently launched Lenz App, which over many years. billion. Volkswagen has a brand value of €22.255 billion, reacts to anything magenta, the brand’s colour. regaining traction after the 2015 emissions That being said, its communications strategy has The automotive industry remains Germany’s top scandal. Other Volkswagen Group brands include With a record brand value decline year on year of not always been so astute. Nivea attracted sector by brand value, with many other car Audi which is ninth, with a brand value of €11.2 43%, Deutsche Bank must hope that strong condemnation this year for its ‘white is purity’ brands placing highly. Mercedes-Benz claims billion, and Porsche which is tenth place with a fi nancial results for the fi rst three months of 2017 campaign, perceived by many as racially third place in Brand Finance Germany 50 with a brand value of €11 billion. are the fi rst signs of its long-awaited recovery. insensitive. The strength of Nivea’s brand has brand value of €31.6 billion. Record demand for 8. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 9.

Executive Summary

Brand Value Over Time The 10 Most Powerful Brands Brands – BV Change (EURm) These are the most powerful German brands, whose rating 35 is based on Brand Finance’s Brand Strength Index (BSI). Porsche 6,923 Porsche 169% Siemens SAP 5,107 SAP 61% Volkswagen 4,845 Hannover Re 41% 30 BSI Score Siemens 3,059 Adidas 39% Volkswagen Adidas 2,517 MAN 36% Mercedes-Benz 2,137 25 87.6 Opel 33% Audi 2,113 Infineon Technologies 32% Mercedes-Benz BSI Score T (Deutsche Telekom in Germany) 1,874 Volkswagen 28% 1,643 20 Bosch Munich Re 24% 86.0 BMW 857 Puma 24% T (Deutsche Telekom in Germany) -211 DB -7% DB 15 BSI Score -254 Hugo Boss -7% Continental -259 Continental -10% Lidl DZ Bank Brand ae BMW 84.9 -265 -11% Allianz 10 -462 EnBW -11% DZ Bank BSI Score -551 Metro Cash & Carry -11% Hugo Boss -801 Commerzbank -16% Metro Cash & Carry 5 -818 Lidl -23% EnBW 84.5 -1,592 Allianz -32% Commerzbank -3,378 BSI Score Deutsche Bank -43% Deutsche Bank 0 -4000.000000-2357.142857-714.285714928.5714292571.4285714214.2857145857.1428577500.000000 -65.0-38.5-12.014.541.067.594.0120.5147.0173.5200.0 2011 2012 2013 2014 2015 2016 2017 83.4 Brands – BV Change (%) Total Brand Value by Sector 2017 Porsche 6,923 Porsche 169% BSI Score SAP 5,107 SAP 61% Colour Industry Total Value Proportion (EURm) Volkswagen 4,845 Hannover Re 41% Siemens 82.1 3,059 Adidas 39% Automobiles 115,503 34% Adidas 2,517 MAN 36% Engineering & 40,285 12% BSI Score Construction Mercedes-Benz 2,137 Opel 33% Telecoms 32,415 9% Audi 2,113 Infineon Technologies 32% T (Deutsche Telekom in Germany) 82.0 1,874 Volkswagen 28% Automobiles Retail 30,626 9% 34% Bosch 1,643 24% BSI Score Munich Re Insurance 20,883 6% BMW 857 Puma 24% -211 DB -7% DB Technology 15,561 5% -254 Hugo81.6 Boss -7% Continental Logistics 14,729 4% Continental -259 BSI Score -10% Lidl DZ Bank Apparel 13,106 4% -265 -11% Allianz -462 EnBW -11% DZ Bank Utilities 10,943 3% -551 Metro80.3 Cash & Carry Engineering & -11% Hugo Boss Construction Retail Chemicals 10,399 3% -801 CommerzbankBSI Score -16% Metro Cash & Carry 9% 12% -818 Lidl -23% EnBW Telecoms Others 37,598 11% 9% -1,592 Allianz -32% Commerzbank -3,378 80.2 Total 342,048 100% Deutsche Bank -43% Deutsche Bank -4000.000000-2357.142857-714.285714928.5714292571.4285714214.2857145857.1428577500.000000 -65.0-38.5-12.014.541.067.594.0120.5147.0173.5200.0 10. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 11. Brand Finance Brand Finance Germany 50 (EURm) Germany 50 (USDm)

Top 50 most valuable German brands 1 - 50. Top 50 most valuable German brands 1 - 50.

Rank Rank Brand Value Brand Value Brand Brand Rank Rank Brand Value Brand Value Brand Brand Brand name Sector % Brand name Sector % 2017 2016 (EURm) (EURm) rating rating 2017 2016 (USDm) (USDm) rating rating change change 2017 2016 2017 2016 2017 2016 2017 2016 1 1 BMW Automobiles 33,030 3% 32,172 AAA- AAA 1 1 BMW Premium Automobiles 37,124 6% 34,968 AAA- AAA 2 2 T (Deutsche Telekom in Telecoms 32,415 6% 30,540 AA+ AA+ 2 2 T (Deutsche Telekom in Telecoms 36,433 10% 33,194 AA+ AA+ 3 3 Mercedes-Benz Automobiles 31,623 7% 29,486 AAA- AAA 3 3 Mercedes-Benz Automobiles 35,544 11% 32,049 AAA- AAA 4 5 Volkswagen Automobiles 22,255 28% 17,410 AAA AA+ 4 5 Volkswagen Automobiles 25,014 32% 18,923 AAA AA+ 5 4 Siemens Engineering & Construction 20,541 17% 17,482 AAA- AA+ 5 4 Siemens Engineering & Construction 23,088 22% 19,002 AAA- AA+ 6 7 Bosch Engineering & Construction 16,006 11% 14,363 AAA- AAA- 6 7 Bosch Engineering & Construction 17,991 15% 15,612 AAA- AAA- 7 6 Allianz Insurance 13,521 -11% 15,113 AA AA 7 6 Allianz Insurance 15,197 -7% 16,426 AA AA 8 10 SAP Technology 13,486 61% 8,378 AA- AA 8 10 SAP Technology 15,158 66% 9,107 AA- AA 9 8 Audi Automobiles 11,162 23% 9,049 AAA- AAA- 9 8 Audi Automobiles 12,546 28% 9,836 AAA- AAA- 10 18 Porsche Automobiles 11,029 169% 4,106 AAA AAA 10 18 Porsche Automobiles 12,396 178% 4,463 AAA AAA 11 9 DHL 11 9 DHL 12 14 Adidas 12 14 Adidas 13 11 ALDI 13 11 ALDI 14 12 Lidl 14 12 Lidl 15 15 E.ON 15 15 E.ON 16 17 Nivea 16 17 Nivea 17 16 BASF 17 16 BASF 18 20 Fresenius 18 20 Fresenius 19 13 Deutsche Bank 19 13 Deutsche Bank 20 19 Bayer 20 19 Bayer 21 23 Edeka 21 23 Edeka 22 28 Munich Re 22 28 Munich Re 23 24 TUI 23 24 TUI 24 33 MAN 24 33 MAN 25 21 Continental 25 21 Continental 26 32 Opel 26 32 Opel 27 25 RWE 27 25 RWE 28 27 Deutsche Post 28 27 Deutsche Post 29 22 Metro Cash & Carry 29 22 Metro Cash & Carry 30 34 Evonik Industries 30 34 Evonik Industries 31 26 DB 31 26 DB 32 35 Thyssenkrupp 32 35 Thyssenkrupp 33 29 Zalando 33 29 Zalando 34 39 HeidelbergCement 34 39 HeidelbergCement 35 New Kaufl and 35 New Kaufl and 36 38 Schwarzkopf 36 38 Schwarzkopf 37 37 Ergo 37 37 Ergo 38 31 DZ Bank 38 31 DZ Bank 39 46 Infi neon Technologies 39 46 Infi neon Technologies 40 36 Hugo Boss 40 36 Hugo Boss 41 New Puma 41 New Puma 42 41 Lufthansa 42 41 Lufthansa 43 43 Media-Saturn 43 43 Media-Saturn 44 45 Linde 44 45 Linde 45 48 Hannover Re 45 48 Hannover Re 46 42 Otto 46 42 Otto 47 30 Commerzbank 47 30 Commerzbank 48 40 EnBW 48 40 EnBW 49 47 BayWa 49 47 BayWa 50 New Osram 50 New Osram

12. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 13. Understand Your Brand’s Value

Drivers of Change Brand Strength Index 2016 An ideal balanced scorecard of fundamental brand related measures Brand Value Dashboard Three key areas impact Brand Value (EURm) Brand Valuation Assumptions Effective BSI Weighting Attributes 18 131 Underlying economic assumptions used in valuation 34 $707m $882m $10,216m 6.25% Product: R&D expenditure, Widely recognised factors deployed by Brand Capital expenditure Strong brand (EUR) (EUR) Marketers to create brand loyalty and Brand [XXX] Brand Value Brand Value (EUR) Brand value (EURm) Investment Enterprise Value AA+ Investment 25% 6.25% Place: Website Ranking 729 729 Inputs market share. We therefore benchmark 78/100 616 616 650 6.25% People: Number of Employees, €650m €729m €9,399m Employee Growth brands against relevant input measures by Brand 25% Equity X 6.25% Promotion: Marketing expenditure sector against each of these factors. % = Historic brand value performance (EURm) Peer Group Comparison (USDm) $650 Brand Performance Forecast revenues $6,265 2015 Brand Strength Business Performance External Changes 2016 5.00% Familiarity 800 729 Weak brand $ $3,031 7.50% Consideration How do stakeholders feel about the brand 650 $2,328 $1,913 $707 700 607 7.50% Preference vs. competitors? Brand Strength Business Outlook Economic Outlook Customer 35% 7.50% Satisfaction 600 [XXX] [XXX]’s brand strength has increased compared to last year. Brands drive higher revenues. An investor would therefore All future returns are subject to risk. If the risk of not 7.50% Recommendation/NPS • Brand equity accounts for 50% to reflect Revenue Long Term Growth Rate Tax Rate Discount Rate 500 pay more for a brand that makes more money. receiving the forecast returns is higher (increasing the Brand the importance of stakeholder As the brand continues its sustainability drive, [XXX] has discount rate), the brand’s market is not growing as quickly Equity 5.00% Employee Score Licensing payments for the use of a After the explicit forecasts, the brand Forecasted royalties are reduced by Earnings in the future are worth less 320 Staff 5% perceptions to behaviour 400 Brand Value by Product Segment been improving across all CSR scores. It now has the [XXX]’s revenue base and the 5 year forecast growth have as expected (lower long term growth rate) or the tax rate in brand are derived from revenue. will continue to grow. However, it is the tax rate to reflect the actual than consumption now. This rate is 275 highest CSR scores it has had in the last four years across fallen this year, resulting in a loss of $177m USD to total the brand’s regions of operation is higher, then the brand’s 300 Increases or decreases in forecasted unlikely that the company will sustain amount that would be received by therefore used to reduce future 213 Environment, Employees and Governance. brand value. value is reduced and vice versa. 50% 2.50% Credit Rating • Brand Equity is important to all 37% Financial 5% revenue increase or decrease the extraordinary returns into the future the brand owner after tax. earnings to their value today. Nutrition 2.50% Analyst Recommendation stakeholder groups with customers being 200 The premium approach is also leading to significant margin However, it is important to note that this has arisen as a final valuation. so forecast industry growth rates are advantages – positively affecting “performance”. result of the company divesting a number of divisions. the most important 100 Performance Materials 1.67% Environment Score applied. 58% External 5% 1.67% Community Score 0 Other Activities 4% 1.67% Governance Score 2011 2012 2013 2014 2015 2016 2016 2015 2016 2015 2016 2015 5 year Compound Annual Growth Rate Long Term Growth Rate Tax Rate Discount Rate Brand 5 Year Forecast 6.25% Revenue (CAGR) 78 76 2.6% 3.4% Discount Rate 9.1% 8.6% Brand Strength Index Strength Growth Quantitative market, market share and 7% Brand 6.25% % Margin financial measures resulting from the Long Term Growth 3.2% 2.6% 2015 2014 2015 2014 2015 2014 2015 2014 Base Year 8,205 9,570 Performance Outputs 25% 6.25% % Forecast Margin Revenue (EURm) strength of the brand. 6.25% % Forecast Revenue Growth Tax 28.9% 30.2% 25% 2.6% 3.4% -0.8% 3.2% 2.6% +0.6% 29% 30% -1.3% 9.1% 8.6% +0.5%

Determining the Royalty Rate Brand Performance Brand Investment In order to apply the Brand Strength Index, a hypothetical royalty rate range needs to be set Competitor Royalty Rates An ideal balanced scorecard of fundamental brand related measures Proven inputs that drive the Brand Equity and financial results Following the OECD guidelines, Brand Finance sets the hypothetical brand royalty rate ranges by reference to three tests: Competitor royalty rates will be different based on different strengths of the brand, having Brand Strength Index Brand Strength Index different operating segments and company-specific long term affordability • Comparable Agreements: A search of comparable licensing agreements for brands in each industry is conducted every year. The margin analyses Brand Investment Brand Performance are then compared against the royalty rates found in these agreements to analyse the importance of brand in the industry and set an appropriate 1.2% average industry royalty rate. 10.0 1.0% 10.0 9.3 • Industry Margins: An analysis of 25% to 40% of margins, generally accepted as rules of thumb for licensing rates for all intangible assets in a 8.9 8.9 8.0 7.7 company. These rates are adjusted to take into account the importance of brand in a given industry. 8.0 8.1 0.8% 0.8% 0.8% 0.8% 6.4 6.0 • Affordability: Thirdly, an analysis of the brand’s specific royalties is conducted. If the brand has been able to sustain extraordinary profits over an 0.7% 6.0 5.3 0.6% extended time it is likely that hypothetical brand owners would be willing to pay closer to the company’s margins than the industry average. In the 0.6% 0.6% 0.6% 5.0 4.0 case of Brand Finance’s League Table models, affordability will be based on the forecast EBIT. 4.0 [XXX]DSM Best in Class Competitor Average 0.5% DSM[XXX] Best in Class Competitor Average 2.0 • Average industry royalty rate ranges can be seen below 2.0 0.0 High 0.0 Effective Effective Weighting 6.25% 6.25% 6.25% 6.25% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Weighting 6.25% 6.25% 6.25% 6.25% DSM BASF Dow Du Pont Akzo Nobel Akzo Nobel Best in Best in Class [XXX] Du Pont Multiple Akzo Nobel Mid Class Akzo Nobel Dow Akzo Nobel Du Pont Product Place People Promotion [XXX] Revenue Margin % Forecast Revenue Growth % Forecast Margin % Low Relative quality of the brand’s investment in Relative quality of a brand’s distribution Relative quality of the human network Relative quality of the brand’s promotions. its products. The measure can include R&D network. It can include the quality of supporting the brand. This may include the Marketing investment, the quality of visual Akzo Nobel – Paints and spend and capital expenditure. logistical infrastructure available to the size of the support network, its likely future identity and the effectiveness of the [XXX] BASF Dow Du Pont Akzo Nobel - Corporate The brand’s ability to drive a The brand’s ability to drive a The brand’s ability to improve Coatings brand, the quality of its online presence, or growth or the investment in workforce brand’s social media is covered by this volume premium. Implied by price premium. Implied by business prospects across the number and quality of its retail outlets. training and human resources. measure. 78 78 80 80 82 82 current and future revenue. current and future margins. various KPIs

A Brand Value Report provides a complete + Internal understanding of brand Royalty Rates Trademark Audit breakdown of the assumptions, data + Brand value tracking sources and calculations used to arrive at + Competitor benchmarking Analysis of competitor royalty rates, industry Analysis of the current level of protection for the your brand’s value. + Historical brand value royalty rate ranges and margin analysis used to brands word marks and trademark iconography Each report includes expert recommendations determine brand specific royalty rate. highlighting areas where the marks are in need for growing brand value to drive business of protection. performance and offers a cost-effective way to Brand Strength Index + Transfer pricing gaining a better understanding of your position + Licensing/ franchising negotiation + Highlight unprotected marks against competitors. A breakdown of how the brand performed on + International licensing + Spot potential infringement various metrics of brand strength, benchmarked + Competitor benchmarking + Trademark registration strategy A full report includes the following sections against competitor brands in a balanced which can also be purchased individually. scorecard framework. For more information regarding our Brand Value Cost of Capital Reports, please contact: + Brand strength tracking Brand Valuation Summary + Brand strength analysis A breakdown of the cost of capital calculation, Alex Haigh + Management KPI’s including risk free rates, brand debt risk Director of League Tables, Brand Finance Overview of the brand valuation including + Competitor benchmarking premiums and the cost of equity through CAPM. executive summary, explanation of changes in [email protected] brand value and historic and peer group + Independent view of cost of capital for internal comparisons. valuations and project appraisal exercises +44 (0)20 7389 9400

14. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 15. How we can help Contact details

1. Valuation: What are my intangible assets 2. Analytics: How can I improve marketing worth? effectiveness? Contact us Our offices Valuations may be conducted for technical purposes Analytical services help to uncover drivers of demand For brand value report and to set a baseline against which potential strategic and insights. Identifying the factors which drive enquiries, please contact: brand scenarios can be evaluated. consumer behaviour allow an understanding N 2. IO AN of how brands create bottom-line impact. Alex Haigh T A A L Director of League Tables U Y L T Brand Finance A I V C • Branded Business Valuation • Trademark Valuation [email protected] . S • Market Research Analytics • Brand Audits 1 • Intangible Asset Valuation • Brand Contribution Brand & • Brand Scorecard Tracking • Return on Marketing Investment

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4. Transactions: Is it a good 3 3. Strategy: How can I increase

Robert Haigh deal? Can I leverage my S the value of my branded business? T

T C

intangible assets? R Marketing & Communications

A Strategic marketing services enable brands A

N Director Brand Finance

E to be leveraged to grow businesses. Scenario

Transaction services help buyers, sellers and A

Y T . 4 owners of branded businesses get a better deal modelling will identify the best opportunities, [email protected] by leveraging the value of their intangibles. ensuring resources are allocated to those activities which have the most impact on brand and business value. For all other enquiries, please contact: • M&A Due Diligence • Franchising & Licensing • Brand Governance • Brand Architecture & Portfolio Management • Tax & Transfer Pricing • Expert Witness • Brand Transition • Brand Positioning & Extension [email protected] +44 (0)207 389 9400 For further information on Brand Finance®’s services and valuation experience, please contact your local representative: Country Contact Email address Australia Mark Crowe [email protected] Brazil Pedro Tavares [email protected] MARKETING FINANCE TAX LEGAL linkedin.com/company/ Canada Bill Ratcliffe [email protected] brand-finance China Minnie Fu [email protected]

We help marketers to connect We provide financiers and We help brand owners and We help clients to enforce and Caribbean Nigel Cooper [email protected] their brands to business auditors with an independent fiscal authorities to understand exploit their intellectual East Africa Jawad Jaffer [email protected] performance by evaluating the assessment on all forms of the implications of different property rights by providing France Victoire Ruault [email protected] return on investment (ROI) of brand and intangible asset tax, transfer pricing and brand independent expert advice in- facebook.com/brandfinance Germany Dr. Holger Mühlbauer h.mü[email protected] brand based decisions and valuations. ownership arrangements. and outside of the courtroom. Greece Ioannis Lionis [email protected] strategies. Holland Marc Cloosterman [email protected] India Ajimon Francis [email protected] + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation twitter.com/brandfinance Indonesia Jimmy Halim [email protected] + Brand Contribution + Brand Contribution + Brand Contribution + Brand Contribution Italy Massimo Pizzo [email protected] + Trademark Valuation + Trademark Valuation + Trademark Valuation + Trademark Valuation Malaysia Samir Dixit [email protected] + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation Disclaimer + Brand Audit + Brand Audit + Brand Audit + Brand Audit Mexico Laurence Newell [email protected] Brand Finance has produced this study LatAm (exc. Brazil) Laurence Newell [email protected] + Market Research Analytics + Market Research Analytics + Market Research Analytics + Tax & Transfer Pricing with an independent and unbiased + Brand Scorecard Tracking + Brand Scorecard Tracking + Franchising & Licensing + Expert Witness analysis. The values derived and Middle East Andrew Campbell [email protected] opinions produced in this study are Nigeria Babatunde Odumeru [email protected] + Return on Marketing + Return on Marketing + Tax & Transfer Pricing based only on publicly available Investment Investment + Expert Witness information and certain assumptions Portugal Pedro Tavares [email protected] + Brand Transition + Brand Transition that Brand Finance used where such Russia Alexander Eremenko [email protected] data was deficient or unclear . Brand + Brand Governance + Brand Governance Finance accepts no responsibility and Scandinavia Alexander Todoran [email protected] + Brand Architecture & + Brand Architecture & will not be liable in the event that the Singapore Samir Dixit [email protected] Portfolio Management Portfolio Management publicly available information relied upon is subsequently found to be South Africa Jeremy Sampson [email protected] + Brand Positioning & + Brand Positioning & inaccurate. Spain Lorena Jorge ramirez [email protected] Extension Extension Sri Lanka Ruchi Gunewardene [email protected] + Franchising & Licensing + Mergers, Acquisitions and The opinions and financial analysis expressed in the report are not to be Switzerland Victoire Ruault [email protected] Finance Raising Due construed as providing investment or Diligence business advice. Brand Finance does Turkey Muhterem Ilgüner [email protected] not intend the report to be relied upon UK Alex Haigh [email protected] + Franchising & Licensing for any reason and excludes all liability + Tax & Transfer Pricing to any body, government or USA Ken Runkel [email protected] + Expert Witness organisation. Vietnam Lai Tien Manh [email protected]

16. Brand Finance Germany 50 May 2017 Brand Finance Germany 50 May 2017 17. Contact us.

The World’s Leading Independent Branded Business Valuation and Strategy Consultancy T: +44 (0)20 7389 9400 E: v.ruault@brandfi nance.com www.brandfi nance.com

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