The total value of the United Kingdom’s top 150 brands has declined by over £30 billion or 8% of the total over the first year of the COVID-19 pandemic, from £356.8 billion in 2020 to £326.7 billion in 2021, according to the Brand Finance UK 150 2021 report.
Travel Takes a Toll
With international and even domestic travel banned or severely restricted, airlines and hotels are among the worst affected sectors, with total brand values for the sector falling by 38% and 22%, respectively. British Airways is the fastest-falling airline brand, down 43%. Similarly, aero-engine maker Rolls Royce is down 45%.
Other COVID-hit sectors have also seen significant brand value declines. Housebuilders were severely disrupted in 2020 due to initial confusion over whether they were essential workplaces, disruption to supply chains, and difficulty operating under COVID-safe conditions, contributing to a brand value decline of 32% for Taylor Wimpey.
Burberry, one of Britain’s strongest and most iconic brands, has also seen its brand value fall, losing 26% over the past year. Retail locations have been closed, high-spending international customers have been unable to visit key stores and concessions, and perhaps most fundamentally, the lack of opportunity to wear and display the Burberry brand in public has diminished its potency.
Richard Haigh, Managing Director, Brand Finance, commented:
“Some of the brand value changes this year will be the temporary results of a unique operating environment for brands, but others will be longer lasting. For example, the decline of airline brand values is not simply the result of temporary restrictions in the airlines’ ability to monetise their brands. British Airways and EasyJet have seen both their brand values and also their brand strength scores decline, indicating more fundamental damage to brand assets. Some customers were disappointed and frustrated with the airlines’ refund policies, while many more, particularly business travellers, are reassessing their relationship with airlines in the light of climate concerns and recently enhanced comfort with teleconferencing.”
Home delivery brands deliver
Deliveroo may be facing a torrid time in the capital markets, but the pandemic has undoubtedly bolstered its brand with consumers as it recorded a 52% brand value rise to £2.2 billion. Deliveroo has benefited from the displacement of hospitality spend, where consumer demand for quality food and small indulgences cannot be fulfilled by lockdown-hit restaurants and bars, with consumers turning to takeaways. However, it would not have enjoyed such striking success without consistently strong marketing communications and delivery against customer expectations. As a result, though it is likely there will be a slight correction in brand value as hospitality re-opens, Deliveroo has created a foundation for longer term growth, allowing it to capitalise on lasting behavioural change and opportunities for geographic expansion.
ASOS and Ocado, pioneering home delivery brands in fashion and grocery respectively, have also performed well as a result of the pandemic. ASOS is up 38% to £1.1 billion and Ocado 28% to £600 million.
Health and hygiene brands have also performed strongly. Home-cleaning brands Finish, Dettol, Airwick, and Lysol have all increased in value by around 20%, while brands focused on personal health have also seen significant increases, including The Body Shop (up 21% to £557 million) and Boots (up 18% to £2.4 billion).
AstraZeneca, instrumental in pulling the country out of the COVID crisis, has also seen significant brand value gains of 17% to £2.4 billion. Given that governments have purchased billions of doses of its COVID vaccine and the business has received widespread praise from British politicians and clinicians, the increase in brand value might have been higher.
Richard Haigh, Managing Director, Brand Finance, explains: “AstraZeneca chose to manufacture its vaccine at cost and the forgone revenue makes this a costly decision in terms of short-term brand value growth. However, the goodwill generated amongst the medical community, governments, and patients make it a very shrewd one in the long term, generating preference for the brand by end users and supporting the company’s ‘license to operate’ - smoothing relationships at a governmental, societal, and business-to-business level.”
However, there is also a less positive explanation for the limited brand value rise. Aspersions have been cast over the safety and effectiveness of the AstraZeneca vaccine. Whilst some of these concerns are unfounded or exaggerated for political reasons, evidence of an enhanced risk of blood clotting has been enough for several European governments to restrict or ban its use. The result is a brand with significant variation in perceptions by geography.
Shell retains top spot
Shell remains the UK’s most valuable brand and the world’s most valuable oil and gas brand, with a brand value of £32.4 billion. Despite a 12% brand value decline, Shell continues to lead the list comfortably, with a brand value nearly double that of second-placed BP (down 9% to £16.4 billion).
Shell investors felt the pinch in 2020 when dividends were cut for the first time since World War II. Dividends are gradually being restored and the brand is reshaping its business for the future of energy. Shell remains one of the strongest oil and gas brands due to an extensive global network presence, centralised and well-invested brand management, as well as a longstanding reputation for high quality fuels. With April 18th’s historic cooperation agreement between China and the US, momentum is growing behind carbon reduction, meaning that Shell’s ambition of becoming a net-zero emissions energy business will become all the more critical to future brand value performance.
EY – the UK’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, EY remains the UK’s strongest brand with a Brand Strength Index (BSI) score of 89.6 out of 100 and the elite AAA+ brand strength rating as the only brand in Britain. This top place ranking validates the brand’s focus on long-term value creation for stakeholders, which has been particularly important when navigating the pandemic.
EY has committed to becoming the distinctive global professional services brand, showcased through its actions and voice in the market. At the end of 2019, the brand launched EY Ripples – its commitment and programme to positively impact one billion lives by 2030 - through mobilising its network to unite in working towards the UN Sustainable Development Goals.
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. The United Kingdom’s top 150 most valuable brands are included in the Brand Finance UK 150 2021 report.
The full Brand Finance UK 150 2021 ranking, additional insights, charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance UK 150 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.