German brands hold steady despite year of uncertainty
Germany’s strongest brands worth US$336 billion
The country’s leading 50 brands have a combined brand value in 2020 of $335,996 million. While this is a 1 percent decrease on the 2019 total, when fluctuations in the exchange rate are taken into account, it represents continued strength on the part of German brands, which remain the most valuable in Europe. This year’s results come at a time of continued economic uncertainty, not just in Germany but in many of the country’s trading partners. This is significant because so many of the Top 50 are export brands, generating the vast majority of their revenue in international markets.
Diverse ranking reflects breadth of German economy
Germany’s Top 50 brands come from a wider mix of categories than the leading brands in any other BrandZ market. Many countries’ rankings are dominated by one sector, which can contribute up to half the entire value; in Germany, the biggest category – automotive – accounts for only 22 percent of the ranking’s dollar value. The most valuable categories after that are technology and Telecom providers. All together there are 18 categories in the Top 50 spanning all of German life, from banks and beer to apparel and insurance cover. Brands in experience-driven categories tended to outperform the others.
Big swings behind headline figure
While the overall picture is of little change in the Top 50’s brand value, there were some significant movements both up and down, ranging from +25 percent to -30 percent. Only seven brands had little change in brand value, with the rest either rising or falling by at least 3 percent. The automotive industry was one of the hardest hit overall as many brands are working out what their role will be as consumer focus shifts away from car ownership and towards a broader view of mobility. Reflecting a pattern we have seen in many other countries’ BrandZ results, Germany’s much-loved retail sector has seen a boost this year in brand value. German retail has also been given a boost this year by the inclusion in the Top 50 of two new retail brands in the Top 50 – Fielmann and Tchibo. Three of the Top 10 fastest risers in the ranking are retailers.
Global consumers fuel fastest growth
German brands with a strong business overseas have been able to insulate themselves from economic stresses at home and post relatively strong growth in brand value compared to those with a primarily domestic focus. In fact, 74 percent (weighted average) of the brand value in the Top 50 comes from overseas. By having their eggs in many baskets, they are able to balance their risk – as well as reap the rewards of rising demand in fast-growth markets. The fastest-growing brands this year are adidas and Puma, both brands with more than 90 percent international exposure.
Leaders offer lessons
The most valuable brands in Germany – and the fastest-growing smaller brands – clearly demonstrate the benefits of being meaningful, different and salient in consumers’ minds. Those that stand out against others in their category in ways that are relevant and important to people have posted significantly stronger performances this year than those that don’t. In addition to being Meaningfully Different, the best brands also ensure they have Salience, that is they spring readily to mind when someone has a need or thinks of a category.
Brands on a mission win consumers’ hearts
There are five key attributes that contribute to a brand’s vitality, giving it a strong score on what we at BrandZ call its vitality quotient (vQ). The Top 50 German brands are star performers on all five measures, but they stand out especially for having a strong sense of purpose – providing an advantage either to the buyer or the wider world that goes beyond its functional benefits. There are few brands in the world that aren’t now talking about what their bigger purpose should be, but the importance of having a deeper mission has been well understood by leading German brands for years.
German brands shine as innovators
The German Top 50 once again emerge as the most innovative brands in Europe, and it is clear that this positions them well for value growth. The brands in the ranking are a generally innovative bunch, but those that stand out on this measure have posted stronger gains in dollar value than the rest. The most innovative brand in Germany this year is adidas, which encourages people to improve their lives through sport; it also has a strong focus on ways it can use technology to reduce its impact on the environment.
Strong brands are built on trust
Consumer mistrust of big business and big institutions has been fueled by the “Dieselgate” scandal, allegations of high-level impropriety in the banking sector, and the recent sale of listeria-tainted meat in German supermarkets. Trust should be seen as a foundation stone to building a strong brand, particularly in uncertain times – and this applies in every category. Lufthansa is the most trusted brand in the German Top 50, and retailers are consistently strong performers. An important element of trust is being seen as fair – in pricing and in the treatment of staff, customers and suppliers.
Top learnings for marketers
1 A healthy brand is a more valuable brand
There’s a compelling correlation between the BrandZ measure of good health, what we call vQ, and strong brand value growth. Brands with high vQ scores grew in value by an average of $142 million in 2020, while those that underperformed on this key vitality metric actually declined, by an average of $295 million. The brands with the highest vQ scores this year include Fielmann, dm, DHL, adidas and Lufthansa, showing that health isn’t predetermined by the category in which a brand operates. When brands give themselves a workout, they can build up brand muscle in the right places to deliver value.
2 Have a mission, promote it, and deliver on it
The brands that have a strong purpose beyond what they produce or deliver every day are viewed more favorably by consumers, and ultimately generate stronger value growth. A brand’s purpose must be more than a PR statement, and it must be evident in every experience a consumer has of a brand. Have a genuine mission to do something for the greater good, articulate that purpose clearly and effectively, and ensure it’s clearly seen as part of the brand’s DNA.
3 It’s vital to be different, in a way that benefits consumers
Being different to other brands is one way of standing out from the crowd, but it’s important that what sets a brand apart is seen as important to the people it’s targeting. We call this “Meaningful Difference” and it’s this that makes a difference to success in the market and a rise in brand value. In the Top 50, the more Meaningfully Different brands are typically more valuable. The fastest risers and new entrants to the ranking this year are also more Meaningfully Different than average.
4 Any brand can be innovative
Creative disruption isn’t just the preserve of startups and tech brands; the five most innovative brands in the German Top 50 are as old as 108 years (Nivea), and the youngest among them was founded in 1973 (dm), and none is from an inherently innovative sector. What marks out these brands is their ability to evolve both their offering and their communications so that they feel relevant to customers’ lives today.
- Focusing on brand is the key to long-term growth
Use brand-building – with a long-term outlook – as the basis of defence against disruptive new challengers and a platform from which to attack as the market shifts. A strong brand protects a business from imitators, and from rivals that seek to succeed by focusing solely on being the cheapest.