Toys brand Lego AS is next and consumer packaged goods French brand L’Oreal SA has been placed third in a 2016 list released on Monday by Brand Finance, a London-based brand valuation and strategy consultant that puts thousands of the world’s top brands to the test every year.
The brands are evaluated to determine the most powerful—based on factors such as familiarity, loyalty, promotion, marketing investment, staff satisfaction and corporate reputation— and the most valuable.
They are then ranked to form the Brand Finance Global 500.
Disney is the world’s most powerful brand as its strength is founded on its history and original creations, Brand Finance said. However, its current dominant position is a result of the big acquisitions that it has made over the years, including those of ESPN Inc., Pixar, The Muppets and Marvel.
The most important acquisition, however, has been that of Lucasfilm Inc., the US film and television production company founded by filmmaker George Lucas which gave Disney the rights to the Star Wars franchise.
The seventh in that series, The Force Awakens,broke several box office records upon its release on 18 December to collect $2 billion and become Disney’s most successful film ever. Meanwhile, Star Wars toys have netted more than $700 million.
The Danish toy company Lego, top of the heap in 2015, slipped to number two position in the most powerful list as a result of a series of controversies, which threatened to spoil its image.
The company was fined by German regulators for attempting to prevent retailers from discounting its products and was accused of colluding in censorship for trying to prevent dissident Chinese artist Ai Weiwei from using Lego in his work. Yet, it remains a very powerful brand and retains its AAA+ brand rating. Soft drinks maker The Coca-Cola Co. was ranked 8th in the list while Google (Alphabet Inc.) came at number 10.
To be sure, brand strength or power is only the initial part of Brand Finance’s analysis. Using the Brand Strength Index assessment, Brand Finance also determines a royalty rate for each brand, which is then applied to revenue information to calculate the brand’s value.
Brand Finance calculates the values of the brands in its league tables using the “Royalty Relief approach".
This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand—that is, what the owner would have to pay for the use of the brand, assuming it were not already owned.
For instance, Brand Finance estimates the value of the Star Wars brand to be $10 billion, dwarfing the $4.05 billion Disney paid for Lucasfilm in 2012.
Apple Inc. continued to be the world’s most valuable brand in the 2016 table, despite slowing sales. Apple’s value was up by 14% to touch $145.9 billion, thanks to the huge success of the iPhone 6 and recently released iPhone 6s.
Google (now Alphabet Inc.) moved up a rank to take second place, followed by South Korean multinational conglomerate Samsung Electronics Co. Ltd and US online retailer Amazon.com Inc. and Microsoft Corp.
Amazon improved its ranking from 8 to 4.
Chinese telecom firm China Mobile entered the 2016 listing of the 10 most valuable brands this year as its brand value increased by 4%. It was ranked at number 11 last year.
Auto brand Volkswagen AG was the worst performing brand of 2016, falling steeply from 17th to the 56th rank. The German car maker saw its value slip by $12 billion following revelations it programmed its diesel vehicles to trick emission tests.
A Brand Finance spokesperson said that the consulting firm is yet to release its report on India’s most valuable brands.
However, he said the Indian brands listed in the Global 500 include Larsen and Toubro Ltd, Tata Group, Life Insurance Corporation, State Bank of India, Infosys Ltd and Bharti Airtel Ltd.