The Brand Finance Middle East 50, the definitive list of the Middle East’s top 50 most valuable brands produced by brand valuation and strategy firm Brand Finance, is now in its sixth consecutive year. Brand Finance’s results for this year show that the Middle East’s top brands have grown by an average of 38%. This brings the total value of the top 50 above US$50 billion for the first time. This year’s huge growth rate is in marked contrast to last year’s meagre 5% and is also the largest one year leap in total brand value since Brand Finance began compiling the figures in 2009.
The Brand Finance Middle East 50 has long been dominated by the UAE and Saudi Arabia. Last year, brands from the two countries accounted for 70% of total brand value. This year the power of the duopoly seems to have been strengthened, with the figure having risen to 77% of the total. This helps to explain such a strong overall performance in the face of accelerating political tension in the region, with Gulf economies seemingly insulated from the ongoing problems in the wider Middle East.
Saudis Take the Crown
Though Saudi Arabia and the UAE have always been close to parity in terms of total brand value, the UAE has always managed to stay ahead since the inception of the Middle East 50. However 2014 sees Saudi Arabia move ahead for the first time. Both countries have 16 brands in this year’s table, but while those from the UAE come in at US$19.1 billion, the Saudi brands total US$19.7 billion.
In the battle for third, Qatar continues to hold off Kuwait. In 2010, the total value of Kuwaiti brands in the table was nearly double that of those from Qatar. However the continuing dominance of KSA and the UAE, along with the assertive and particularly successful brand building of the Qataris has seen Kuwait’s percentage share of total brand value continue to fall; it now stands at 8%.
Other countries have also lost ground in the race to establish themselves as brand leaders. Last year Egyptian brands featured in the list for the first time, with four new entries. With the political situation still stabilising, two of these has fallen out of the table and Egypt’s share of the total has fallen. Orascom has been rebranded under the Vimplecom name while weaker revenue forecasts are the reason for Mobinil’s absence this year. Bahrain no longer features in the table at all as Ahli United Bank, Batelco and Al Baraka have all dropped out this year.
Emirates Flying High but Competitors Now on the Radar
One accolade that the UAE can still boast of is having the Middle East’s most valuable brand. Emirates has always held the top spot and remains far ahead of both global competitors in the airline sector and brands of any kind from the Middle East. Its 2014 brand value is US$5.5 billion, making it the first and only brand from the region to be worth in excess of US$ 5 billion.
It is not just valuable however. It is also the only brand on the list to have a AAA brand rating. The brand rating is calculated using Brand Finance’s Brand Strength Index which is a benchmark of a brand’s power, stability and future potential, similar to a credit rating. Emirates’ vast sponsorship portfolio is partly responsible for its branding success. Adding Real Madrid to an already long list of sponsored football clubs was alleged to have cost upwards of €30 million a year, but it has begun to pay off immediately, with a Champions League win guaranteeing maximum exposure and prestige. Existing deals with the likes of Arsenal, PSG and A.C. Milan make Emirates the game’s most prolific club sponsor, while the World Cup has provided another platform, with Emirates flight attendants presenting a victorious Germany with the trophy itself.
Until this year Emirates was the only airline brand to feature in Brand Finance’s list, 2014 sees two additions however, both of which appear to be following Emirates’ approach to brand building. Etihad comes in at number 14 with a brand value of just over US$1 billion. Etihad is now almost synonymous with Premier League Champions Man City and has also followed Emirates into F1 sponsorship, in particular at the Abu Dhabi Grand Prix. Qatar Airways is this year’s highest new entry; it is 7th in the list with a total brand value of US$1.8 billion. It supports stars and teams across a number of sports including cycling, tennis but also football, most notably FC Barcelona. The 2022 world cup will guarantee a significant spike in demand and boost to the brand’s profile, so it will be hoping that recent controversy over corruption dies down and the tournament goes ahead as planned.
STC – Top of the Telcos
This year’s biggest winner in terms of total brand value added is STC. The telecoms giant has added US$1.7 billion in brand value to reach a total of just under US$5 billion. Though Emirates is safe at the top for now, STC has emerged as the only serious rival for the title of the Middle East’s most valuable brand. Telcos continue to dominate the top five, with Etisalat and Mobily taking thirs and fourth place respectively. Following its well-publicised rebrand, Qtel no longer appears in Brand Finance’s list. Its successor Ooreedoo appears for the first time at 15th, with a brand value of US$958 million.
QNB and Al-Rajhi in Battle of the Banks
Banks have maintained a strong presence in this year’s table, accounting for 30% of the total top 50 brand value of the top 50. QNB is the Middle East’s most valuable bank brand, with a total value of US$1.8 billion, having added over half a billion dollars in brand value. QNB’s nearest competitor, Al-Rajhi Bank, has risen even faster however, adding US$533 million to reach a total of US$1.72 billion.
Overall brand value growth of 38% for the Middle East shows that the region is realising its potential, fast. However the average brand value to enterprise value ratio for Middle Eastern brands (which shows the proportion of a company's value attributable to brand) stands at just 10%. The global average is 16%, suggesting there is ample opportunity for further brand growth.
Strategic, high value sectors such as Telecoms and Banking (which together account for 62% of total brand value) are critical for overall economic growth and development and continued focus and attention must be paid to them. However other sectors such as chemicals, foods, retail, real estate & engineering (which account for approximately 16% of the overall brand value) could potentially benefit even more from increased brand related investments. Afai is a pioneer in this regard; its US$2.4 billion brand value is an impressive 28% of the company value, showing that it is punching above its weight relative to competitors.
As political turmoil intensifies in some parts of the Middle East and North Africa, value may continue to be consolidated in the relative safety of Saudi Arabia and the UAE. However, as the inclusion of brands from all over the region attests, this need not be the case; the Middle East’s brands are prospering more than ever.
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.
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 strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
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.
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. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. 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 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net 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.