Fast food brands take a hit as Google tops world’s most valuable brands ranking
The likes of McDonald’s, KFC and Coca-Cola all experienced declines in Brand Finance’s Global 500 rankings for 2016, with Apple pipped by Google as the world’s most valuable brand.
The impact of people eating more healthily has had a detrimental impact on some of the world’s biggest fast food brands, according to Brand Finance.
Its Global 500 rankings for 2016 saw the likes of McDonald’s, KFC and Domino’s Pizza all slide drastically, something the brand valuation firm attributed to “an increasingly fragmented market with healthier challenger brands offering greater choice for consumers.”
KFC fell 110 places to 146th, with its brand value down 27% to $6.1bn, while Domino’s Pizza fell a whopping 125 places to 427th, with its brand value falling 16% to $3.98bn. The much bigger McDonald’s brand also fell four places to 16th as its brand value fell 9% to $38.96bn.
In 2016, the British government unveiled plans to introduce a sugar tax in the hope of reducing sugar consumption. And the changing consumption habits of consumers, particularly their move away from sugar-high products, has also seen Coca-Cola’s global revenues fall from $48bn in 2012 to $44.3bn in 2015. According to Brand Finance, the soft drink giant’s brand valuation took another hit in 2016, with Coca-Cola falling 12 places to 28th and its brand value down 7% to $31.88bn.
“The behemoths of the non-alcoholic drinks industry, Coca-Cola (28th) and Pepsi (67th) have fallen as they continue to struggle against the trend towards healthier alternatives and greater scrutiny around marketing sugary drinks to children,” explains David Haigh, CEO of Brand Finance.
However, energy drinks appear more successful in battling the anti-sugar brigade, with Red Bull (227th) and Gatorade (372th) continuing to increase their brand strength rating (by 1 and 3 index points respectively) in 2016. This was credited to a marketing focus on extreme sports and performance athletes.
Success for Google and Lego
The biggest success stories were Google and Lego. With a brand value of $109.5bn, Google replaced Apple – which has held the spot for the last five years – as the world’s most valuable brand. Google’s reliance on its core search business was listed as its biggest strength due to remaining “largely unchallenged” in this area.
“Apple has struggled to maintain its technological advantage. New iterations of the iPhone have delivered diminishing returns and there are signs that the company has reached a saturation point for its brand,” adds Haigh.
“The Chinese market, where Apple has enjoyed a dominant market share, is becoming far more competitive with local players entering the market in a meaningful way.”
Lego, meanwhile, has regained its status from Disney as the world’s most powerful brand, thanks to its impressive brand strength score of 92.7. It is expected to have another winning year in 2017, with analysts backing The Lego Batman Movie to be one of the year’s highest grossing movies at the box office.
Elsewhere, the rise of Chinese brands in the West continued in 2016, according to Brand Finance. Alibaba rose 36 places to the 24th ranking, while ICBC, the Chinese Construction Bank and China Mobile all made the top 20.
And despite 2016 being a year of recalls and faulty products, Samsung remains surprisingly strong. It rose one ranking to 6th as its brand valuation grew 13% to $68.21bn.
Brand ranking is something that has always caught my attention. It’s interesting to see that big companies that produce products most of us use everyday can drop or rise in ranking all due to their consumers. It really puts the focus on the consumer and how they are able to determine a brand’s worth. It’s even more interesting to see how fast food brands, as well as soft drink brands have taken a hit in the rankings. I think a lot of it has to do with the fact that more people are being conscious with that they consume and we have moved into an age where researching what goes into your food has become the norm will continue to hurt brands who don’t adapt to the shifting times. I think it’s worth noting that the brands that dominate the top ten are all technologically focal companies. Plus the addition of two wireless providers leads me to wonder if they are global or only national. It’s surprising that Samsung maintained an even ranking with all the issues for their last phone release but not surprising for Apple to drop considering all the backlash for their last phone and Mac releases. What I’d like to know more about and wished the article talked about was the rise of Chinese brands and what they are.
It’s not particularly surprising to me that technology is dominating this list of the top 10 brands as opposed to food. I suppose a lot of this probably has to do with competition between countless numbers of restaurants, as well as the fact that technology and social media are enormous markets right now.
But I know that for Arizona, such declines in numbers could also possibly be attributable to the recent increase in the minimum wage (at least, if it isn’t already, I expect that will eventually be the case). It’s one thing for policymakers to make a marginal change to such a law, which could be $.50 or even $1 above the previous level. However, what the majority of Arizonan voters did in the most recent general election was approve the passage of Proposition 206, which changed the statewide minimum wage from $8.05 to $10. I don’t anyone–even its supporters–could argue that a nearly $2 jump in the standard pay level is rather significant.
As a result, I have already noticed that various fast food establishments in the Phoenix area have adjusted their prices to buffer expected profit losses due to increased labor costs.
To name a brief example, my wife is a shift leader at a local Subway restaurant. She has frequently told me that her customers are often surprised at how their 6” subs are priced above $5 after tax (does anyone hear remember the $5 footlongs?). With that in mind, it would only make sense that some fast food customers will now start to visit their favorite establishments less as they see how much money they may end up spending each time they go.
Only time will tell as this new policy affects the economics of fast food in Arizona, but if this article is an indication of anything, many factors have (and will continue) to harm that industry nationwide.