The Pernod Ricard team were in London today (February 18) to flesh on the bones for their half year interim results which were announced last week.
The full results of Brands by Value will be published on Drinksint.com on June 4 and the June edition of Drinks International magazine, but here we present a first look at ranks 26-50.
Brand value in brief
Brand value is the amount that an independent third party might pay to buy the trademark and associated intellectual property. For example, Jose Cuervo's brand value represents Brand Finance’s opinion on how much someone should pay to buy the Jose Cuervo trademark.
As part of a brand valuation exercise, the strength of a brand is evaluated against its peers across a number of measures, including emotional connection, financial performance and sustainability, among others. This is used to arrive at a brand rating which ranges from D to AAA.
This year’s Brands by Value table continues to see a volume shift towards local brands from developing countries. The potential for these brands, especially from China, is immense and opportunities to develop variants to enhance margin – and, in turn, cross borders – remain. Margin growth remains with the global power brands however.
Famous Grouse continues to be the goose that laid the golden egg for Edrington Group. Its brand value is up US$69.6 million to US$398 million following an increase in case sales of 400,000, making it the biggest riser in the table’s lower half. Famous Grouse also has the strongest brand rating at AAA-, suggesting the consumer affection and loyalty needed for continued growth.
The table is dominated by Diageo and Pernod Ricard with over half of the 25 brands in the lower half of the table owned by these two companies. Diageo’s Ketel One has enjoyed the second largest jump in brand value, US$65.9 million, bringing its total to US$381 million.
Despite the success of Famous Grouse, it has been a less successful year for some other whiskies. Glenfiddich has dropped from 27th in 2012 to 35th in this year’s table after losing US$39 million in brand value. Meanwhile J&B has had an even more difficult year. Following a fall in case sales of 200,000 its brand value has fallen US$46.7 million to US$371 million, pushing out of the top half to 30th place in this year’s list.
Brand Finance calculates brand value using the Royalty Relief approach. This involves estimating the likely future sales attributable to a brand and calculating a royalty rate that would be charged for the use of the brand.
The steps in this process include:
- Calculate brand strength on a scale of 0-100 according to a number of attributes, such as emotional connection, financial performance and sustainability. This score is known as the Brand Strength Index
- Determine the royalty rate range for the alcoholic drinks sector by reviewing comparable licensing agreements sourced from Brand Finance’s database of licence agreements and other online databases