Every business in the world has had to take stock and pivot their operations to deal with the unforeseen situations caused by the coronavirus outbreak. Luxury brands, too, have been affected.
Brand Finance in its Luxury & Premium 50 2020 report has indicated that the world’s top 50 most valuable luxury and premium brands could lose up to US$35 billion worth of brand value as a result of the COVID-19 pandemic.
While many businesses have been impacted and will continue to see the impact in 2021 as well, there are other luxury brands that have managed to grow. Eight of the top 10 most valuable brands according to Brand Finance have seen their valuations grow in the last one year.
German automobile brand, Porsche, has retained the title of the world’s most valuable luxury and premium brand from 2019 by a considerable margin, following a 16% brand value increase to $33.9 billion.
The brand known for its world-class sports cars has become a pioneer in sustainability. Porsche is the first traditional luxury car manufacturer to launch a fully electric model, the Taycan.
Gucci, which takes the second spot in the list, has been taking big leaps towards sustainability not just in its collections but also in its operations. It also launched a gender neutral edit this year. Its brand value rose 20.2 per cent to $17.6 billion.
Five French brands feature in the top 10 and have all celebrated a strong year, their brand values growing on average by 14%.
The top 10 most valuable brands are:
1. Porsche + 16 per cent, $33.9 billion
2. Gucci + 20.2 per cent, $17.6 billion
3. Louis Vuitton + 21 per cent, $16.5 billion
4. Cartier + 10.1 per cent, $15 billion
5. Chanel + 19.4 per cent, $13.7 billion
6. Hermès + 1 per cent, $ 11.9 billion
7. Ferrari + 7 per cent, $ 11.9 billion
8. Rolex – 2.2 per cent, $ 7.8 billion
9. Dior +8.6 per cent, $6.8 billion
10. Coach – 9.7 per cent, $6.8 billion
Givenchy is the fastest-growing brand this year, its brand value growing at an impressive 74 per cent to $2.0 billion, simultaneously jumping 11 spots in the ranking from 37th to 26th in the list.
Ferrari is the world’s strongest brand
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation.
According to these criteria Ferrari has retained its position as the world’s strongest luxury and premium brand with a Brand Strength Index (BSI) score of 94.1 out of 100 and a corresponding elite AAA+ brand strength rating.
Ferrari’s brand value grew 9 per cent to $9.1 billion. In 2019, the brand announced five new models in 2019, including the SF90 Stradale and Ferrari Roma, both aimed at new market segments. The company also made an agreement with the Giorgio Armani Group to help push Ferrari collections into a more premium space.
In terms of brand reputation, the auto sector leads the way followed by tech, apparel, restaurants and then airlines.
Impact of Covid-19
According to the report, sub-sectors in the luxury sector have been impacted differently by the pandemic. Apparel brands are heavily impacted with a 20 per cent brand value loss while autos are moderately impacted by 10 percent brand value loss. Cosmetic brands have not been impacted by the pandemic to a large extent.
The report also estimates that the brand value of the top 500 brands in the world could fall by $1 trillion due to the Coronavirus outbreak.
“There is no denying the importance of the Chinese market in ensuring the good health and growth in the luxury & premium sector. We have witnessed the Chinese successfully keep the sector above water following the 2008 crash and luxury brands will be relying on this market once again in the wake of the Coronavirus pandemic. Porsche – the most valuable luxury and premium brand in the world – sold a staggering 86,000 units in China in 2019 alone, and the auto giant, along with fellow brands across the sector, will be hopeful that keen spenders will keep demand high,” the report states.