What brands are worth: Another inflexion point?
PremiumIf Apple’s overthrow of Coca-Cola heralded the age of digital appeal, does Tesla’s spectacular ascent signal a global embrace of clean air? Remember, there are other collective causes too
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A brand is a rock of stability, a snappy representation of an enduring set of values and promises, as much as a source of profit. Its value tends to stay relatively stable, too. The tech shake-up of the past decade gave global brand valuations a shot of dynamism. Now clean tech has begun revving up the charts. Interbrand’s Best Global Brands list for 2021, out last week, has Apple on top for the ninth year in row, worth almost $408.3 billion, up 26% over the year, by the brand consultancy’s formula. Second-placed Amazon is valued at $249.3 billion, with a 24% gain, and third-ranked Microsoft at $210.2 billion, 27% more than it was in 2020. Together, they make up 62.3% of the top 10 brands’ value, boosted by a pandemic pivot towards digital dependence. The once top-prized Coca-Cola is only the sixth most valuable, nearly flat at $57.5 billion, below fourth Google and fifth Samsung, and is followed closely by Toyota, Mercedes, McDonald’s and Disney. The spotlight, however, is on a brand that made a high-voltage leap of 184%, Tesla. At $36.3 billion, it is ranked No. 14 and still trails three car marques, BMW being No. 12, but its near-tripling of brand value nudges us to expect accelerated inflexions ahead as the worldwide premium rises on innovation to combat climate change.
The success of Elon Musk’s electric vehicles (EVs) venture named after Nikola Tesla (1856-1943), which posted its first annual profit in 2020, shows the power of innovation that can profitably capture our urge to quit fossil fuels. While Tesla’s battery-run cars remain out of most buyers’ reach and its overall impact on the world’s carbon emissions is not yet notable either, the very possibility of exhaust-free mobility thrown open by the direction of its business thrust has given it a heroic aura. Its agility as an enterprise and ability to attract popular participation in its stated purpose as a brand are a couple of other parameters on which it scores impressively. Of course, its end of losses clinches the case for it being a worthy asset. Interbrand’s brand valuation springs from “an analysis of the financial performance of branded products or services, of the role the brand plays in purchase decisions, and of the brand’s competitive strength." Apart from direction, agility and participation, the extent of internal alignment, trust enjoyed, empathy shown, distinctiveness achieved, coherence displayed, presence established and affinity evoked also go into its calculation.
There are other evaluation formulas, too. Brand Finance, for example, estimates the money a company would pay as royalty to license the use of its brand if it did not own it. Apple is only worth $263.4 billion on its chart for 2021, while Tesla is pegged at $32 billion, just a bit lower than Interbrand’s figure. Either way, as a fraction of stock-market capitalization, Apple outscores Tesla vastly as a brand. While this may largely be because the EV- maker’s shares are overvalued right now, it also speaks of Apple’s lead, which tells us how far a name can go that endears itself to people by playing the hi-tech champion of liberty and empowering them with whizzy new tools. Indeed, the shape that a brand takes in consumer mindspace is vital. Interbrand, which lays emphasis on this, expects change-drivers to zoom ahead, those whose growth “becomes a matter of common interest". Cleaner air would certainly serve our collective cause. So would much else that helps us breathe easy
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