EU Business News May 2017

10 EU BUSINESS NEWS / May 2017 , British Brand Values Take Brexit Beating Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Britain’s 150most valuable brands are featured in the 2017 Brand Finance UK 150. British brands have suffered some dramatic falls in their dollar-denominated values this year. Of the 140 of the brands with data for both 2016 and 2017, 88 have declined in value. On average, the UK’s top brands lost 6% of their value last year. There are several reasons behind this, but the common factor is the devaluation of sterling in the wake of the Brexit vote. This significant loss of brand value should concern British policy- makers, brand owners, workers and consumers. Senior politicians have vowed to protect our brand ‘crown jewels’ and Theresa May has promised tougher government scrutiny of brand acquisitions. However, the UK is currently one of the one of the most attractive place to buy brands; it is one of the world centres of the marketing and advertising industry and so a hub of brand creation; there is relatively little regulatory scrutiny of takeovers; and workforce restructuring is relatively straightforward, particularly compared to European markets. In this context, the sudden devaluation of British brands leaves them vulnerable to takeovers from international buyers. Unilever and Burberry both recently defended bids from the US (from Kraft-Heinz and Coach respectively), while ITV is reported to have been the subject of repeated bids. Associated British Foods was unable to bring the Weetabix brand home after a stronger bid from America’s Post Holdings while world renowned chip-maker ARM was acquired by Japan’s SoftBank. This spate of acquisitions and the prospect of more raises serious questions about the potential impact on investment and employment. David Haigh, CEO of Brand Finance, said: “While the impact of Brexit on the broader economy has not lived up to the doomsday scenarios, British brands are clearly vulnerable to takeover by foreign firms. At one level, this is testament to Britain’s strength at developing and managing desirable brand assets. However more should be done to ensure Britain gets its fair share of the spoils for its quality brands. Tighter regulation is one solution, but another is for management and shareholders to be fully aware of both the saleable value of their brands and the value that those brands contribute to the overall business. This way hasty sales for less than fair value, that endanger British jobs, might be avoided.” Though British brands have suffered in terms of their dollar value, looking at sterling- denominated figures shows that the majority continue to perform well. Changing the currency almost reverses the decline in fact; 85 of the brands are increasing in value in GBP terms. Most valuable brand Shell is Britain’s most valuable brand, with a brand value of £28.3 billion, up 35%. Oil prices saw a steady increase across 2016 as supply became slightly more constrained, helping to improve revenues. After a drop at the beginning of the year, Brent Crude nearly doubled in value from early January to the end of December. Its asset disposal program following the completion of its merger with BG has helped to consolidate and strengthen Shell’s brand, which has been upgraded from AA+ to AAA- thanks to a Brand Strength Index score of 82. Shell’s longstanding partnership with Ferrari continues to deliver returns, with a demonstrable price premium attributable to the association with the world’s most