Brands are reeling under the impact of Covid-19, witnessing depreciation in their brand value, according to a report by an independent brand valuation consultancy, Brand Finance. The report says that India’s top 100 most valuable brands are likely to lose up to 15 percent of their brand value cumulatively, a sizeable drop of around $25 billion in comparison to the original valuation date of January 1, 2020. The global picture is gloomy too as the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, is expected to fall by an estimated $1 trillion as a result of the pandemic.
The industries that have been hit the most are aviation, oil & gas, tourism & leisure, restaurants, and retail. Evaluating the impact of Covid-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020, the report attempts to calculate 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 percent brand value loss), and heavy impact (up to 20 percent brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
There are categories where a poor reputation is the default position, such as utilities, telecoms, and banks. These sectors have failed to convince customers that they are consumer champions – and the global average score reflects overall feelings towards brands: acceptance and appreciation, but rarely loyalty. Automobile sector on the other hand continues to enjoy strong reputations. The sector also ranks first on other indicators, such as recommendation and word-of-mouth sentiment. When it comes to the technology sector, consumers seem to be taking a leap of faith and continue to hold the tech sector in high regard, even though reputation scores have fallen slightly. In part, any decline may be because issues in the public spotlight are finally impacting the reputation of some industry giants. Supermarkets and casual dining brands have moderately positive reputations overall, but these two are category leaders in terms of delivering value for money. Banking brands continue to struggle to earn the respect of consumers and are seen as offering poor value for money.
"Covid-19 is undoubtedly going to wreak havoc on the hotel sector in the coming year - both financially, as hotels are forced to close and bookings are cancelled and reputationally, as brands that do not manage to avoid association with coronavirus may suffer lasting reputational damage. Our analysis has shown that hotel brands could face a 20 percent brand value loss, following the pandemic," said Savio D'Souza, Director, Brand Finance.
All in all, adverse effects of the pandemic are bound to seep into the crevices of every industry vertical and brands will have to soon come up with new ways of brand building and maintenance.