Consumers place more value on innovation as food and drink is named the most innovative sector in the BrandZ Top 75 Most Valuable UK Brands ranking, recently released by WPP and Kantar Millward Brown.
Newer brands Just Eat, Innocent, Deliveroo and Brewdog have entered this year’s UK list, which has been extended to include 75 brands. Vodafone remains at No. 1 with an increase in value of 6 percent to reach $28.9 billion, followed by HSBC (+7 percent, $23.6 billion) and Shell (+10 percent, $20.3 billion).
The BrandZ UK Top 75 is worth $271 billion (around £205 billion)—equivalent to just over 10 percent of the UK’s GDP. The 50 most valuable brands on the list have gained 5 percent in total value in the last year, compared with the 2017 BrandZ UK Top 50. The top innovators increased brand value by 25 percent more than their rivals.
This growth has been driven by the Top 10 risers, which have grown at nearly four times the rate of the rest of the brands. The fastest riser is Prudential, which increased its brand value 40 percent in the last year, followed by Dyson (31 percent), Asos (31 percent), and Dulux (18 percent). The BrandZ research shows that consumers perceive these fast-rising brands as particularly innovative and good at communicating, and they also have much stronger brand equity than the average across the ranking.
The brands that have entered the UK ranking for the first time, which are worth on average $1.1 billion, include Just Eat (No. 30), bet365 (No. 44), Compare the Market (No. 46) and Ocado (No. 49). Consumers view them as highly differentiated, recognizing them for “shaking things up” and providing a great experience. However, the older established names that remain at the top, such as Dove (No. 10) and Shell (No. 3), are worth $4.9 billion on average. These brands are considered less different, but more meaningful and top of mind.
Higher perceptions of innovation are proven to stimulate value growth—the brands in the BrandZ UK ranking that consumers perceive as the most innovative rose +18 percent in value in the last year, while the least innovative declined -7 percent.
“The nation’s most valuable 75 brands have all risen to the top in a highly competitive, crowded and uncertain environment,” said WPP’s David Roth, in a news release. “Consumers value innovation, and it is key to helping UK companies’ future-proof their brands, deliver sustainable growth and increase in value—ever more vital in a post-Brexit world.”
The 2018 BrandZ Top 10 Most Valuable UK Brands
The BrandZ research indicates that the UK is still catching up when it comes to innovation. In 2017, consumers perceived the UK’s most valuable brands as only slightly more innovative than the average brand, putting them at risk from global competitors and new disruptors. The innovation score across the 50 most valuable brands in the UK was 102—in 2018, this has risen to 105 (the average brand is 100). This is lower than the 50 most valuable brands in the Global Top 100 (113), the U.S. (111), Indonesia and China (both 108), Germany (107) and India (106).
“Established and new brands can learn a lot from each other,” said Jane Bloomfield, head of business development at Kantar UK, in the release. “Those older brands that form the bedrock of the UK economy have great staying power, having built salience and meaning. To grow, they need to work on increasing consumer perceptions that they are different, innovative and relevant. The disruptors entering the ranking, meanwhile, need to make their difference meaningful and salient to consumers – if they fail to do so they could have a short lifespan.”
Other trends highlighted in this year’s report include:
Brands that are innovative are more loved
But according to the BrandZ analysis of consumers’ opinions, they have to clearly communicate their innovations in order to be recognized as innovators. Among the Top 10 innovators this year are Dyson, Deliveroo, BrewDog and Sky.
Innovation on its own will not sustain value growth
If a brand fails to innovate in a way that consumers find both meaningful and different, it drops in value. The brands considered innovative and meaningfully different—Dulux, Just Eat, Dyson, BBC, BrewDog, Compare the Market, Tesco, Sky, John Lewis and Innocent—are worth twice as much on average compared to low performers on both aspects.
Strong brands beat the stock market
The average share price of the 50 most valuable UK brands in our 2017 ranking increased 9.3 percent between November 2017 and July 2018, compared with 1.1 percent for the FTSE100. This means they created nine times as much value for shareholders.
Some leading names generate the vast majority of their revenue from overseas exposure
These include Johnnie Walker, Castrol, Lipton, Dove, Standard Chartered, KitKat and Vodafone—representing a broad range of categories.
Great communication is a vital driver of brand value
The brands considered by consumers to be the best communicators increased their value 13 percent in the past year, compared with a decline of -6 percent for the worst communicators.
Food and drink is seen as the most innovative category of all
The sector has an average score of 109, driven by new brands such as Deliveroo, Just Eat and BrewDog, followed by the household goods category, driven by brands including Dyson and Dulux.
The valuation behind the BrandZ Top 75 Most Valuable UK Brands was conducted by Kantar Millward Brown, which specializes in brand equity research and brand valuation. Commissioned by WPP and Kantar, the ranking combines rigorously analyzed financial data from Bloomberg with the opinions of over 120,000 UK consumers.