Cost of living crisis helps Aldi bounce back into BrandZ top 100

KFC has also returned to the ranking of the world’s most valuable brands having both been absent in 2020.

AldiBudget supermarket Aldi and fast food chain KFC have both re-entered Kantar’s BrandZ ranking of the world’s top 100 most valuable brands, having failed to make the list in 2021.

Both have been singled out as “well managed” brands that take a long-term approach and are consistent, all the more important given the cost of living crisis.

Aldi comes in 98th having increased its value by 20% to $21bn, while KFC has grown by 23% taking it to 95 in the ranking with a value of £22bn. In 2020, Aldi ranked 82nd and KFC came in at 84.

The move back into the top 100 is significant, especially for Aldi, suggests global head of research at BrandZ, Martin Guerrieria.

“It just shows the brand has been really well managed,” he tells Marketing Week. Even more pertinent given the current economic climate, with Guerrieria suggesting its success is “partly illustrative of the times we live in”.

Apple beats Amazon and Google to reclaim title of world’s most valuable brandBut that shouldn’t detract from the fact it is “clearly a well run business,” he adds, and one that has proven itself by being “very consistent” and improving quality over time.

“[Aldi has] improved the quality of what it can provide at a low price. Actually it’s not necessarily that different to what a lot of big brands and big supermarkets provide,” he says. “It has established a brand that has instant meaning for a mass range of consumers.”

[Aldi has] established a brand that has instant meaning for a mass range of consumers.

Martin Guerrieria, Kantar BrandZ

Long-term brand building is key to success for the top 100, as the data highlights that “well differentiated” brands that effectively market themselves over a three year period are more “meaningful and salient”.

That is certainly the case for KFC, which took home the Brand of the Year prize at the 2021 Marketing Week Awards. Guerrieria says the strength of KFC’s communication and its “distinctive assets” have helped it return to the top 100.

Adele Joliffe, head of the brand domain consultant team at Kantar, adds that the brand’s advertising helps creates the sense “nothing compares to KFC”, and if a brand can persuade consumers it’s “the only one”, then people will choose it.

Driving value

The rising cost of living is helping Aldi thrive as it has carved a position for itself as a retailer that provides quality at low cost.

“You’ve almost got the divine meeting luck here,” says Joliffe, citing how Aldi has spent “years and years” redefining the price versus quality equation.

People are of course budgeting, she says, but it’s not just that consumers are going to Aldi “because it’s cheap”. “This is actually tapping into years and years of mental structures around Aldi not just being cheap, but it’s also not rubbish.”

She calls it an “acceptability to trade down” too. “A cleverness, a discernment of being a savvy shopper and knowing how to use Aldi and mix that into your budgeting. You’re not just going to a cheap supermarket.”

Joliffe believes the budget retailer has done a “great job” of reframing value. And it’s a marked change too, as she explains how despite being “cheap”, the brand isn’t coming to market with the “stigma of cheapness that it might have”.

She cites Aldi’s 2022 Christmas advert as one of the brand building exercises that has led Aldi to more success, along with its Kevin the Carrot brand mascot.

Aldi crowned this year’s most effective Christmas adThe mascot is an act of something Guerrieria describes as brand building “back to front”. Aldi is now thinking “brand, brand, brand” he says, when previously it was about product.

“It’s years of fantastic management tapping into a very acute need,” emphasises Jollife, and it’s a need that will only increase during a time of inflation and rising costs. “It is for that reason mentally available in a very, very humble way,” she adds.

Aldi also meets needs, she says, pointing out that while those needs have altered, the brand has been “well positioned” to adjust.

It’s come at a cost for other supermarkets, which Guerrieria says “took their eye off what consumers wanted” while grappling with a savvy competitor.

“They’ll regret that decision now a chunk of the market has gone,” he says, not just to Aldi, but to retailers like Lidl too.

Historically Aldi and Lidl were talked about in the same breath, but Guerrieria suggest that increasingly “they feel like different brands” now.

That being said, the analysis shows the two are perceived similarly in the UK. But Aldi has the stronger relationships with customers, grounded in its “disruptive” positioning and “a sense of category leadership”. Positive word of mouth has also been a factor in this, according to the research.

Kantar’s BrandZ valuation process takes the financial value created by a brand in US dollars and multiplies it by brand contribution. The result is Brand Value – the dollar amount a brand contributes to the overall value of a corporation. Isolating and measuring this intangible asset reveals an additional source of shareholder value that otherwise would not exist.

That brand contribution is derived from consumer research that quantifies how much of the volume people purchase and how much of the price premium people pay can be attributed to brand equity, connecting what people think to what they do.

This year’s analysis involves 19,250 brands, 4.1 million consumers, 522 categories, 51 markets and 5.4 billion data points.