Economic downturn knocks $67bn off top 100 global brands

The recession has wiped $67bn (£38bn) off the brand value of the top 100 global brands, according to a report by Brand Finance, although value for money brands are doing well as luxury brands such as Nike suffer.

Between January and September the brand value of the 100 most valuable global brands has decreased by 4.2%, a drop of $67bn (£38bn).

The report reveals that value for money brands like Wal-Mart, AT&T, Exxon and McDonalds are still performing well, but brands like Starbucks, Nike, Coca-Cola and L'Oreal are declining in value. As the price of oil remains buoyant so does the value of leading petrochemical brands, with four of the top five brands that recorded an increased brand value belonging to leading brands in the oil and gas sector. ExoonMobil is up 19.4%, BP, 18.3%, Chevron, 17.9% and Shell 12.8%.

The only other sector to record a significant increase in overall brand value is healthcare, suggesting that despite a decrease in spending, consumers are prioritising health and well-being.

Johnson & Johnson has outperformed its competitors by jumping 16 places to 84 in the table, illustrating the trend across the sector.

Everyday consumer brands have benefited as consumers trade-down and rediscover good value products. The report cites McDonald's as an example of a brand that has benefited from successfully re-positioning as a healthier, value-for-money option.

The fast food chain's value has increased by 9% while brands such as Starbucks struggle to gain share as consumers cut unnecessary spending habits and turn to more essential goods.

Wal-Mart has overtaken Coca-Cola to become the most valuable global brand in the Brand Finance 500. Its value has increased by 9% to $23,968m since December last year. Wal-Mart has turned the recession to its advantage by leveraging its reputation for low prices.

Citi has dropped out of the top 10 to 15th place reflecting its poor performance in the current sub-prime crisis. This allowed Vodafone to enter the top 10 in ninth place as the leading telecoms brand, closely followed by Nokia.

David Haigh, CEO of Brand Finance, said: "There is clear evidence that basic, value for money brands like Wal-Mart, AT&T, Exxon and McDonald's are performing very strongly, particularly when they invest consistently in advertising and marketing. "By contrast unnecessary or discretionary brands like Starbucks, Nike, Coca Cola and L'Oreal are declining in value as consumers watch their finances more carefully."
He added that there is also evidence at the global level that developing world brands are growing rapidly, such as Samsung, Tata, Bank of China and Lukoil.

Brand Finance released the 2008 version of its report in March, but decided to revisit its findings following the global economic crisis.

The study is calculated by Brand Finance based on the "Royalty from Relief" methodology, which assumes that a company does not own its brand name and then calculates how much it would have to pay to license it from a third party.