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Guest Article

The dollar value of corporate brands

15-Sep-2006

Branding specialists CoreBrand have shown that the corporate brand of food and beverage companies is a key asset to boost sales. Chief executive officer James Gregory tells FoodNavigator-USA.com why.

The simple fact is that every company has a brand image, and those companies that manage their corporate brands well can attain far greater value than those that do not.

And corporate brand image plays a bigger role in the food and beverage industry than in most other industries.

The Corporate Branding Index, which has been tracking corporate brands for the past 16 years, has shown that the average contribution of a company's brand today to its market capital is 7 percent. The beverage industry by contrast is 13 percent, and the food industry is 11 percent. This makes corporate brands among the biggest assets within the corporation, usually amounting to many billions of dollars.

Possibly the best example of the value contained within a company's brand is the Coca-Cola company, which in the first quarter of 2006 had a 21 percent brand equity as a percentage of market capital. In dollar value, this amounted to $20bn.

PepsiCo is not far behind, with a 19 percent brand equity, amounting to $19bn of its market capital, while the Anheuser-Busch corporate brand contributes 19 percent equity and $6bn market capital.

When it comes to food companies, General Mills' corporate brand comes out first, with 19 percent and $4bn respectively. The Kellogg Company is at 19 percent and $3bn, and Kraft Foods is at 17 percent and $9bn.

The corporate brand is a valuable asset, and there are a number of brand-building best practices that can be used to fully leverage this asset.

Put metrics in place to monitor a brand

Companies must make sure their metrics deliver Return on Investment (ROI) measures, and must review these reports with the board of directors on a quarterly basis. Good news and bad news must be presented uniformly.

The best example here comes from outside of the food industry. Home Depot has been able to better understand what its brand means to its customers through the utilization of a number of different brand equity metrics. These metrics are one reason the company has been so successful in understanding the needs of its customers and responding with appropriate promotions and advertising. From the fourth quarter 2002 to the fourth quarter 2005 the company added almost $5bn to the value of its corporate brand.

Communication needed across all available touch points

Companies must communicate the brand message at every opportunity. This must be done clearly, concisely and consistently. It can often take up to three years to have a measurable impact at normal spending levels; but consistent communication will help to leverage spending.

The beverage industry average of brand equity's contribution to market capital increased a half percentage point from the fourth quarter 2002 to the fourth quarter 2005. PepsiCo, however, managed to stay ahead of the curve by communicating aggressively. The company's brand equity as a percentage of market capital increased more than 1 percentage point and the dollar value of its brand increased almost 7 billion dollars over that same period.

All employees should project the brand

All the employees, from the ground up, should know that it is their job to reinforce and support the brand. Companies must ensure they have the resources to get the message out. Employees should be kept in the loop on the corporate image, and their contributions should also be considered. Employees define the corporate image, so it is crucial that they have a good understanding of what that image is and how a firm wants to project it.

Harley-Davidson, for example, has become synonymous with brand loyalty. This is not just because it makes great motorcycles, but also because the company's employees love the brand just as much as its most loyal customers. That is the reason why, even though the company is not very large, Harley-Davidson is consistently at the top of our rankings according to brand equity as a percentage of market capital: over 20 percent in the fourth quarter of 2005.

Long term view

Once a firm has established a plan of action, it must try not to deviate from it, even if budgets are cut. Corporate image investment pays off best when companies think long-term."

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