As the COVID-19 pandemic wreaks havoc on the global and national economy, Sweden’s top 50 most valuable brands could lose up to 14% of brand value cumulatively, a drop of over SEK 150 billion compared to the original valuation date of 1st January 2020.
Looking beyond Sweden, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated R15 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
Sweden’s response to the coronavirus pandemic certainly hit the headlines globally as the nation imposed relaxed guidelines compared to its European counterparts. Although there is no denying that the Swedish economy is going to feel the crippling effects of the pandemic, one could argue that the economy is better placed to rebound in the coming year and thus Swedish brands and their brand values could be impacted less.Richard Haigh, Managing Director, Brand Finance
IKEA has retained the title of Sweden’s most valuable brand despite recording a 4% brand value loss to SEK 188.2 billion. The world’s biggest furniture retailer has committed to its business transformation, aiming to merge its physical stores with a greater online proposition as the world becomes ever more digital.
Hailed as a forward-thinking brand, last year the furniture giant announced its commitment to becoming a circular business by 2030 – where all its products can be reused, refurbished or recycled.
The very nature of IKEA’s business, paired with its lack of strong online presence, means the brand has struggled to maintain sales revenue as it negotiates reduced store hours and closures amid the pandemic. As with other brands globally, the level of damage to IKEA will depend on how long coronavirus engulfs its markets.
If is Sweden’s fastest growing brand, following an impressive 48% brand value increase to SEK 13.1 billion, simultaneously jumping 6 spots in the ranking from 24th to 18th position.
Hiring nearly 7,000 employees and with 3.7 million customers across the Nordic and Baltic regions, the insurance brand has celebrated solid performances in its commercial and industrial business areas.
Brand Finance’s analysis has shown that insurance brands are likely to be heavily impacted by the COVID-19 pandemic, with a potential 20% brand value loss as a result. However, as the leading property and casualty insurer in the Nordic region, the brand is likely to be somewhat protected from the damage as fewer such claims are expected during the far-reaching and ongoing lockdown period.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Telia Company (up 1% to SEK 43.5 billion) is Sweden’s strongest brand with a Brand Strength Index (BSI) score of 83.2 out of 100 and a corresponding AAA- brand strength rating.
Telia Company has performed strongly across key metrics in Brand Finance’s global brand monitor study including price, products, consideration, familiarity, environment, governance and reputation. With a continued focus on its CSR initiatives, the telecoms brand prides itself on its sustainable and responsible business practices which it cites as the prerequisite for both sustainable growth and profitability.
The telecoms industry is one of the few sectors in the economy that should see limited impact from COVID-19, according to Brand Finance’s analysis. Telia Company, along with fellow telecoms brands, has the opportunity to embrace the working from home revolution, which has led to extraordinary demand for remote working resources and connectivity.
Swedish brands dominate the Brand Finance Nordic 50 2020 ranking, claiming one in two positions, with a combined brand value of SEK 953.7 billion. IKEA (down 4% to SEK 188.2 billion), Volvo (up 28% to SEK 163.3 billion) and H&M (down 7% to SEK 133.8 billion) have retained the top 3 positions in the ranking. 25 brands from Sweden feature, compared with 14 from Denmark, six from Finland and five from Norway.
Brand Finance has calculated that Nordic brands could stand to lose up 13% of their brand values, however, as a result of the COVID-19 pandemic, equating to SEK 219 billion.