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The Netherlands Survives and Thrives

The Netherlands Survives and Thrives

When King Willem-Alexander addressed the Dutch Parliament recently to outline the country’s economic forecast for 2020, he stuck to the no-nonsense headlines: “National debt is under control and the (tax) burden can be lowered,” he said. But at the same time, he added, GDP growth likely would slow to 1.5 percent in 2020, down from 2.5 percent in 2018. “The approaching Brexit casts its shadow forward," the King said. “"It's a profit warning for the short term and the long term, that forces us to consider how the Netherlands will earn money in the future and remain a country with good social services."

This is all fitting and true enough (although in a society increasingly concerned with notions of fairness, debates still rage about who should most benefit from any future tax relief). But what a straightforward recitation of the Dutch economy’s fundaments misses is just how unusual the country’s journey has been in the past decade.

There has been an undeniable dynamism to the Netherlands’ trajectory ever since the crisis years of 2012 and 2013. Since then, the country has quickly recovered from recession to stand alongside Germany as of a linchpin of Europe’s resurgence. For all that the Dutch are known as a plainspoken, pragmatic people, they haven’t been afraid to diverge from the typical script. The Netherlands may be a small country, but it is a strong and stubborn one when it comes forging its own path regardless of outside expectations.

Many of the country’s leading businesses reflect these traits of dynamism and independent thinking. They have shown a remarkable willingness to disrupt and pivot where others might play it safe. If a company like Shell had hailed from a country besides the Netherlands, would it have been the first major oil company to release a strategic scenario on how to fulfill the emissions goals of the Paris Accords? Or would it have made such aggressive moves to expand into the worlds of electricity trading and green technology? If Heineken had been an American or British brand instead of Dutch, would it have been as willing to shake up its core business by launching a major push into the world of zero-alcohol beer? Would Philips under a different flag have so boldly decided to pivot away from consumer technology to bet on health devices?

The Netherlands has most notably diverted from its expected narrative in the runup to Brexit. With major financial institutions looking to move their European operations outside of London, many expected the Netherlands to be a natural option to host them thanks to its close proximity, strong financial infrastructure, and English-speaking workforce. In reality, however, ever since the 2012-2013 banking crisis the Dutch have shown little desire to turn Amsterdam into the next London or Frankfurt. As a result, financial firms on the run from Brexit have largely bypassed the Netherlands.

So while the country remains exposed to significant Brexit risk - estimates suggest the country could lose out on some 10 billion euros in trading revenues in the event of a hard crash-out - any recovery will have to rely more on the Dutch economy finding organic sources of growth, rather than simply bolting on formerly British assets. (Though, of course, the possibility remains that the Netherlands will convince at least some major companies to relocate their European offices across the North Sea - after all, the Eurostar runs from London to Amsterdam…)

For the Dutch finance system, what all of this means is that instead of receiving an influx of foreign bankers, the Netherlands will have to write its own story of growth and recovery. Because banking will remain a vital part of the Dutch economy – it’s one of the Netherlands oldest and most famed industries, after all, and can still be one of its most valuable going forward. The difference today is that instead of relying on complex financial engineering to secure growth, Dutch banks have been charged by society to tap other sources of innovation: in areas like fintech, payments, and agricultural finance – so-called examples of “boring banking” that are, in fact, anything but.

Similarly, in the realm of retail and consumer-facing brands, the Netherlands has rejected any narrative that suggests its home-grown offerings are destined to be overrun by major global corporations. For such a small domestic market (both in area and GDP), the Netherlands has continued to nurture a surprisingly strong brand portfolio. Local retailers like bol.com and Albert Heijn have more than withstood the likes of Amazon and Aldi; and many more Dutch brands besides – including HEMA, thuisbezorgd.nl, Booking, and Action – have actually expanded outward to become bigger world and regional players.

In category after category, the Netherlands has defied conventional wisdom about what’s possible in a small country. For instance, few would expect a country the size of the Netherlands to be the world’s second-largest agricultural exporter by value - but that’s exactly the case today. This feat was made possible by the country’s embrace of data-enriched, hydroponic, and “smart greenhouse” technologies to more efficiently bring plant, food, and animal products to market. It’s a rural analogue to the innovative, collaborative way that many Dutch cities have served as incubators for fintech, data analytics, and design startups.

None of this is to suggest that the Netherlands future is without risk. Growing pains in the finance sector could turn ugly if they lead to a decrease in ordinary people’s pensions. The country’s food and agriculture industry will increasingly come into conflict with the Netherlands’ sustainability goals. Meanwhile, Dutch consumer confidence is already trending negative for the first time in years - no doubt because people are already starting to worry, and rightly, about the impact of Brexit. In the sociological realm, tense debates over issues like “Black Peter” and religious dress have exposed tensions in an increasingly multicultural society, while recent terrorism and drug-crime incidents have shown that the Netherlands is in no way insulated from the problems of the wider world. And perhaps we should mention Brexit again, just for good measure?

Nevertheless, the key differentiator here is that the Netherlands is willing to face these risks by taking risks – and smart risks, at that. As a result, it will find itself better positioned than most to survive and thrive in the years ahead. As a small country, the Netherlands has always been vulnerable to outside forces shape its story. But now more than ever, the Dutch also possess the strength and determination to write their own narrative for a brighter future.

KEY RESULTS

1. Top 30 Dutch brands worth over €80 Billion

In a challenging macroeconomic environment, the BrandZ™ Top 30 Most Valuable Dutch Brands are worth a combined $92 billion. This is down a slight 1 percent from the year prior, and is in line with declines seen in countries such as the UK (down 3 percent) and Australia (down 5 percent).

2. Dutch brand health remains strong

Statistically speaking, the Netherlands’ mildly negative trend in total brand value can be attributed to earnings declines among a few of the country’s biggest companies. However, brand marketing in the Netherlands remains relatively strong, with top Dutch brands leading Europe in average measures of overall brand health (the metric known as vQ), as well as Meaningfulness (i.e. making a positive difference to people’s lives) and Salience (i.e. being recognizable and top of mind at the time of purchase).

 

2. Wide variations in growth

The overall growth picture also masks wide swings in how brands fared during this second year of the BrandZ™ Dutch Top 30 rankings. Of the 28 returning brands on this year’s list, seven grew their brand value by more than 5 percent, 11 were essentially flat, and ten declined in brand value by more than 5 percent. One clear sign that the Netherlands remains a competitive brand ecosystem: the minimum brand value needed for a brand to win a place in the Dutch Top 30 grew 17 percent this year versus last.

3. Royal Dutch Shell stays at the top

Royal Dutch Shell handily retains its top spot in the BrandZ™ Top 30 Dutch Brands rankings, with a total value of more than $19 billion. Though it declined 8 percent this year (in part due to structural headwinds in the energy industry), Royal Dutch Shell once again accounts for more than a fifth of the Dutch Top 30’s total brand value. Royal Dutch Shell also retains its crown as the most valuable energy brand in the most recent BrandZ™ Global rankings.

4. Brands remain crucial to the Dutch economy

Top Dutch brands are worth more relative to national GDP than is the case in many other leading countries. While the total value of top brands in countries like Japan, Spain, and Italy have underperformed relative to those countries’ GDPs, Dutch brands as a group have overperformed relative to the Netherlands’ GDP. What this means, first and foremost, is that top brands remain crucial to the overall Dutch economy, in both good times and bad.

5. Brand value concentrated at the top

Compared to other markets ranked by BrandZ™, the value of Dutch brands is more concentrated among a few top performers. The Netherlands’ top 10 brands account for a higher percentage of value of the national Top 30 –86 percent – than any other ranked country. Given this concentration, changes in just two or three brands can have (and did have) a major impact on the year-to-year value of the Dutch Top 30.

6. New entrants lead a strong year for retail and tech

This year saw two new entrants to the Dutch Top 30. Both are major players in the field of online retail: CoolBlue (which claimed the 16th spot in the rankings) and bol.com (18th). Retail was among the big risers in terms of year-on-year percentage change, growing significantly on the strength of existing brands like Action as well as strong results for new entrants Bol.com & Coolblue.com in this year’s list.

7. Challenges ahead for banks

For the second year in a row, Banks ranks as the second-largest category in the Dutch Top 30, with 17 percent of the rankings’ total value (behind Energy at 21 percent However, macroeconomic challenges in global banking industry have negatively impacted the share price – and thus, the brand value – of many Dutch banks. The good news is that these banks have retained their core brand strengths in many BrandZ™ metrics. This suggests that Dutch banks are positioned to weather macro difficulties better than many of their global peers.

8. Strong international exposure

The Top 30 Dutch brands include a mix of domestic and international brands – but the country’s biggest brands tend to have a large presence in the global market. This means that the Netherlands’ Top 30 Brands have a relatively high measure of a metric called overseas exposure – with the Netherlands outranking countries like the United States, Japan, Australia, India, and China on this score. Needless to say, this exposure to the global economy comes with its benefits and drawbacks. But given the Netherlands’ small size, it’s probably to be expected that some 44 percent of top Dutch brands’ value comes from overseas.