A Global Game Of Snakes And Ladders

Sydney Morning Herald

Thursday September 25, 2008

Paul McIntyre

The value of Google's brand name has slumped $5.5 billion this year, so the world must be coming to an end. The online name that can do no wrong has taken one giant leap back for mankind and it's there in black and white in a report on the top 100 global brand valuations from the London valuer, Brand Finance. In its revised report - because of the volatility that has besieged markets this year - Brand Finance says Google's brand is now worth a measly $US37.5 billion, down from $43 billion at the start of the year.

The good news for Google, though, is that the online search supremo is far from alone. Just 19 of the biggest global names improved their valuations between January and the end of August. The rest were caught up in the economic mudslide.

The fact there's even 19 brands which increased their valuation is perhaps the biggest surprise. Beer (Budweiser and Heineken), cheap burgers (McDonald's), cheap retailers (Wal-Mart), cheap cosmetics (Avon), tobacco (Marlboro) and oil companies (BP, Chevron, Shell, ExxonMobil) pretty much sums up the winners that have emerged from the crunch so far in 2008. And interestingly, American and European packaged food brands are gaining ground. Kellogg's and Nestle were two food names in the global 100 whose brand valuations rose - Kellogg up $404 million to $10.07 billion and Nestle $312 million to $9.15 billion.

The rise in fortunes for packaged food makers fits neatly with recent US business reporting. The major food brand owners, like General Mills, Kraft, and Campbell's, reported significant sales rises in the past quarter as consumers retreated to their kitchens. Kraft's chief executive, Irene Rosenfeld, said sales for its macaroni and cheese product were up 20 per cent and General Mills registered a 14 per cent sales rise in the US in the quarter. "People are eating more meals at home today and cereal is a quick, convenient option for them," General Mills's cereal boss said.

Even more bullish on the packaged food front was the US maker of instant noodles, Maruchan, which said some of its lines were up 40 per cent this year. "It's because of the economy," the company's marketing boss, Rick Kester, told AdAge last week. "The same thing happened in the [downturns of] the '70s and '80s."

The global head of Brand Finance, David Haigh, says what's happening in the US will spread internationally. "Whether you call it trading down or not, in difficult times people are going back to more basic products. They're moving away from things like Starbucks which was fundamentally all about image ... They are spending it on value retailers like Wal-Mart."

While we're only going to see more of the trading down phenomenon, it doesn't quite explain the upward movement in brand values for Marlboro and Budweiser. Stress relief, perhaps?