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Saturday 06th of December 2008
September 18, 2008

Brand Finance reveals impact of credit crunch on leading brands


by Kay Murchie
”Brand

Independent brand valuation consultancy, Brand Finance plc, has revealed the extent the credit crunch has had on the technology sector after the economic downturn has wiped $67 billion (£37.5 billion) off the top 100 global and US brands.

In March this year, the organisation published its report on the 500 most valuable Global Brands. The effective valuation date was 31 December 2007, using financial forecasts for 2008 and beyond.

The report provides an insight into the impact of recession on leading brands.

This year the economy has been hit by rising commodity prices, the credit crunch, a rise in unemployment and falling share prices.

Consequently, Brand Finance has revised its findings and updated the values of the top 100 global and top 100 US brands.

The revised report established that since Brand Finance’s previous valuation, the Microsoft brand has dropped 12% to $39,358 million while Google’s brand value also fell dramatically by 12%. IBM fell just 1% to $37,948 million.

The hardest hit was Cisco System after it fell two places in the brand values ranking and lost 15% off its brand value. Hewlett-Packard retained its place at the number eight spot but lost 5% to $32,427 million.

According to David Haigh, Brand Finance’s CEO, the considerable fall could be symptomatic of individuals and businesses postponing upgrading software and hardware in the current challenging economic climate.

Meanwhile, the price of oil hit record highs earlier this year which resulted in the rise in value of leading petrochemical brands.

Brand value was increased among ExxonMobil (19.4%), BP (18.3%), Chevron (17.9%) and Shell (12.8%).

Healthcare also noted a considerable rise in overall brand value, suggesting that despite a fall in spending, consumers see health and well-being as important. Johnson & Johnson outperformed its rivals by rising 16 places to number 84 in the rankings.

The retail sector’s total enterprise value has risen by 9.1% and as consumers cut back on spending, low-priced retailers are leveraging their position by providing customers with low cost items.

Brand Finance highlighted that retailing giant Wal-Mart has overtaken Coca-Cola, to become the most valuable global brand. Since December last year, the value of the brand has gained 9% to $42,567 million fuelling a 23.5% increase in Wal-Mart’s enterprise value over same period.

The current economic climate has had a severe impact on the financial services sector and brand value has decreased across the board, concluded Mr Haigh.

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