1.

iapi lunchtime insights April 2020

Prepared for Charley Stoney

April 2020

2.

Introduction to Brand Finance

3.

Brand Finance – Bridging the gap between marketing and finance

Founded in 1996, and the world’s leading independent value-

based brand strategy consultancy.

Brand Finance exists to help clients build successful, admired

and effective brands by better understanding their effects

on customers and other stakeholders.

We help companies organise their marketing teams and

processes, evaluate their marketing activities, and support

investment cases in the Board Room.

We value the World’s biggest brands across all countries and

sectors to create the annual Brand Finance Global 5,000

Brand Valuation Database, which is widely publicised in

news media worldwide.

We are headquartered in London

We are present in over 20 countries

4.

We offer impartial advice based on multidiscipline expertise and technical credibility

We are headquartered in London

We are present in over 20 countries

We help connect marketing to financeSince 1996 we have been helping marketers make brand strategy decisions and develop

robust business cases by connecting marketing information about brands to the bottom line.

Our advice is impartialWe are able to offer you an impartial and independent service to give confidence to both

internal stakeholders and external audiences.

We offer a unique combination of expertiseWe possess a unique combination of marketing, research, management and financial

expertise, as well as ex-client side senior management.

We offer technical credibilityWe have contributed to the development of leading edge brand valuation, brand equity

research and brand reporting techniques globally since 1996. We are members of the

International Standards Organisation and Marketing Accounting Standards Boards’ initiatives

to improve valuation analysis and reporting around brands.

5.

Calculating Brand ValueThe Royalty Relief method is used – the preferred methodology of courts and tax authorities

Brand Investment

BrandEquity

BrandPerformance

1 2 3 4

Brand Strength Index

(BSI)

Brand Impact

(Royalty Rate)

Forecast Revenues Brand Valuation

Explanation: The index is a score out of 100,

which reflects the strength of the

brand.

The brand’s BSI score is applied

to a product-specific royalty

range to identify that brand’s

royalty rate.

The royalty rate is applied to

forecast revenues to derive brand

earnings.

Post-tax brand revenues are

discounted to a net present

value.

Implication: Maintain and improve brand

attributes relative to competitors.

Maximise the impact of brand

strength within the core business,

and where it influences most.

Use your brand to help build

revenue growth, and understand

where brand drives income.

Identify value created, value

potential and value at risk from

changes to brand strategy.

Industry

Standard: ISO 20671 : 2019 ISO 10668 : 2010 ISO 10668 : 2010 ISO 10668 : 2010

Strong brand

Weak brand

6.

Brand Rankings

7.

Brand Finance’s Brand RankingsThe world’s largest database of brand values

Why we publish brand value league tables:

Every year Brand Finance values over 5,000 public brands –

from 160 different countries

The results are published in the media across the world

Brand Finance is uniquely positioned. We take a financially-

driven approach to managing brands

Our Brand Valuation Reports provide a ‘baseline’ value and

are a cost-effective way to gaining a better understanding of

your position against competitors.

8.

the

the

Our Annual Industry PublicationsWe launch more than 40 tables regarding different industries every year

• Banking 500

• Commercial Services 50

• Real Estate 25

• Exchanges 10

• Aerospace & Defence 10

• Airlines 50

• Airports 25

• Auto Components 20

• Logistics 25

• Beers 25

• Wines 10

• Spirits 50

• Tobacco 10

• Telecoms 300

• Telco Infrastructure 10

• Media 25

• Pharma 10

• Cosmetics 50

• Retail 50

• Toys 25

• Engineering &

Construction 50

• Mining, Iron & Steel 25

• Automobiles 100

• Car Rentals 10

• Restaurants 25

• Dairy 10

• Soft Drinks 25

• Food 50

• Insurance 100

• Insurance Brokering

10

• Healthcare 25

• IT Services 15

• Tech 100

• Luxury 50

• Apparel 50

• Hotels 50

• Leisure & Tourism 10

• Tyres 10

• Oil & Gas 50

• Chemicals 10

• Utilities 50

9.

Brand Equity Study – Market ResearchOriginal market research in 29 countries and across 10 sectors

Contributes 35%To the overall ‘Brand

Strength Index’ Construct

Image & personalityReputation, Quality, Value-for-

money, Innovative, etc.

Brand Funnel KPIsFamiliarity, Consideration, Preference

• Airlines

• Apparel

• Automobiles

• Banks

• Insurance

• Restaurants

• Retail

• Technology

• Telecoms

• Utilities

MethodologyOnline sample of the general population

- Broader brand reputation is the focus of our public valuations

Sample sizes: ~50,000

Content: Brand KPIs and diagnostics

RecommendationNPS, Word-of-mouth.

B2B researchResearch was conducted for banking and insurance sectors in

10 markets:France Spain USA South Africa Italy

Germany UK China Japan Canada

*Covered in previous waves:

Beers, Oil & Gas, Tyres, Hotels & Leisure

10.

Most Valuable Irish Brands

11.

Ireland’s 25 Most Valuable Brands 2020

All figures in USD millions.

BV RANK BRAND BRAND VALUE EURm

2020 2019 2020Change

(‘19-’20)2019

1 3 Primark / Penney's 2,382 8.9% 2,188

2 2 Allied Irish Banks (AIB) 1,902 -18.0% 2,319

3 1 Guinness 1,894 -23.7% 2,484

4 4 Ryanair 1,894 -10.5% 2,115

5 5 Smurfit Kappa 1,460 0.8% 1,448

6 6 Bank of Ireland 1,219 -14.4% 1,423

7 12 Baileys 1,175 114.9% 547

8 7 DCC 1,110 -4.9% 1,167

9 8 Jameson 985 3.3% 954

10 9 Ardagh Group 800 6.1% 754

11 10 Kingspan 754 3.0% 732

12 13 Kerry Group 634 16.2% 545

13 14 Paddy Power 631 21.0% 522

Guinness loses its lead to Primark / Penny’s, while AIB holds on to 2nd place

BV RANK BRAND BRAND VALUE EURm

2020 2019 2020Change

(‘19-’20)2019

14 11 eir (Eircom) 522 -7.2% 563

15 15 Optimum Nutrition 435 2.1% 426

16 16 CRH PLC 417 3.0% 405

17 17 Aer Lingus 359 -8.7% 394

18 18 thinkThin 330 -4.8% 347

19 23 Tullamore Dew 305 41.8% 215

20 21 Exertis 251 -0.8% 253

21 22 Ulster Bank 233 -4.3% 243

22 24 BSN 225 6.2% 212

23 20 Adient 217 -22.9% 281

24 25 Denny 145 -4.1% 151

25 New Richmond 134 - -

12.

Year on Year Brand Value Trends Three of Ireland’s top five most valuable brands also form part of the top five brand value

declines (‘19 – ‘20)

13.

2020 Primark Brand Value Results Overview

Brand Value (USDm)

$2,638

Brand Strength Rating

AAA-83/100

Enterprise Value (USDm)

$11,072

Ireland 25 Rank

Brand Value (EURm)

Enterprise Value (EURm)

Value date: 1st January 2020

Branded Business

Brand Contribution

Brand Value

Businesses operating

under a particular

trade mark

The total economic

benefit derived by a

business from its

brand

Trade marks

associated marketing

IP together with the

goodwill associated

with those trade marks

and marketing IP

Brand Value (USDm)

Brand Strength Rating

AA+78/100

Enterprise Value (USDm)

$10,384

2019

+11.8%

+8.9%

+5.9%

Ireland Rank

2020

Enterprise Value (EURm)

3

$2,541

1 +2

Brand Value (EURm)

€9,997 €8,942

€2,382 €2,188

14.

Inputs:

Marketing

Mix

BrandPerformance

25%

Primark’s brand value is driven by stronger BSI performance year-on-year

Brand Investment

25%

BrandEquity50%

Outputs:

Financial

Value Drivers

Customers

External

Brand Strength Index (BSI)

Staff

Investor

82.7 78.0 +4.72020 BSI vs 2019 BSI:

Effective % Attributes Elements

6.25% ProductsAverage R & D Expenditure, Average Capital

Expenditure, Innovation, Quality

6.25% Place Monthly Web Visits, Website & Apps

6.25% Promotion Social Media Score, Word of Mouth

6.25% Price Value for Money

5.00% Current Revenue Current Revenue

5.00% Current Margin Current Margin

5.00% Forecast Revenue Growth Forecast Revenue Growth

5.00% Forecast Margin Forecast Margin

5.00% Propensity to Switch Propensity to Switch

8.75% Familiarity Familiarity

8.75% Consideration Consideration

8.75% Preference Preference

8.75% Recommendation Recommendation

5.00% Employee Score Employee Score

2.50% Credit Rating Credit Rating

2.50% Analyst Recommendation Analyst Recommendation

2.50% CSR ScoresEnvironment Score, Community Score,

Governance Score

2.50% Reputation Reputation

Pillar Scores

62

74

2019 Inputs

2020 Inputs

90

91

2019 Equity

2020 Equity

70

75

2019 Outputs

2020 Outputs

15.

Ireland’s strongest brands (2020 vs 2019)Baileys has been the strongest brand in Ireland for the past two years

RANK BRAND

BRAND STRENGTH (/100)

2020 2019 2020 2019

+3% 1 1 86.2 83.7

+6% 2 4 82.7 78.0

- 3 2 82.2 82.6

-1% 4 3 78.7 79.2

-2% 5 5 76.4 77.9

+3% 6 7 74.8 72.7

+1% 7 6 74.7 74.1

+9% 8 12 71.7 66.0

-1% 9 8 70.7 71.8

-1% 10 6 69.6 70.1

2020 2019

16.

BaileysBaileys far outperforms the Ireland 25 average in all 3 pillars of the Brand Strength Index (BSI)

82.8 66.9

83.8 65.4

94.4 69.9

Ireland 25 Average

Baileys is the only

AAArated brand in the

2020 Ireland 25.

86.2 66.9

This measures the financial aspects of

brand performance. As a key part of

Diageo’s portfolio, Baileys scores very well

in Revenue and Operating Margin metrics.

Brand Outputs

Baileys performs very well in

Monthly Web Visits and Social

Media Score. This reflects the

success of Baileys management in

communicating the brand to

customers through appropriate

channels.

Brand Inputs

Baileys scored very well in Brand Finance’s

market research study, particularly in

Preference and Recommendation.

Additionally, the brand scores well in CSR

measures such as the Employee and

Environment metrics.

Brand Equity

17.

Irish Banks – performance within Ireland 25

17%

16%

12%

12%

11%

32%

Brand Value distribution in Ireland

Engineering & Construction Banks Spirits Apparel Airlines other

57%

36%

7%

Brand value distribution of banking sector

Allied IrishBanks (AIB)

Bank ofIreland

Ulster Bank

The banking sector in Ireland holds 16% of brand value with Allied Irish Bank being the most

valuable banking brand. The banking industry accounted for 19% of the value in 2019.

19.

Bearish outlook among analysts driving declineA key reason for the falling brand values of the Irish Banks is the fall in analyst revenue

forecasts, the banking brands are expected to grow at a slower rate than previous years

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Base Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Forecast revenues used in valuation (USDm)

AIB 2020 AIB 2019 Bank of Ireland 2020 Bank of Ireland 2019 Ulster Bank 2020 Ulster Bank 2019

Brand Compound Annual Growth Rate Change %

2.38% 3.02% -0.64%

2.25% 2.64% -0.39%

1.58% 2.23% -0.65%

20.

Irish Food BrandsAlmost quarter of brands in the ranking are Irish food brands

22.

Impact of Corona Virus

23.

Estimated Brand Value at Risk by sector

Household Products

UtilitiesFood

Pharma

Cosmetics & Personal Care

Soft Drinks

Telecoms

Technology

Healthcare

Mining, Iron, & Steel

Auto

Tobacco

Commercial Services

Logistics

Spirits

Media

Engineering & Construction

Airlines

Restaurants

Hotels

IT Services

Aerospace & Defence

Apparel

Leisure & Tourism

Beers

Insurance

Banking

Oil & Gas

Airports Retail

Limited Impact

0%

Moderate Impact

-10%

High Impact

-20%

Companies that are best suited to our changed lifestyles and demands do best

24.

Irish brands being negatively impacted by the Corona VirusBanking, airlines, Oil and Gas and Engineering sectors have all been heavily impacted

-11%-12%-16%-16%

-20%-23%-23%

-25%-27%

-36%-38%-39%

-41%

-59%-61%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Irish Brands

25.

-30%

-14%

-6%

-1%

4%

25%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Henkel RECKITT BENCKISER GROUP PLC Procter & Gamble Unilever Kimberly-Clark Clorox

Household Products

There are winners and losers within each categoryCompanies that are best suited to our changed lifestyles and demands do best

Limited Impact Category

26.

There are winners and losers within each categoryCompanies that are best suited to our changed lifestyles and demands

-29%-26%

-19% -16% -14%-7%

-2% -1%

111%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Facebook Samsung Google Apple Alibaba Tencent Amazon NETFLIX Zoom

Tech Moderate Impact Category

27.

-50%

-33%-29%

-13% -13%

-4%

5%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

JD SPORTS FASHION PLC Marks & Spencer Bed Bath & Beyond Sainsbury's Tesco Carrefour Costco

Retail

There are winners and losers within each categoryCompanies that are best suited to our changed lifestyles and demands

High Impact Category

28.

Global Soft Power Index

29.

Global Soft Power Index 2020The world’s most comprehensive research study on the perceptions of soft power

For the past 15 years, Brand Finance has been producing an annual Nation Brands report, in which 100 country brands are ranked according to national brand value. This is based on the royalty relief methodology and takes into account the brand strength of individual countries.

This year we have extended that study to include a measure of softpower and attitudes to different nation brands.

In February, Brand Finance launched the world’s most comprehensive research study on the perceptions of soft power – surveying the opinions of over 55,000 people in more than 100 countries.

The study was launched at the Global Soft Power Summit – a two-day conference in London and Oxford with the 8th Secretary-General of the UN, Ban Ki-moon, as our keynote speaker.

The ultimate aim is that the Global Soft Power Index will eventually cover all 193 member countries of the United Nations.

33.

Global Soft Power Index Methodology

Business &

TradeGovernance

International

Relations

Culture &

Heritage

Media &

Communicati

on

Education &

Science

People

& Values

Easy to do

business in and

with

Respected

leaders

Influential in

diplomatic

circles

Influential in

arts and

entertainment

Good

communicators

A leader in

scienceGenerous

A strong and

stable economy

Politically

stable & well-

governed

Helpful to other

countries in

need

Food the world

loves

Affairs I follow

closely

Strong

educational

system

Fun

Products and

brands the

world loves

High ethical

standards and

low corruption

Acts to protect

the

environment

A great place to

visit

Influential

media

Leading-edge

technologyFriendly people

Safe & secure

Good relations

with other

countries

Rich heritageTrustworthy

mediaTrustworthy

Respects law

and human

rights

An appealing

lifestyleTolerant

Leaders in

sports

Sample: 54,000 General Public / 1,000 Specialist Audiences

Weighting: 75% - 25%

Countries: 100 surveyed - 60 ranked

Familiarity Reputation Influence

34.

Top Soft Power PlayersThe ambition is to continue conducting the Global Soft Power Index study. This will give nations the ability to track their progress through time.

36.

Belgium

Finland

New Zealand

Austria

Ireland

Portugal

Qatar

Croatia

Estonia

Kazakhstan

Soft Power Economic Power Hard Power

Small Countries Doing Well Despite Low Hard Power

37.

Global Soft Power Index Dashboardwww.brandirectory.com/globalsoftpower