Earlier this month, UK-based business valuation consultancy Brand Finance released the latest edition of its annual beverage alcohol report.
‘Alcoholic Drinks 2023’ awarded Heineken’s namesake lager, China Kweichow Moutai Distillery’s namesake baijiu and Moët Hennessy’s Moët & Chandon the titles of most valuable beer, spirits and wine brands, respectively. Here’s a closer look at the report.
In last year's report from Brand Finance, Heineken came in second behind Corona Extra [owned by Anheuser-Busch InBev globally and in the US by Constellation Brands]. Fast forward 12 months, and the consultancy estimates a near-6% rise in the lager's value, driven in part by the wider roll-out of the lower-abv Heineken Silver line extension.
The other multinational brewers account for the rest of the top ten, with the exception of Snow, which relies almost solely on its home market of China [the brand has long been the world's largest beer brand by volume].
Of note is the retention of the number four spot by Bud Light, which has been the subject of high-profile controversy in the US this year following a backlash against its relationship with actor & online celebrity Dylan Mulvaney. Will the furore have an impact on Bud Light next year?
As for Carlsberg, the group's flagship brand fell two places to number 16, while stablemate Tuborg was down in 30th position, slipping four places.
When multinational spirits groups highlight the potential for their brands in China, this year's top ten underlines why, with six of the positions held by baijiu brands. All of the top five places are taken by members of the country's domestic white spirit segment, with leader Moutai holding on to number one for the eighth consecutive year.
The first multinational-owned spirit in the ten, Hennessy Cognac, also has China to thank for its performance, although according to owner Moët Hennessy's most-recent results, the key export market is exhibiting 'bump in the road' tendencies at the moment.
Elsewhere, Diageo makes the top ten twice with Johnnie Walker and Smirnoff, both of which were beaten out by Brown-Forman's Jack Daniel's at number eight.
Spare a thought for Bacardi's namesake rum, however, which dropped out of the top ten, from last year's seventh place to 11th.
Finally, to wine, where there was also no change at the top. Despite an estimated 10% decline in value, Moët Hennessy's Moët & Chandon Champagne brand held off a charge from China's Changyu Pioneer Wine Co. The company's Changyu wine brand has leapt in brand value by a third, according to Brand Finance.
The bleaker showing for Champagnes this year - Veuve Clicquot and Dom Pérignon, both also in the Moët Hennessy fold, have declined in estimated value - was put down to what Brand Finance said was a "public wariness around overconsumption.
"With many now facing financial pressures due to soaring inflation rates and living costs," the consultancy said, "Champagne-drinkers are drawing back and making more conscious choices."
Choices such as E&J Gallo Winery's Barefoot, perhaps? Or Treasury Wine Estates' Beringer?
Brand Finance calculates the values of brands in its rankings using the 'Royalty Relief' approach – a method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are:
- Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100
- Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s database
- Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%
- Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand
- Determine forecast revenues using a function of historic revenues, equity analyst forecasts and economic growth rates
- Apply the royalty rate to the forecast revenues to derive brand revenues
- Discount post-tax brand revenues to a net present value which equals the brand value
To access a preview of Brand Finance's 'Alcoholic Drinks 2023' report, click here.
