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Tobacco Brand Values Hit New Highs In Spite of Regulation

03 March 2017
This article is more than 4 years old.

· Marlboro brand value hits record high of US$32.4 billion

· The world’s most tobacco brand is successfully extending its brand

· Over 80% of tobacco brands growing in value

Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable tobacco brands are ranked and included in the Brand Finance Tobacco 50 2017.

Particularly in the last 15 years, an accelerating tide of regulation has swept over the tobacco industry. There are now with significant restrictions on when and where consumers can buy and use cigarettes in most of the OECD and many other markets too. The advent of plain packaging is an even more fundamental threat, putting the very existence of tobacco firms’ brands at risk. In its strictest form, it will prevent companies from differentiating themselves and from identifying quality and unique features to consumers. This would ultimately commodify the product, leading to a race to the bottom in terms of price and quality.

Yet despite the apparently existential threat of this regulation, the world’s top tobacco firms are managing to increase the value of their brands. Marlboro, the world’s most valuable tobacco brand, has achieved an all-time record brand value of US$32.4 billion. A decline in Western markets is being offset by growth in other parts of the world such as China, Indonesia and Africa where regulation remains weaker.

However Marlboro is also successfully extending its brand into new products. Many of the major tobacco brands were slow off the mark to embrace e-cigarettes however Marlboro’s iQOS system and Heatsticks are now proving hugely popular, demonstrating the brand’s power.

Brand Finance’s CEO David Haigh comments, “Marlboro’s success is by no means an isolated case, with the brand values of major names such as Pall Mall, L&M, Newport and Winston all growing this year and the likes of Parliament, Sampoerna and Chesterfield enjoying double digit growth. Despite the well-founded health concerns and mounting regulation, the value of these brands for their owners and investors remains robust. The day when the value of tobacco brands goes up in smoke is a long way off.”

ENDS

Note to Editors

Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team.

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