The total value of Europe’s top 500 most valuable brands has dropped 10% during the COVID-19 pandemic from €1.96 trillion in 2020 to €1.76 trillion in 2021, according to the latest report by Brand Finance – the world’s leading brand valuation consultancy.
Brand Finance’s ranking has been expanded to include the old continent’s 500 most valuable brands for the first time, allowing for comparisons with the world’s two other major economies – the United States and China. The US is in a league of its own, with its top 500 reaching a total brand value of a staggering €3.40 trillion. While Europe comes in second place, the impact of the COVID-19 pandemic has undermined its standing and China is quickly catching up, with its top 500 brands totalling €1.65 trillion in brand value.
Richard Haigh, Managing Director, Brand Finance, commented:
“The COVID-19 pandemic has ravaged Europe and the world alike, and the impact on the old continent’s top brands cannot be ignored, with the total brand value of the top 500 ranking decreasing 10% year-on-year. The pandemic has tested the resolve of Europe’s top brands – some have truly thrived and benefitted as consumers completely shifted their habits, whereas others will be hoping that the continent’s rapid vaccination programme enables them to return to normal operations soon.”
Automobiles speed ahead as most valuable sector
Automobiles is the most valuable sector across the continent, with the 27 brands that feature in the Brand Finance Europe 500 2021 ranking accounting for 14% of the total brand value (€237.7 billion). German brands still command the auto industry across Europe, with the seven brands represented totalling an impressive €171.5 billion or three quarters of the sector’s total. Mercedes-Benz once again leads the pack as the most valuable brand in Europe, with a brand value of €49.6 billion. Volkswagen (down 1% to €40.0 billion), BMW (down 6% to €34.4 billion), and Porsche (down 5% to €29.2 billion) all claim places in the top 10 in 3rd, 5th, and 6th respectively.
Despite maintaining its position at the top, Mercedes-Benz has recorded a 16% decline in brand value this year. It has been a difficult year for most traditional car manufacturers – Mercedes included – with sales impacted by COVID-19. The iconic German marque also struggled to formulate a coherent electric mobility strategy and communicate a clear vision for its electric car models.
Volkswagen has recorded healthier results, its brand value only recording a marginal 1% drop. The brand has continued to focus on its ‘New Volkswagen’ strategy – described as a new era for the brand, as well as implementing its TOGETHER 2025+ strategy – with the ultimate aim of selling 50 different fully-electric vehicles and another 30 plug-in hybrid options. Should the brand be successful, it will overtake Tesla to become the world’s largest electric carmaker.
Ferrari is Europe’s strongest brand
In addition to measuring overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, Ferrari is Europe’s strongest brand – and the second strongest brand in the world according to the Brand Finance Global 500 2021 ranking – with a Brand Strength Index (BSI) score of 93.9 out of 100 and corresponding elite AAA+ brand strength rating.
Ferrari reacted proactively to the pandemic, initially shutting down production and then reopening with a focus on creating a safe working environment. This both minimised disruption and reinforced the brand’s reputation as a high-quality and responsible firm. In line with this, Ferrari ranks high for reputation in our Global Brand Equity Monitor study, particularly in Western Europe (in the top 3 of all brands researched in France, Italy, and the UK). Ferrari remains a highly desired brand, albeit aspirational rather than accessible for many.
Alongside revenue forecasts, brand strength is a crucial driver of brand value. As Ferrari’s brand strength maintained its rating, its brand value dropped only slightly, down 4% to €7.9 billion. For years, Ferrari has utilised merchandise to support brand awareness and diversify revenue streams and is now taking steps to preserve the exclusivity of the brand, planning to reduce current licensing agreements by 50% and eliminate 30% of product categories.
Banking sector down 20%
As governments scramble to stimulate economic growth in the face of the ongoing global health crisis, and profits and interest rates take a hit, it is unsurprising that Europe’s banking sector has recorded the most dramatic cumulative brand value loss among the main sectors of the economy. The total brand value in the industry has declined by 20% – from €225.8 billion in 2020 to €181.8 billion in 2021 – and three brands have dropped out of the ranking this year, bringing the total number to 53.
The UK’s HSBC is the highest ranked banking brand, but only sits in 21st spot, down six places from last year following an 18% brand value decrease to €14.5 billion. Over the last year, HSBC has had to navigate a dent in profits, lower interest rates sparked by the pandemic, political tensions between the US and China, and the uncertainty surrounding Brexit, all of which caused the brand’s profits to plunge by 65% in the first half of 2020.
Similarly, Spain’s leader in the sector, Santander, has seen its brand value go down 23% to €12.2 billion, dropping out of the top 25 this year to 26th position. Its larger presence in the South American markets has meant the risk exposure is larger than its Spanish counterparts’ and thus the turbulence of the last year has meant expected returns are less optimistic than previous years, impacting overall brand value.
Other national banking leaders from across the continent have fared slightly better, climbing the ranking despite losing brand value: France’s BNP Paribas (down 12% to €10.5 billion), the Netherlands’ ING (down 17% to €8.5 billion), and Switzerland’s UBS (down 11% to €7.4 billion) have moved up to 29th, 38th, and 51st positions, respectively.
Sber cashes in as strongest banking brand
Russia’s market leader, Sber, is the strongest banking brand across the continent and globally according to the Brand Finance Banking 500 2021 ranking. The brand has successfully increased its brand strength year-on-year to reach an impressive BSI score of 92.0 out of 100 and the coveted AAA+ brand strength rating.
As the largest bank in Russia, Sber has benefitted from its stable brand and high levels of customer loyalty. These have only been boosted by the recent rebranding to consolidate its ecosystem of services – encompassing banking, health, and logistics, among others – around the Sber brand. Sber is poised for further success, as the company’s pledge to spend more on its brand in the coming year is likely to further boost its BSI score.
In our original market research, Sber consistently outperforms its peers in overall reputation and familiarity – it is widely known, always top-of-mind, and well-regarded. As a result, recommendation is high. Its ubiquitous presence and – in consumers’ eyes – by far the best digital offering ensure high mental and physical availability, which are strong foundations for brand strength.
David Haigh, CEO of Brand Finance, commented:
“Sber’s successful rebranding as a cross-sector tech brand can be an example to other market leaders worldwide. While some rest on their laurels and are often surprised by disruptive challengers, Sber is focused on the future, innovating and modernising with their customers’ best interests in mind.”
Retail sector posts brand value growth
Bucking the trend across Europe’s largest industries, the retail sector has recorded a 4% uptick in cumulative brand value. It is the third most valuable sector, behind autos and banking, with the 49 brands that feature accounting for 9% of the total brand value in the Brand Finance Europe 500 2021 ranking.
Unsurprisingly, various types of retailers have been impacted by the pandemic differently, as consumer habits have been forced to change. Notably, delivery apps and e-commerce platforms are among the fastest growers in the ranking this year. Delivery apps have benefited from the displacement of hospitality spend, where demand for quality food and small indulgences cannot be fulfilled by lockdown-hit restaurants and bars, with consumers turning to takeaways.
Germany’s Delivery Hero is the fastest-growing brand in the ranking, following an impressive 148% brand value growth to €3.2 billion. Similarly, Just Eat is the second fastest-growing brand, up 112% to €2.5 billion.
Nevertheless, brick-and-mortar retailers IKEA (down 13% to €15.3 billion), Aldi,and Lidl stillclaim the podium for the sector’s most valuable brands. The German supermarket rivals have posted contrasting results, however, with Aldi recording a 2% increase in brand value and Lidl a 14% decrease.
Aldi (brand value €13.2 billion) has embarked on a foray into the online retail space, successfully pivoting its offering in the face of the pandemic. The same strategy has not been undertaken by Lidl (brand value €9.6 billion), with the CEO of the UK arm, Christian Härtnagel, arguing the pandemic has artificially inflated demand for online shopping and that the costs are simply too high.
German brands represent a quarter of total brand value
With the nation’s 65 brands making up 25% of the total brand value in the ranking, Germany is well ahead of the pack.
France sits in second, with 91 brands featuring and their brand value equating to 20% of the total. Orange (down 1% to €16.3 billion), Total (down 26% to €15.4 billion),and AXA (up 1% to €14.8 billion) are the top three most valuable French brands, claiming 13th, 15th, and 19th spots, respectively. Orange has continued its focus on the deployment of 5G, which as of the beginning of 2021, is present in 160 cities.
Brexit puts Britain on backfoot?
Despite the UK still having the greatest number of brands represented at 101, it is the only major economy to lose brands in the ranking, with nine brands dropping out the ranking this year. After Britain’s official exit from the European Union in January 2020, the true impact of its departure is yet to be seen, especially given the pandemic turmoil of the previous year.
A total of 334 or two in three among the top 500 brands hail from the EU, a number that has dropped a considerable amount now that the UK has left.
Very few brands from Central and Eastern Europe are represented, with only 22 featured in total. The majority of these brands hail from Russia, whose 15 brands account for 2% of the total brand value in the ranking.
Richard Haigh, Managing Director, Brand Finance, commented:
“With over half of the brands in the top 500 hailing from just three nations – Germany, France, and the UK – the smaller economies have a long way to go to stamp their authority across the continent. The focus should be shifted towards investment in building up and supporting strong homegrown brands to expand internationally, which will in turn drive local economies forward.”
Note to Editors
Every year, Brand Finance puts 5,000 of the biggest brands to the test, evaluating their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across all sectors and countries. Europe’s 500 most valuable brands are included in the Brand Finance Europe 500 2021 ranking.
The full rankings, additional insights, charts, more information about the methodology, as well as definitions of key terms are to be found in the Brand Finance Europe 500 2021 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Please see below for a full explanation of our methodology.
About Brand Finance
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Definition of Brand
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand value refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, published brand values can be different.
These differences are similar to the way equity analysts provide business valuations that are different to one another. The only way you find out the “real” value is by looking at what people really pay.
As a result, Brand Finance always incorporates a review of what users of brands actually pay for the use of brands in the form of brand royalty agreements, which are found in more or less every sector in the world.
This is known as the “Royalty Relief” methodology and is by far the most widely used approach for brand valuations since it is grounded in reality.
It is the basis for our public rankings but we always augment it with a real understanding of people’s perceptions and their effects on demand – from our database of market research on over 3000 brands in over 30 markets.
Brand Valuation Methodology
For our rankings, Brand Finance uses the simplest method possible to help readers understand, gain trust in, and actively use brand valuations.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668.
Our Brand Strength Index assessment, a balanced scorecard of brand-related measures, is also compliant with international standards (ISO 20671) and operates as a predictive tool of future brand value changes and a control panel to help business improving marketing.
We do this in the following four steps:
1. Brand Impact
We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands.
This results in a range of possible royalties that could be charged in the sector for brands (for example a range of 0% to 2% of revenue).
2. Brand Strength
We adjust the rate higher or lower for brands by analysing Brand Strength. We analyse brand strength by looking at three core pillars: “Investment” which are activities supporting the future strength of the brand; “Equity” which are real perceptions sourced from our original market research and other data partners; “Performance” which are brand-related measures of business results, such as market share.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+, in a format similar to a credit rating.
3. Brand Impact x Brand Strength
The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4. Brand Value Calculation
We determine brand-specific revenues as a proportion of parent company revenues attributable to the brand in question and forecast those revenues by analysing historic revenues, equity analyst forecasts, and economic growth rates.
We then apply the royalty rate to the forecast revenues to derive brand revenues and apply the relevant valuation assumptions to arrive at a discounted, post-tax present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.