Brands that use their British heritage to sell themselves have seen their value grow in the year running up to the Queen’s Diamond Jubilee and the London Olympics, according to a new list of the 50 most valuable British brands seen exclusively by Marketing Week.
Out of the 10 brands that have grown in value the most in the past year, according to the Brand Finance study, five are consumer-facing companies that make their British origin a focal point of their marketing.
Virgin Media has seen the value of its brand grow by 64% – more than any other on the list – in a year when it introduced a UK flag motif into its logo. Luxury fashion label Burberry, which holds a royal warrant and uses quintessentially British models such as Rosie Huntington-Whiteley in its advertising, achieves the second-highest jump in brand value, of 41%. High street fashion retailer and London Olympics supporter Next, whose summer collection has a British theme, comes third, growing by 32%.
Chocolate maker Cadbury and car marque Mini also feature in the top 10 for brand value growth, experiencing increases of 27% and 18% respectively. Both retain strong links to their British roots despite now having foreign owners.
In compiling its list of brands of British origin, valuation company Brand Finance assessed the revenue contribution each makes to its parent company by estimating the amount it would cost to licence the brand if the business didn’t own it. It takes into account the current worth of future cashflows that can be attributed to the brand alone.
Strategies for exploiting a brand’s UK connections vary, with some finding that Britishness is more appealing to customers at home than abroad. Virgin Media’s insertion of the Union Jack into its logo is a gesture aimed solely at the UK, since that is its only market (see The Frontline, right).
Despite not being a sponsor of the London 2012 Olympics, Virgin Media has also succeeded in associating itself with athletics in the year when the games take place, through advertising featuring sprinter Usain Bolt. And it recently sponsored this year’s series of ITV show Britain’s Got Talent, targeting a UK audience.
Conversely, Burberry has taken advantage of its British heritage in its marketing to audiences outside the UK. Its sales growth now principally comes from developing markets, particularly China, where consumers are increasingly spending their new-found wealth on premium European fashions.
Despite all having strong cultural links with the UK, 12 of the top 50 most valuable brands of British origin are now held by companies based outside the UK, and eight of these foreign-owned brands are in the top 20 by value. Most of these are business-to-business brands, and so less likely to bring their origins to the forefront of their marketing.
But even for prominent and well-loved consumer brands like Cadbury, owned by US company Kraft since 2010, and Mini, owned by German car maker BMW since 1994, coming under foreign ownership does not appear to have adversely affected their brand perceptions.
Despite Kraft having reneged on promises not to cut British manufacturing jobs, Cadbury’s brand remains strong, according to Brand Finance valuation director Bryn Anderson. “Everyone was concerned about what would happen to the Cadbury brand after the takeover by Kraft. But if you look at its brand value, it has done really well. Kraft has allowed Cadbury to retain its Britishness.”
Exploiting Britishness has not been the only determining factor of changes in brand value in the past year. There are also marked trends among specific business sectors. Three of the big four commercial services companies – PwC, Ernst & Young and Deloitte – have seen top-10 brand value growth. Most banks and supermarkets, conversely, have seen the value of their brands diminish.
RBS is one exception, growing its brand value since 2011 and showing some recovery. However, the value of RBS’s brand is still much lower than those of other banks as a proportion of the overall value of its business. Anderson points out that RBS has taken longer than other banks to rebound from its reputation taking “a massive crash in 2007 and 2008”, though all banks still have ground to make up.
He adds: “There was the economic downturn, financial markets have been struggling and there are the reputational issues they have been dealing with. But commercial services companies, which cover the accounting disciplines, have avoided being caught up in these problems.
All of them have seen significant revenue growth.”
Not all supermarkets have lost brand value. Waitrose, Marks & Spencer and Morrisons have improved their positions year on year, but Sainsbury’s and Asda are among the 10 biggest losers on Brand Finance’s list. The value of both brands as a proportion of the ‘enterprise value’ – the hypothetical value of a business if it were in a position of zero debt – is still high, however, at 49% for Sainsbury’s and 40% for Asda.
Tesco has lost less brand value than either Asda or Sainsbury’s, but still suffered a drop of 5% in a year when it issued profit warnings for the first time in two decades. Anderson suggests that recent price wars featuring heavy discounting and confusing price promotions have tarnished these three brands.
Of these, Sainsbury’s is perhaps best placed to claim back some of its positive associations among British consumers in the short term. As an official sponsor, it will have a prominent presence around the Paralympics and is organising a Family Festival in London’s Hyde Park to celebrate the Queen’s Diamond Jubilee (see main picture).
Anderson says: “Brands that take advantage of the Olympics and the Jubilee will see a real benefit, and the ones that don’t will have missed a trick.”
The Frontline: We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground
Executive director of marketing
Marks & Spencer
We don’t want to push patriotism down people’s throats. But the Queen’s Jubilee is a celebration that we think we can benefit from and the British aspect to our marketing will go up this summer.
In territories where we are developing rapidly, such as India and China, it is less important that we are British. It is more important that we sell great fashions and products of great quality, and that is what they appreciate. Britishness is a card in the marketing armoury that we will play when we need to and in an appropriate way.
Executive director of brand and marketing
We have a right to talk about our Britishness and heritage. Our founder, Sir Richard Branson, is one of the most famous British businessmen and we trade in the UK. We wanted to unlock some of our British identity this year. We started that process in the second quarter of last year by incorporating the Union flag into our logo, which will remain throughout 2012 and maybe beyond.
It isn’t like we have changed our strategy. All we have really changed is our corporate identity. Where you have to be careful is if you choose to drift into the territory of cultural stereotyping. There are brands that choose to play up to their origins that way.
Associating ourselves with Usain Bolt has been good for our brand and was a very good association. Bolt is a proxy for speed. He is also one of the most famous and recognisable people on the planet – certainly coming into an Olympic year. We are not an Olympic sponsor, so we have to be careful how we use that relationship as we get closer to the games. We have been very careful to make sure we respect all the rules.
UK managing director
Mini’s rich British heritage is extremely important to us because there is a huge amount of goodwill and fondness for the brand in the UK. However, our Britishness goes further than our heritage. We are a truly modern British brand. Over 5,000 people are employed across the Mini production triangle at state-of-the-art plants in Oxford, Swindon and Hams Hall in Warwickshire. On average over 200,000 Minis are built in Britain each year and 80% of these are exported, contributing about £1.2bn to UK GDP. ‘Buying British’ is a factor for many people.
The brand has enjoyed a record sales year both in the UK and globally. The brand is enjoying ever increasing popularity in new markets such as China, Brazil and Russia, as well as in established markets such as the UK, US and Germany. The classic Mini, and the images associated with it have true global resonance and are often referenced in international marketing activities.
This is a very special year for Great Britain with London 2012 and the Jubilee. So far in 2012, Mini has supported Visit Britain’s ‘Great’ campaign, celebrating modern British design, manufacturing, technology, culture, fashion and business. The London Olympic and Paralympics Games will present a further opportunity to continue to raise awareness of the Mini brand.
In its role as official partner to Team GB and Paralympics GB, Mini has been supporting British athletes on their journey to the games as well as conducting extensive marketing and PR communications campaigns around engaging the British public in support for the team. Such activities have included the announcement and launch of London 2012, inspired special edition models and an experiential ‘Great British Roar’ marketing campaign, gaining messages of encouragement for the respective teams. Mini will equally have a role within the official London 2012 Olympic car fleet.