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COVID-19: World’s top luxury brands could lose up to US$35 billion in brand value

The apparel sector will be the most heavily impacted, followed by automobiles. Meanwhile, the cosmetics sector will be largely sheltered from effects of the pandemic.

COVID-19: World’s top luxury brands could lose up to US$35 billion in brand value

The SF90 Stradale is Italian supercar manufacturer’s first ever Plug-in Hybrid Electric Vehicle. (Photo: Ferrari)

The world’s 50 most valuable luxury and premium companies are expected to lose up to US$35 billion (S$47.6 billion) in brand value as a result of the COVID-19 outbreak, according to the latest report by London-based brand valuation consultancy firm, Brand Finance.

Brand Finance assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on Jan 1 this year.

Three sub sectors – apparel, automobiles and cosmetics and personal care – were analysed in the report. Out of these three sub sectors, apparel brands will be the most heavily impacted, facing a 20 per cent brand value loss. Automobiles will be moderately impacted, facing a 10 per cent brand value loss. Cosmetics brands will be largely sheltered from the damage of pandemic.

Meanwhile, German automobile brand Porsche has retained its title as the world’s most valuable luxury and premium brand by a considerable margin, following a 16 per cent brand value increase to US$33.9 billion.

The new Porsche 911. (Photo: Porsche)

“There is no denying the importance of the Chinese market in ensuring the good health and growth in the luxury and 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,” said Alex Haigh, Valuation Director at Brand Finance.

“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."

"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." – Alex Haigh

Gucci ranked second, with a brand valuation of US$17.6 billion. Louis Vuitton took third place, with a brand valuation of US$16.5 billion. Cartier, Chanel, Hermes, Ferrari, Rolex and Dior followed in the top 10.

According to the study, Givenchy is the fastest-growing brand in this year’s ranking, its brand value growing 74 per cent to US$2 billion, simultaneously jumping 11 spots in the ranking from 37th to 26th. 

Louis Vuitton presents its Spring/Summer 2021 collection. The French fashion house ranked third in the list of the world's most valuable luxury brands, according to Brand Finance. (Photo: Louis Vuitton)

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.

Ferrari announced five new models in 2019, including the SF90 Stradale and Ferrari Roma, both aimed at new market segments. The company also established a manufacturing agreement with the Giorgio Armani Group to help push Ferrari collections into a more premium space.

Haigh commented, “The embodiment of luxury, Ferrari continues to be admired and desired around the world, and its outstanding brand strength reflects this. It is no wonder that many consumers, who might never own a Ferrari car, want a bag or a watch emblazoned with the Prancing Horse, but it is also crucial that management remain at the steering wheel of the brand’s future and maintain its exclusive positioning by monitoring the licensing output closely.”

READ> From Chanel to Ferrari, here's how luxury brands are aiding COVID-19 relief

Source: CNA/st(ds)

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