Mktg - Global brands lose $67 billion in valuation

Manika Gupta

NEW DELHI: The global credit crunch is hitting the value of many brands on the main street worldwide. According to a report prepared by Brand Finance
PLc, an Australia-based independant global valuation consultancy that tracks 500 most valuable brands across the world, between January and September, value of the 100 most valuable global brands decreased by 4.2%, a drop of $67 billion.

However, Asian brands like Tata, Samsung, Bank of China and Lukoil continue to grow rapidly. The report also reveals that enterprise value of the 100 most valuable global branded businesses decreased by 13.3% in the same period, a drop of $1.6 trillion.

It shows that a major shakeout has taken place amongst the brands due to a US recession fear, visible from shrinking consumer wallets and decline in demand.

The basic, value-for-money brands like Wal-Mart, AT&T, Exxon and McDonalds are performing strongly, particularly when they invest consistently in advertising and marketing. But value of brands like Starbucks, Nike, Coca-Cola and L'Oreal is declining as consumers are watching their finances more carefully, the report said.

McDonalds' brand value gained 9% after it re-positioned itself as a healthier, value-for-money option. But brands like Starbucks struggled to gain share of (shrinking) wallet as consumers are cutting unnecessary spending habits and turning to essential goods.

The trend of value-for-money brands gaining ground is also reflected in the fact that healthcare has recorded an overall increase in brand value, suggesting that despite a decrease in spending, consumers are prioritizing health and well-being.
The report said that FMCG major Johnson & Johnson does especially well and outperforms its competitors.

Retail sector's total enterprise value has risen by 9.1% as customers turn to value-for-money goods in times of recession. While brand value of financial services sector has decreased across the board, values of oil and gas sector, including ExxonMobil, BP, Chevron and Shell have increased.

Interestingly, Wal-Mart has overtaken Coca-Cola to become the most valuable global brand in the Brand Finance 500 ranking.