The Best Global Brands of 2020 Will be…

Predicting the future of a fact-based ranking is an uncomfortable process. The whole point of undertaking rigorous analysis required to deliver Interbrand’s Best Global Brands report is to remove speculation and state what brands are really worth as economic assets. It’s grown to have such authority that many senior execs are now bonused on where their brand appears within the Top 100, so it’s quite a responsibility to deliver.

But looking inside the data, we can make some predictions that feel logical within the context of the findings from the rankings so far and after all, 2020 is only five years away. First up, the value of the table overall grows year on year at a rate that has always been above inflation or global interest rates.

Reassuringly, this shows that an investment in brands is a good one. But also when we have indexed the Best Global Brands and compared them with stock market indices, we see that these strongly branded companies outperform the markets, in good times or bad.

We expect the table to continue to show that an investment in brands is a good one. So let’s look at the categories inside the ranking. Well, unsurprisingly for a ranking that has Apple and Google as its first $100bn+ brands in position No 1 and No 2, Tech brands feel like a good bet to continue their meteoric rise.We can see that the role of brand (i.e. the role that brand plays in driving choice in a category) is becoming ever more important. These brands used to hide behind a screen but are now front and centre of consumers’ decision making criteria.

 

Our choice of smartphone now says a lot about us as a consumer and this will only increase as technology becomes more wearable and design-led. But it won’t be all plain sailing.

For all of the success of the winners like Apple, Google and Samsung, the category also has its share of brands that have fared less well, like Nokia and Nintendo which just made the cut of Best Global Brands 2014. This goes to show the importance and constancy of innovation to the category and ensuring that the brand is making the right bets on what will drive future demand.

Beyond tech, we’ve also witnessed a resurgent Automotive category that has impressively responded to a downfall in global demand back in 2008-09 and innovated beyond and around the presumed stereotypes of dirty engineering through hybrid technology.

The Energy and Pharma sectors are also providing strong potential for brand value growth as they recognise and commit to greater brand focus. Now let’s move onto geographies.

One of the ironies of producing a report on the Best Global Brands is that everyone gets obsessed with their country of origin, despite the fact that the brands have to demonstrate that they are indeed global entities. We stipulate that 30 per cent of their revenues come from outside their home region and they have a significant presence in Asia, Europe and North America as well as broad geographic coverage in emerging markets.

However, if we focus on country of origin, we can see that whilst the US dominates the table with 53 brands, that sense of geographic dominance has slowly changed over time, considering it contributed 62 brands back in 2001. Indeed in Best Global Brands 2014 we witnessed the arrival of the first Chinese brand, Huawei, and surely over time, more brands from the emerging markets will follow.

Brands like Samsung, Hyundai and Kia are now comfortable and assumed stable mates of brands that have been long established as household names. Surely it can’t be long before Lenovo, Alibaba and Tata join them. Now let’s get specific about brands.

Breaking into the esteemed group of Best Global Brands isn’t easy. In 2014, the 100th brand, Nintendo, was still valued at around $4billion so whilst brand values may fluctuate, a $4 billion entry point will remain a significant hurdle to many great, strong and respected brands that just won’t be valuable enough to make the cut.

However, as brands have become increasingly digital, we have seen meteoric rises that start to show that brand value can be gained more quickly than was conceivable in the old, pre-digital economy.

Facebook entered the table in 2013, as we require publicly available financial data for analysis. It walked into the table at Number 52 and then proceeded to post an 86 per cent increase in brand value to place itself at No 29 in 2014.

Correspondingly, back in 2008, Nokia was a Number 5 brand that now just holds onto No 98. So whilst brands build sustainable value, and that value insulates a business better from sudden fluctuations, we can see the process of building and maintaining Facebook entered the table in 2013, as we require publicly available financial data for analysis. It walked into the table at Number 52 and then proceeded to post an 86 per cent increase in brand value to place itself at No 29 in 2014.

Correspondingly, back in 2008, Nokia was a Number 5 brand that now just holds onto No 98. So whilst brands build sustainable value, and that value insulates a business better from sudden fluctuations, we can see the process of building and maintaining brand value has become more volatile and that represents both an opportunity and a challenge for brands today.

So, to the table in 2020 and some predictions. First off, the brands in the global Top 10 are extremely well managed. Expect those brands to be up at the top of the table or thereabouts. They have the qualifications to do this and barring disaster, should deliver against that expectation.

Expect the value of the table overall to keep on increasing and an entry point into Best Global Brands may require a brand value of around $5.5bn – $6bn. Expect more brands from the emerging markets to be sitting comfortably within the table as they understand how to generate demand across the world.

Expect all the brands on the table to understand the importance of their customers with a renewed humility, to have navigated the digital landscape and have made big data personal to their customers as outlined in our recent ‘Age of You’ thinking. And also expect one or two surprises, new entrants that we don’t know yet but will be household names by the time we get to 2020.This article was originally published in The Economic Times on January 7, 2014.

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