FDBusiness.com

Coca-Cola and Nestlé Reign Supreme Dominating Food and Drink Sector

 Breaking News

Coca-Cola and Nestlé Reign Supreme Dominating Food and Drink Sector

Coca-Cola and Nestlé Reign Supreme Dominating Food and Drink Sector
September 25
10:00 2020
Spread the love

The food & drink sector is one of the few sectors that should suffer limited impact as a result of the COVID-19 pandemic, with the world’s top food & drink brands unlikely to lose brand value, according to the latest Brand Finance Food & Drink 2020 report. Looking beyond the food & drink sector, however, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.

Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.

Coca-Cola bubbles to top

American soft drinks giant, Coca-Cola, retains its title of the world’s most valuable soft drinks brand, recording a steady 5% increase in brand value to US$37.9 billion. With a brand worth more than double that of its second-placed rival, Pepsi (up 2% to US$18.9 billion), Coca-Cola proves its dominance in the global soft drinks market for another year.

Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, Coca-Cola is also the world’s strongest soft drinks brand, with a Brand Strength Index (BSI) score of 90.9 out of 100 and a corresponding elite AAA+ brand strength rating.

Founded over a century ago and sold in over 200 countries, Coca-Cola is a unique example of a B2C brand with a significant historical impact – from its political significance during World War II, to developing innovations in modern advertising, and even to shaping the jolly Santa Claus character that is most commonly portrayed in the Western world.

Consistent with other brands in the soft drinks sector, Coca-Cola’s success has been disrupted by COVID-19, suffering the steepest drop in quarterly sales in over 25 years due to the fall in demand after bars, restaurants, and cinemas were forced to close.

When looking at the brand portfolios across the food and drink sector, The Coca-Cola Company’s portfolios claims the third position with a cumulative brand value of US$55.7 billion. PepsiCo sits in second, with a total brand value of US$62.0 billion.

Savio D’Souza, Valuation Director, Brand Finance, comments: “The pandemic has dented Coca-Cola’s once solid reputation as being a recession proof brand, while this can be put down to extraneous impacts, its fierce rival, Pepsi, has fared relatively well. On a portfolio level PepsiCo continues to pull ahead of Coca-Cola in terms of brand value and strength. Management is making the right calls to cull zombie brands and refocus on the strong master brand, and a streamlined portfolio. Moving forward, Coca-Cola will need to react to the pandemic with consistent innovation, marketing efficiency and effectiveness in line with its recent reorganisation of the business.”

Yili grows impressive 13%

Recording an impressive brand value growth of 13% to US$8.6 billion, Yili has now overtaken Danone to become the most valuable dairy brand in the world, as well as claiming 2nd position in the overall Brand Finance Food 50 2020 ranking.

As Asia’s most valuable dairy brand for the last five years, Yili has continually expanded into new territories, ratifying the brand’s aim to build a global network and target 2 billion consumers by the end of 2020. Domestically, Yili has invested US$4.3 billion in constructing a high-end organic dairy production base in Inner Mongolia, which is expected to generate 60,000 jobs as well as stimulate local farming and logistics industries. Abroad, Yili set its sights on New Zealand, acquiring 100% of equity of the country’s second largest dairy producer, Westland Milk Products.

Yili could see the gap ahead of Danone widen as the brand enjoyed formidable quarterly results, staging a strong rebound in the second quarter despite the pandemic’s negative impact at the beginning of the year.

For the first time, the Brand Finance Food & Drink 2020 report includes the Dairy Portfolio ranking – a ranking that splits the brand value related to dairy brands from the wider food portfolios – as dairy brands represent a large proportion of the food portfolios’ brand value and often are responsible for movement within the overall ranking.

Yili also has the fifth most valuable dairy portfolio, with a total brand value of US$8.6 billion, an impressive feat as traditionally Asian players have not performed well in the dairy business, with international counterparts dominating market share. Nestlé once again leads the way, boasting the most valuable dairy portfolio with a combined brand value of US$12.6 billion. Lactalis’ (total brand value US$11.7 billion) and Danone’s (total brand value US$11.6 billion) dairy portfolios claim second and third respectively.

Savio D’Souza, Valuation Director, Brand Finance, comments: “As a brand committed to continuous innovation in the industry, it is unsurprising that Yili has managed to continually achieve its expansion goals this year, even despite the COVID-19 pandemic. In the coming year, Yili’s strong strategy of innovation is set to be the brand’s core power for growth in the future.”

Nestlé boasts most valuable portfolio

Nestlé has retained the title of the world’s most valuable food brand following a 3% brand value increase to US$20.3 billion. The Nestlé portfolio is once again the most valuable food & drink portfolio, with a total brand value US$68.5 billion.

For another year, Nestlé has celebrated strong organic growth, following a solid performance in its key US market. The brand prides itself on its market-leading, high-speed innovation and has recently successfully rolled out its premium Starbucks products. Furthermore, Nestlé has capitalised on the ever-growing vegan and vegetarian movement through the development of its plant-based offering.

Hungry for growth, Nestlé has got a pipeline of expansion projects in its sights, including its Purina Australia arm, further investment in Purina US, as well as in its Romont production centre in Switzerland.

Savio D’Souza, Valuation Director, Brand Finance, comments: “Nestlé’s response and resilience to the COVID-19 outbreak has demonstrated why the brand is truly a leader both on home soil and globally. Posting solid growth in a time of turmoil is testament to the agility and strength of the brand. With Brand Finance calculating that the food industry is one of the few sectors that should see limited impact from the pandemic, Nestlé certainly seems to be in a strong position to weather the storm.”

Ones to watch

Across the sector there are some standout brands that have recorded significant growth in brand value. As the fastest growing food brand, Japan’s Kikkoman has jumped an impressive 12 spots up the Brand Finance Food 50 2020 ranking from 34th to 22nd, growing by a staggering 36% to US$3.0 billion. Particularly excelling in the soy sauce business, Kikkoman claims the greatest share of the domestic soy sauce market.

Indian dairy brand, Amul is one to watch this year as the fastest growing dairy brand, increasing in brand value by 25% to US$3.1 billion. The brand has focused on diversifying its portfolio, launching its Tru range. The brand cites improvements in its infrastructure, and thus increased sales in rural areas, as a key reason behind its recent solid financial performance.

View the full Brand Finance Food & Drink 2020 report here

 


Warning: count(): Parameter must be an array or an object that implements Countable in /home/fdbusiness/public_html/wp-content/themes/legatus-theme/includes/single/post-tags.php on line 5

About Author

mike

mike

Related Articles

Food & Drink Business Conference & Exhibition 2016

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

    Subscribe Here



    Advertisements