Nestlé and Coca-Cola have yet again dominated brand rankings in their respective industries, each keeping runners-up at a healthy distance of over US$10 billion, according to a new report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
Valued at US$19.4 billion, Nestlé again claimed the title of the world’s most valuable food brand, more than double the value of second-ranked Danone (US$9.1 billion). Nestlé’s brand value registered virtually no change from last year, with revenues performing at only a satisfactory level. This was caused by challenging sales in both North and South American markets.
Despite a 5% decrease to US$30.4 billion, Coca-Cola once more came in first among the world’s most valuable soft drink brands, over US$10 billion ahead of Pepsi (US$20.0 billion). While the global market for its core product is shrinking, Coca-Cola is actively leveraging its brand with less sugar-laden products such as Coca-Cola Zero Sugar. Diet options are helping to support overall forecast-revenue stability despite health-conscious consumers turning away from traditional sugary drinks.
David Haigh, CEO of Brand Finance, commented:
“With producers and analysts used to the lack of change among the food and drink industry leaders, performance of emerging market brands is likely to cause a stir. We are already starting to see this from brands like Yili. The value of China’s largest dairy brand jumped ahead of international leaders such as Kellogg’s, Kraft, and Heinz.”
Yili milking brand potential
Dairy is one of the strongest performing sectors in the food industry registering an average 13% brand value growth year on year versus 4% for the table as a whole. Within the sector, the Chinese market is the most dynamic in the world, set to overtake the US as the largest market for dairy products by 2022. This phenomenon is due to rising affluence and improved accessibility of products in China’s lower tier cities. As Chinese consumers increasingly prefer dairy products which are more premium, with health benefits and innovative flavours, leading brands such Yili focus on the changing demand and product innovation.
Thanks to this dynamic, Yili stands out as best-performing among the 10 most valuable food brands in the world, rising to 3rd place from 8th in 2017 following an eye-watering 43% growth to US$6.2 billion brand value. This is off the back of fast revenue growth and high profitability, meaning it is now a darling of investors. The brand is dominant in the Chinese market but has a clear potential for expansion into non-dairy categories or internationally as many major Chinese brands take advantage of the Belt and Road initiative to bolster growth abroad.
Although Yili is ahead of Danone in terms of brand potential, the French giant still boasts a more valuable brand, growing above the average for the industry at 15% year on year. Its performance was mainly driven by good sales. Also noteworthy is the performance of Mengniu, another Chinese dairy brand growing at a similar pace as Yili, up 45% year on year, but from a lower base, with their brand value now established at US$3.4 billion.
Lavazza’s shot to the top
While the top six soft drink brands retained the same ranks as last year, brands further down the table have seen much more change. Energy drink brand Monster registered fastest-growth in the top 10 (up 31% to US$3.7 billion), closely followed by Dr Pepper’s performance (up 30% to US$3.3 billion). At the same time, popular brands Fanta (down 12% to US$2.6 billion) and 7-Up (down 3% to US$2.2 billion) fell out from the top 10 this year.
However, fastest-growing in this year’s Brand Finance Soft Drinks 25 league table is Italian coffee brand Lavazza. Up 34% to US$1.2 billion, it moved up from the penultimate 24th to 17th rank in 2018. Popular in and outside of Italy, Lavazza owes the surge to organic brand growth in all its markets, while ambitious acquisitions have also boosted the group’s income. Steadily increasing, consolidated revenues reached €2.0 billion in 2017, up 6.3% from the previous year.
Ferrero’s best-performing portfolio
Although Pepsi (up 8% to US$20.0 billion) is second to Coca-Cola in terms of brand value, the total portfolio of its holding company – PepsiCo – is greater than that of its competitor’s parent. The Coca-Cola Company’s US$45.0 billion portfolio remains second to that of PepsiCo’s, worth US$55.1 billion. More valuable than either of those two is the brand portfolio of the Swiss giant Nestlé, at US$63.2 billion, despite recording a 6% year on year decrease.
Mirroring Lavazza’s success in the drinks brand ranking, Italy’s Ferrero boasts the best-performing food and drink brand portfolio, up 29% to US$8.7 billion this year. All of Ferrero’s major brands recorded significant year on year growth, with three making the Brand Finance Food 50 league table. Ranked 16th, Kinder is Ferrero’s most valuable and fastest-growing brand (up 41% to US$3.1 billion), while Nutella is a new entrant to the ranking, claiming 38th spot.