Apple’s brand not core to its success

Interbrand published their list of the top 100 global brands for 2009 last week, Coca Cola maintaining its position at the top for the ninth year in a row. I thought it would be interesting to compare the brand values calculated by Interbrand with the equity values of the companies concerned as it would indicate those companies with the most to lose (and gain) through their PR and reputation management.

The results for some companies are surprising including the banks, JP Morgan and HBSC, and in particular Apple, who it seems is not very reliant on its brand with only 9% of its company valuation represented by its brand value.

Interbrand’s  methodology effectively values the extent to which a brand is able to generate financial benefits due to the superior demand created through the strength of the brand itself and not the underlying assets, expertise etc of the company.

Comparing this brand value with the company’s stock market value effectively gives an assessment of the extent to which the brand itself is the driver of the company’s performance.

The table below shows the top 50 brands in the Interbrand list sorted in descending order by those whose brands represent the highest proportion of their company valuation. (The position figure is their position in the Interbrand list).

Top of this list is the French company PPR who own the Gucci Group and Puma amongst others. These two brands alone are valued by Interbrand at $11.4bn compared to a stock market value today for PPR of $16.1bn (£11bn) i.e. 71% of the company valuation is accounted for by the brand value of these two brands. Another luxury brand that appears high in the list, with 53% of its value accounted for by its two biggest brands, is Louis Vuitton Moet Hennessy.  This doesn’t seem surprising given the importance of brand in establishing luxury items’ worth.

Bottom of the list are the banks JP Morgan and HBSC. Only 5% of their company valuations is accounted for by their brand values. However this is not a credit crunch effect as this figure has not changed much over the last two years. This seems a little strange to me on the face of it as it implies that the banking sector is much more of a commodity market despite the importance of trust and confidence in this sector.

But more surprising still is Apple. According to Interbrand only 9% ($15.4bn) of the company’s value ($165.7bn) is accounted for by its brand. This compares to 25% for Microsoft and 42% for Sony. This implies that Apple’s brand is not considered an important driver of value in the company and yet I would suspect that most communications and marketing people would perceive that the opposite was the case.

I wonder if the majority of the reason why Apple is valued at 32 times its earnings (as of 21/9/09) driven by high expectations of its ability to innovate and design new products now and into the future and not the Apple brand itself?

Anyone else have any theories?

Position in Survey Company Ticker

Brand value

Equity value
Brand value as % of equity value
41 Gucci/Puma (PPR) PP:PAR 11.4 16.1 71%
15 BMW BMWX:GER 21.7 32.3 67%
5 Nokia NOK 34.9 57.8 60%
48 Heinz HNZ 7.2 12.5 58%
34 Kelloggs K 10.4 18.7 56%
1 Coca Cola KO 68.7 124.6 55%
10 Disney DIS 28.5 52.9 54%
16 Louis Vuitton/Moet (LVMH) MC:PAR 24.9 47.3 53%
6 McDonalds MCD 32.3 62.2 52%
12 Mercedes Benz (Daimler AG) DAI 23.9 49.9 48%
26 Nike NKE 13.2 28.5 46%
29 Sony SNE 12.0 28.4 42%
2 IBM IBM 60.2 160.1 38%
22 American Express AXP 15.0 41.3 36%
42 Phillips PHG 8.1 23.4 35%
35 Dell DELL 10.3 32.6 32%
21 H&M HMB:STO 15.4 49.2 31%
49 Ford F 7.0 22.4 31%
45 Accenture ACN:NYQ 7.7 25.6 30%
18 Honda HMC 16.8 55.9 30%
40 Thomson Reuters TRI 8.4 28.3 30%
9 Intel INTC 30.6 109.5 28%
4 General Electric GE 47.8 175.3 27%
39 Nintendo 7974:TYO 9.2 33.9 27%
3 Microsoft MSFT 56.6 225.1 25%
8 Toyota TM 31.3 130.5 24%
46 Ebay EBAY 7.4 31.4 24%
11 HP HPQ 24.1 109.4 22%
36 Citibank C 10.3 48.3 21%
33 Canon CAJ 10.4 49.3 21%
19 Samsung A005930:KSC 17.5 85.1 21%
7 Google GOOG 32.0 155.6 21%
27 SAP SAPX 12.1 59.3 20%
17 Marlboro (Philip Morris) PM 19.0 93.2 20%
43 Amazon AMZN 7.9 39.0 20%
31 UPS UPS 11.6 58.4 20%
50 Zara (Inditex) ITX:MCE 6.8 36.5 19%
14 Cisco CSCO 22.0 135.5 16%
30 Budweiser (AB InBev) AHBIF 11.8 73.9 16%
13 Gillette/Duracell (Procter and Gamble) PG 26.4 167.3 16%
23 Pepsi PEP 13.7 93.3 15%
44 Loreal OR:PAR 7.7 57.2 13%
24 Oracle ORCL 13.7 108.4 13%
38 Goldman Sachs GS 9.3 93.7 10%
20 Apple AAPL 15.4 165.7 9%
47 Siemens SI 7.3 84.4 9%
25 Nescafe (Nestle) NESN:VTX 13.3 154.2 9%
37 JP Morgan JPM 9.6 176.8 5%
32 HSBC HCS 10.5 204.8 5%
28 IKEA 12.0
Total 945.3 3925.0 24%
IKEA figures not calculated as privately owned so no stock market valuation available
Equity valuations were as of 21st September 2009
Tickers refer to New York Stock Exchange except where stated
Where currencies have been translated the following rates to $1 were used:
Euro = 0.682
Yen = 92
Korean Won = 1,204
Canadian $ = 1.077
Swiss Franc = 1.04

Does your Brand past the touch test?

I was talking to someone the other day about the concept of brand. He is near the beginning of his career in a technology business and I was trying to explain how a brand is the promise of performance and is about so much more than just a name or a logo.

This meant that the work that he would do on a business’s systems, though nothing in this case to do with their identity or communications, would still play a part in establishing that brand through the experiences people would have.

To help him visualise the concept I asked him what he thought of when he heard the name “Volkswagen“. He said all the things you would think – reliable, solid, well engineered etc. I then asked him what would be the first thing he would do if he sat in a VW car in a showroom. His answer was “I would touch the dashboard plastics to get the reassurance that the build quality was what I expected”. In other words how did the plastics feel.

But if the plastics didn’t pass this “touch test” would this effect his perception of the car and VW? Absolutely he replied. Enough to potentially leave the showroom? Absolutely.

So here is an intelligent, logical and technical individual saying that his perception of the VW brand would be materially effected by whether a piece of plastic that cost a few pounds was of sufficient quality to pass his “touch test” expectations.

A reminder that a brand is made up of a huge collection of, often, small experiences, all of which have to add up to that promise of performance and pass our own “touch tests” everyday.

Does your brand pass the touch test?