Friday, October 18, 2013

Best Global Brands 2013

According to a report by Interbrand released late last month, Apple (AAPL) is now the most valuable global brand.

Coca-Cola (KO) had held the top spot for 13 straight years in prior Interbrand reports.

It now sits at number 3.

Top Ten Most Valuable Global Brands
1 Apple
2 Google (GOOG)
3 Coca-Cola
4 IBM (IBM)
5 Microsoft (MSFT)
6 General Electric (GE)
7 McDonald's (MCD)
8 Samsung (SSNLF)
9 Marlboro (INTC)
10 Toyota (TM)

Website: Best Global Brands 2013

Press Release: Interbrand's 14th Annual Best Global Brands Report

Report: Best Global Brands 2013

This top ten ranking of global brands has some similarities to the entirely separate ranking of global brands released earlier this year by Millward Brown.

Apple, Google, Coca-Cola, IBM, Microsoft, and McDonald's make the top ten on both lists. The specific value these two rankings place on each brand is in some cases, not surprisingly, very different (e.g. the study earlier this year puts Apple's brand value at $ 185 billion, the newer ranking places it at more like $ 98 billion).

Some of the are differences between the two rankings will naturally come down to methodology.

Interbrand's methodology is explained here. For inclusion in their rankings, a brand needs to have a "truly global" presence as defined by their methodology.

"In measurable terms, this requires that:

- At least 30 percent of revenues must come from outside the brand's home region
- It must have a presence in at least three major continents, as well as broad geographic coverage in emerging markets
- There must be sufficient publicly available data on the brand's financial performance
- Economic profit must be expected to be positive over the longer term, delivering a return above the brand’s operating and financing costs
- The brand must have a public profile and awareness above and beyond its own marketplace.

These requirements...lead to the exclusion of some well-known brands that might otherwise be expected to appear in the ranking. The Mars and BBC brands, for example, are privately held and do not have publicly available financial data. Walmart, although it does business in international markets, often does so under a variety of brands and, therefore, does not meet Interbrand's global requirements. 

For similar reasons, brands in several sectors have been excluded."

These are:

Telecommunications - strong ties to their national markets but "awareness challenges" further away from home.
Airline industry - capital intensiveness and low margins result in brands that "struggle to achieve positive economic profits over the long term."
Pharmaceutical companies - consumer relationship is generally with the product brands (more so than the corporate brand owner) and "insufficient publicly disclosed financial data on pharmaceutical product brands."

Top 100 Global Brands

Among the top 100, Nokia's (NOK) brand, took the biggest hit in both absolute and percentage terms. Not exactly a surprise.

Google was the biggest gainer in absolute terms.

Facebook (FB) was the biggest gainer in percentage terms.

To me, it seems rather unlikely that brand value could ever be pinned down -- and I mentioned this in the post on Millward Brown's rankings -- as precisely as might be implied by these rankings.

Still, these studies are provide some indication which brands matter around the world and how -- in at least a rough sense -- their value might be changing.

Adam

Established long positions in AAPL, GOOG, KO, MSFT, and GE at much lower than recent prices. Recently added small new IBM position.
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