Australia 100 2019 The annual report on the most valuable and strongest Australian brands January 2019 Contents. About Brand Finance 4 Get in Touch 4 Request Your Brand Value Report 5 Foreword 6 Brand Value Analysis 8 Brand Strength Index Analysis 11 Sector Reputation Analysis 12 Brand Finance Australia 100 (AUD m) 14 Definitions 16 Brand Valuation Methodology 18 Market Research Methodology 19 Stakeholder Equity Measures 19 Consulting Services 20 Brand Evaluation Services 21 Communications Services 22 Brand Finance Network 24 Brand Finance Australia 100 January 2019 3 Request Your About Brand Finance. Brand Value Report. Brand Finance is the world’s leading independent A Brand Value Report provides a complete Each report includes expert recommendations for growing brand valuation and strategy consultancy. breakdown of the assumptions, data sources, and brand value to drive business performance and offers a calculations used to arrive at your brand’s value. cost-effective way to gaining a better understanding of Brand Finance was set up in 1996 with the aim of ‘bridging your position against competitors. the gap between marketing and finance’. For more than 20 years, we have helped companies and organisations of all types to connect their brands to the bottom line. We pride ourselves on four key strengths: What is a Brand Value Report? What are the benefits of a Brand Value Report? + Independence + Transparency Brand Valuation Summary + Technical Credibility + Expertise + Internal understanding of brand + Brand value tracking We put thousands of the world’s biggest brands to the + Competitor benchmarking Insight test every year, evaluating which are the strongest and + Historical brand value most valuable. Brand Strength Index Brand Finance helped craft the internationally + Brand strength tracking recognised standard on Brand Valuation – ISO 10668, + Brand strength analysis and the recently approved standard on Brand Evaluation + Management KPIs Strategy – ISO 20671. + Competitor benchmarking Royalty Rates + Transfer pricing Get in Touch. + Licensing/franchising negotiation + International licensing Benchmarking For business enquiries, please contact: + Competitor benchmarking Mark Crowe Managing Director Australia Cost of Capital [email protected] + Independent view of cost of capital for internal For all other enquiries, please contact: Global Forum 2019 valuations and project appraisal exercises [email protected] Education +61 2 8249 8320 Customer Research + Utilities + Tech Understanding the Value of linkedin.com/company/brand-finance + Insurance + Auto Geographic Branding + Banks + Hotels 2 April 2019 + Telecoms + Beers twitter.com/brandfinance + Airlines + Oil & Gas Communication Join us at the Brand Finance Global Forum, an action-packed day-long event at the Royal facebook.com/brandfinance Automobile Club in London, as we explore how For more information regarding our geographic branding can impact brand value, attract Brand Value Reports, please contact: customers, and influence key stakeholders. [email protected] Understanding www.brandfinance.com/events 4 Brand Finance Australia 100 January 2019 Brand Finance Australia 100 January 2019 5 Foreword. Telstra Rings The Australia 100 highlights how brands are contributing value to organisations and their shareholders. The total value in this year’s rankings is over $166 billion. This figure demonstrates the importance of effectively managing brand performance. Brands are the most important value creating asset in business today. Up Fourth Successful organisations recognise the need to understand brand value and brand strength when making informed strategic decisions. Brands drive demand, motivate staff, gain business and reassure financial markets. Strong brands create high ‘brand equity’ with customers and other stakeholders, thus enabling a business to Consecutive differentiate itself in the market, increase margins, sell greater volumes and promote repeat business. Mark Crowe By placing a financial value on such a powerful asset, it compels boards and Year as Managing Director, management to understand and recognise the need for brand investment to drive Brand Finance Australia revenue and guard against reputational risk. From the perspective of analysts, pricing shares with insufficient information about a Australia’s company’s intangible assets including brand, means investors are often forced to act with one eye closed. In turn, this has a host of negative effects including share price volatility for one. Most Valuable This points to the need for improved financial reporting, whereby boards should be required to disclose their opinion of the fair value of the underlying values of brands and indeed all key intangible assets including under their control. Brand Finance’s research revealed the compelling link between strong brands and Brand. 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. + Telstra remains Australia’s most valuable brand 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 despite brand value dropping 7% about brands, how to value them and how to use that information to benefit the business. + Banks struggle to grow brand value in aftermath of government pressures; Colonial First State worst hit with brand value falling 28% + Qantas soars to become Australia’s strongest brand with a score of 86.6 out of 100 and an AAA rating + Retail brands enjoy strong growth in face of online competition with Woolworths' brand value up 23% 6 Brand Finance Australia 100 January 2019 Brand Finance Australia 100 January 2019 7 Brand Value Analysis. Brand Value Analysis. Banks tarnished by government Top 10 Most Valuable Brands pressures 0 1 Commonwealth Bank (brand value marginally up to 1 $10.6 billion) remains Australia’s most valuable banking 2019: $14,681m -7.3% brand, ahead of the other big banks, with ANZ (brand 2018: $15,836m value down 13% to $9.1 billion), nab (brand value up 4% to $8.6 billion) and Westpac (brand value down 2% 2 4 to $7.3 billion) enduring mixed years. 2 2019: $11,204m +23.1% Retail brands enjoy strong growth 2018: $9,099m Near the top of the ranking, Woolworths and Coles 2 5 both achieved steady brand value growth. Across the 3 board, the brand value of other retailers also grew 2019: $10,958m +30.9% strongly, with Bunnings (up 33% to $2.0 billion), 2018: $8,371m Westfield (up 30% to $2.0 billion), Kmart (up 35% to $1.5 billion) JB Hi-Fi (up 14% to $1.4 billion) and 1 2 Telstra dials up brand value Harvey Norman (up 34% to $1.2 billion) all recording 4 solid results. Despite significant fears a year ago, the 2019: $10,558m +0.1% Telstra remains Australia’s most valuable brand Telstra remains Australia’s most arrival of Amazon into the broader Australian retail 2018: $10,548m despite its brand value subsiding 7% to $14.7 billion. valuable brand, with its key market has not yet harmed the value of Australian Woolworths (brand value up 23% to $11.2 billion) retail brands. 1 3 and Coles (brand value up 31% to $11.0 billion) both customer segments delivering high 5 jumped two places to 2nd and 3rd, respectively. The quality and reliable operations right 2019: $9,108m -13.3% 2018: $10,502m two Australian retail giants have grown their brand across its entire portfolio of values strongly this year despite the threat of online competition from Amazon. telecommunications services. Brand Value over Time 6 0 6 Telstra continues to face domestic 2019: $8,606m Telstra’s fall in brand value was primarily driven 200 +3.9% challenges from a variety of 2018: $8,286m by a decrease in brand strength as the telco giant continues to face many challenger brands in its competitors in its core services, key service areas of mobile, internet and landline putting downward pressure on its 7 2 8 telecommunications. Despite this fall in brand 150 2019: $8,267m strength, it remains Australia’s 5th strongest brand, overall brand value. Looking ahead, +27.2% 2018: $6,499m and clearly continues as Australia’s dominant Telstra’s leadership will need to telecommunications carrier. On the other hand, Optus ensure that they are able to leverage 1 7 (brand value up 6% to $5.3 billion) increased its brand 100 8 strength this year, overtaking Telstra to become the its strong existing brand strength to AUD bn AUD 2019: $7,260m -2.3% country’s strongest telecommunications brand, and ensure that it does not merely 2018: $7,428m Australia’s 4th strongest brand overall. become a dumb pipe to carry smart services: this offers Telstra the 50 0 Elsewhere, mining giant BHP (brand value up 27% to 9 9 $8.3 billion) continues to derive strong results from their opportunity to grow commercial 0 2019: $5,333m +6.1% major 2017 re-branding exercise, remaining Australia’s revenue by extracting greater value 2018: $5,025m most valuable business-to-business brand. BHP’s corporate leadership has invested significant effort from online supply chains. 2013 2014 2015 2016 2017 2018 2019 0 in charting out a forward-looking brand vision based 10 10 around growth and security, despite the risk of global Mark Crowe ● Telstra ● Woolwoths ● Coles 2019: $4,650m +17.7% financial challenges. Managing Director, Brand Finance Australia ● Commonwealth Bank ● ANZ 2018: $3,952m 8 Brand Finance Australia 100 January 2019 Brand Finance Australia 100 January 2019 9 Brand Value Analysis. Brand Strength Analysis. Brand Value Change 2018-2019 (%) Qantas soars to become Australia’s Top 10 Strongest Brands strongest brand EnergyAustralia 95.3% 2 3 In addition to calculating brand value, Brand Finance 1 Amcor 74.9% also determines the relative strength of brands 2019: 86.6 AAA 68.3% +3.2 Carsales.Com through a balanced scorecard of metrics evaluating 2018: 83.4 AAA- Asaleo Care Ltd 65.8% marketing investment, stakeholder equity, and business Tabcorp 61.8% performance.