Europe’s most valuable brands lose 10% of value in pandemic

The total value of Europe’s 500 most valuable brands has dropped 10% during the COVID-19 pandemic from €1.96trn in 2020 to €1.76trn in 2021, according to a global study of brand value.

Published today, Brand Finance’s ranking puts the US is “in a league of its own”, with its top 500 brands reaching a total brand value of a staggering €3.40trn. While Europe comes in second place, the impact of the COVID-19 pandemic has undermined its standing and China is quickly catching up, with its top 500 brands totalling €1.65trn in brand value.

Richard Haigh, managing director, Brand Finance, said the pandemic had tested the resolve of Europe’s top brands: “Some have truly thrived and benefitted as consumers completely shifted their habits, whereas others will be hoping that the continent’s rapid vaccination programme enables them to return to normal operations soon.”

The automobile industry is the most valuable sector across the continent, with the 27 brands that feature in the Brand Finance Europe 500 2021 ranking accounting for 14% of the total brand value (€237.7bn). German brands continue to command the industry across Europe, with the seven brands represented totalling €171.5bn or three quarters of the sector’s total. Mercedes-Benz once again leads the pack as the most valuable brand in Europe, with a brand value of €49.6bn. Volkswagen (down 1% to €40.0bn), BMW (down 6% to €34.4bn), and Porsche (down 5% to €29.2bn) all claim places in the top 10 in 3rd, 5th, and 6th respectively. Despite maintaining its position at the top, Mercedes-Benz has recorded a 16% decline in brand value this year. It has been a difficult year for most traditional car manufacturers – Mercedes included – with sales impacted by COVID-19.

Volkswagen has recorded healthier results, its brand value only recording a marginal 1% drop, according to the report. The brand has continued to focus on its ‘New Volkswagen’ strategy – described as a new era for the brand, as well as implementing its TOGETHER 2025+ strategy – with the ultimate aim of selling 50 different fully-electric vehicles and another 30 plug-in hybrid options. Should the brand be successful, Brand Finance predicts it will overtake Tesla to become the world’s largest electric carmaker.

Ferrari reacted proactively to the pandemic, initially shutting down production and then reopening with a focus on creating a safe working environment. This both minimised disruption and reinforced the brand’s reputation as a high-quality and responsible firm. In line with this, Ferrari ranks high for reputation in our Global Brand Equity Monitor study, particularly in Western Europe (in the top 3 of all brands researched in France, Italy, and the UK).

Alongside revenue forecasts, brand strength is a crucial driver of brand value. As Ferrari’s brand strength maintained its rating, its brand value dropped only slightly, down 4% to €7.9bn. For years, Ferrari has utilised merchandise to support brand awareness and diversify revenue streams and is now taking steps to preserve the exclusivity of the brand, planning to reduce current licensing agreements by 50% and eliminate 30% of product categories.

Banking

The total brand value in the banking industry has declined by 20% – from €225.8bn in 2020 to €181.8bn in 2021 – and three brands have dropped out of the ranking this year, bringing the total number to 53.

The UK’s HSBC is the highest ranked banking brand, but only sits in 21st spot, down six places from last year following an 18% brand value decrease to €14.5bn. Over the last year, HSBC has had to navigate a dent in profits, lower interest rates sparked by the pandemic, political tensions between the US and China, and the uncertainty surrounding Brexit, all of which caused the brand’s profits to plunge by 65% in the first half of 2020.

Similarly, Spain’s leader in the sector, Santander, has seen its brand value go down 23% to €12.2bn, dropping out of the top 25 this year to 26th position. Its larger presence in the South American markets has meant the risk exposure is larger than its Spanish counterparts’ and thus the turbulence of the last year has meant expected returns are less optimistic than previous years, impacting overall brand value.

Other national banking leaders from across the continent have fared slightly better, climbing the ranking despite losing brand value: France’s BNP Paribas (down 12% to €10.5bn), the Netherlands’ ING (down 17% to €8.5bn), and Switzerland’s UBS (down 11% to €7.4bn) have moved up to 29th, 38th, and 51st positions, respectively.

Retail

The retail sector has recorded a 4% uptick in cumulative brand value. It is the third most valuable sector, behind autos and banking, with the 49 brands that feature accounting for 9% of the total brand value in the Brand Finance Europe 500 2021 ranking.

“Various types of retailers have been impacted by the pandemic differently, as consumer habits have been forced to change. Notably, delivery apps and e-commerce platforms are among the fastest growers in the ranking this year. Delivery apps have benefited from the displacement of hospitality spend, where demand for quality food and small indulgences cannot be fulfilled by lockdown-hit restaurants and bars, with consumers turning to takeaways,” the report reads.

Germany’s Delivery Hero is the fastest-growing brand in the ranking, following an impressive 148% brand value growth to €3.2bn. Similarly, Just Eat is the second fastest-growing brand, up 112% to €2.5bn.

Brick-and-mortar retailers IKEA (down 13% to €15.3bn), Aldi, and Lidl still claim the podium for the sector’s most valuable brands. The German supermarket rivals have posted contrasting results, however, with Aldi recording a 2% increase in brand value and Lidl a 14% decrease.

Aldi (brand value €13.2bn) has embarked on a foray into the online retail space, successfully pivoting its offering in the face of the pandemic. The same strategy has not been undertaken by Lidl (brand value €9.6bn), with the CEO of the UK arm, Christian Härtnagel, arguing the pandemic has artificially inflated demand for online shopping and that the costs are simply too high.

A total of 334 or two in three among the top 500 brands hail from the EU. With the nation’s 65 brands making up 25% of the total brand value in the ranking, Germany is well ahead of the pack, according to the report. France comes in second, with 91 brands featuring and their brand value equating to 20% of the total. Orange (down 1% to €16.3bn), Total (down 26% to €15.4bn), and AXA (up 1% to €14.8bn) are the top three most valuable French brands, claiming 13th, 15th, and 19th spots, respectively. Orange is present in 160 cities, and is currently focused on the deployment of 5G.

Very few brands from Central and Eastern Europe are represented, with only 22 featured in total – the majority of these being from Russia, whose 15 brands account for 2% of the total brand value in the ranking.

Richard Haigh, managing director, Brand Finance, commented: “With over half of the brands in the top 500 hailing from just three nations – Germany, France, and the UK – the smaller economies have a long way to go to stamp their authority across the continent. The focus should be shifted towards investment in building up and supporting strong homegrown brands to expand internationally, which will in turn drive local economies forward.”

Image courtesy Mercedes-Benz

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