Economic Downturn Wipes $67 Billion Off Top Global Brands

The global ‘credit crunch’ is hitting the value of brands globally, though Asian brands such as Samsung, Tata, Bank of China and Lukoil continue to grow rapidly, according to a Brand Finance report released last week.

Since January 2008, the global economy has been hit by rising commodity prices, the credit crunch, rising unemployment and tumbling share prices. As a result, Brand Finance has revised its report on the world’s 500 Most Valuable Brands, which was released in March this year.

The update reveals that between January and September 2008, the enterprise value of the 100 most valuable global branded businesses decreased by 13.3%, a drop of US$1.6 trillion.

In the same period, the brand value of the 100 most valuable global brands decreased by 4.2%, a drop of US$67 billion.

Four of the top five brands that increased their brand value sit within the oil and gas sector, including ExxonMobil, BP, Chevron and Shell.

The only other sector to record a significant increase in overall brand value was healthcare, while the retail sector’s total enterprise value has risen by 9.1% as customers turn to value-for-money goods in times of recession.

As a result, brands like McDonald’s have benefited by re-positioning themselves as healthier, value-for-money options.

Wal-Mart has overtaken Coca-Cola to become the most valuable global brand in the BrandFinance 500 ranking. Wal-Mart has turned the US recession to its advantage by leveraging its reputation for low prices.

Vodafone has entered the top 10 global brands in ninth place as the leading telecommunications brand with a brand value of US$26,688 million, closely followed by Nokia.

“There is clear evidence that basic, value for money brands like WalMart, AT&T, Exxon and McDonalds 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,” says David Haigh, CEO of Brand Finance.

“There is also evidence at the global level that developing world brands are growing rapidly. Samsung, Tata, Bank of China and Lukoil are all good examples of this phenomenon.”

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