The BrandZ™ Top 100 Most Valuable Global Brands rose 21 percent in value to $4.4 trillion, adding $748 billion, the largest one-year value increase in the 12 years of publishing the global report.
Brand building powers rise in all categories
The record growth touched both consumer and business brands and followed years of value fluctuations as brands contended with economic and technological disruptions. It confirmed the positive effect of building brands over the long-term and the importance of delivering consistent customer experience. Strong brands caught the tailwind of a sound economy.
Retail was the bellwether category. Having been battered and thoroughly transformed by e-commerce, retail led category value growth for the second consecutive year, with a rise of 35 percent. Two Chinese e-commerce giants drove the retail surge. JD.com increased 94 percent in value, and Alibaba, 92 percent.
These two Chinese brands also led the Top 20 Risers, the list of brands that increased most in value year-to-year, followed by another Chinese brand, Moutai. A premium baijiu, China’s traditional white alcoholic drink, Moutai increased 89 percent in value.
Although North America, principally the US, continued to dominate the Global 100 in number of brands (57) and percent of value (71 percent), other developments also reflected the growing presence of Chinese brands in the BrandZ™ Global Top 100, and the ranking’s increasing diversity:
- Tencent, China’s giant internet portal and most valuable brand, entered the BrandZ™ Global Top 5. And SF Express, a Chinese logistics brand joined the Top 100, with the addition of the logistics category to the report this year.
- Chinese brands increased 49 percent in value year-on-year and 1,445 percent over the past 12 years. Fourteen Chinese brands rank in the 2018 BrandZ™ Global Top 100, compared with one Chinese brand 12 years ago.
- An Indonesian brand entered the BrandZ™ Global Top 100 for the first time, the regional bank BCA. And in another breakthrough, an Indian brand, Maruti Suzuki, entered the BrandZ™ Cars Top 10. In addition, the Chilean department store Falabella returned to the Retail Top 20, and a Mexican brand, Modelo, entered the Beer Top 10.
In another demonstration of the connection between strong brands and superior return to shareholders, the BrandZ™ Strong Brands Portfolio increased 172.1 percent between April 2006 and April 2018, outperforming both the S&P 500, which grew 102.0 percent, and the MSCI World Index, which grew 50.3 percent. And indicating the importance of brand innovation during disruptive times, our BrandZ™ Strong and Innovative Brands Portfolio increased 226.7 percent in value, more than twice the rate of the S&P 500.
Technology and disruption
Although the retail category led the ranking in percentage value growth, the technology category led in actual value contribution. Technology added $348 billion in value to the BrandZ™ Global Top 100, while retail added $149 billion.
Technology brands comprise over one-third of BrandZ™ Global Top 100 value. With the addition of e-commerce giants and telecom providers, technology-related brands account for 56 percent of the Global Top 100 value.
Each of the BrandZ™ Global Top 5—Google, Apple, Amazon, Microsoft, and Tencent—are technology or technology-related brands and all but one, China’s Tencent, are from the US, as is brand No. 6 Facebook.
These brands expanded their ecosystems—networks of interrelated products and services that meet diverse consumer needs and capture a growing portion of customer spending. The power of ecosystem brands crossed categories, adding both new capabilities and disruptions.
With augmented reality software increasingly embedded smartphones, many brands, especially retailers, added apps to enhance the customer experience. Artificial intelligence (AI), in the form of personal assistants, like Amazon’s Alexa, added more convenience to consumers’ lives but also challenged brands in new ways.
Voice emerged as an opportunity and threat. Brands needed to develop their own voice as a critical brand asset. They also needed to find ways to avoid the threat of disintermediation by voice. Disintermediation happens when AI personal assistants narrow choice, responding to consumer product requests with offerings of house brands or brands selected by algorithms or search results.
In financial services, bank and insurance brands attempted to counter the disintermediation threat of start-up fintechs and blockchain technology, able to provide transactional services at lower cost, and appeal especially to a younger generation of potential customers.
Brand building and the consumer mood
Facing ongoing disruption, categories continued to adjust and sometimes substantially transform. To improve customer experience with the right balance of online and offline coordination, retail moved to a new level.
Amazon acquired Whole Foods, the US grocery chain of physical stores, and Chinese e-commerce leaders, Alibaba and JD.com, also linked with physical store operators. Alibaba CEO Jack Ma termed this data-powered integration of products and logistics from sourcing to last-mile delivery, the New Retail.
Brands responded to the consumer mood. Seeking convenience and comfort, consumers became more accepting of their own inconsistent behavior, articulating a desire to live healthier lives, for example, but at the same time enjoying the indulgence of a hamburger or carbonated soft drink.
McDonald’s and Burger King rebounded, having improved their restaurants and menus and matched the consumer desire for healthier, better tasting food. Coke and Pepsi leveraged consumer love for their master brands to gain time and enlarge their drinks portfolios with healthier options.
In apparel and luxury, brands introduced products with bolder designs and colors that fulfilled the consumer desire for escape and personal expression. With its vibrant patterns and colors, Gucci led the BrandZ™ Luxury Top 10 in value growth, increasing 66 percent, making it one of the Top 20 Risers.
Car brands made SUVs of all sizes to satisfy the consumer preference for convenient vehicles that felt powerful and safe. At the same time, anticipating more carbon restrictions, car makers prepared for a future of mobility alternatives. On the strength of its strong brand equity, Volkswagen rebounded back into the BrandZ™ Cars Top 10, having dropped from the ranking after its emissions scandal.
Consumer-facing, downstream businesses gained more attention in the oil and gas category. And exploration, especially in the US, took place closer to home, making consumers potential influencers on relevant legislation and licenses to operate. Shell, which operates the most retail service stations worldwide, surpassed Exxon Mobile as No. 1 in the oil and gas category. As more brands focused on the future of gas and sustainable fuels, long-term brand building became more important, even in the oil and gas category.