It’s another good year for luxury in Interbrand’s Best Global Brands ranking, where 14 of 100 brands that placed were luxury brands.
1. Overall luxury brands performed very well, 8% (mode) growth
2. Louis Vuitton (#19) dropped down from #17 in 2013, with a brand value decrease of 9%
3. Audi (#45) & Hermès (#46) increased brand value by 27% & 18% respectively
4. Land Rover (#91) ranked for the first time, as did Hugo Boss (#97)
5. Ferrari & Moet et Chandon exited the Top 100
“ Most brands increased brand value by between 7 and 9% in 2014 ”
With the exception of Louis Vuitton (down 9%) and stellar performance at Audi (up 7%) and Hermès (up 18%), most brands increased brand value (year on year) by between 7 and 9% in 2014. Thought not directly comparable, this is much more optimistic than sales growth forecasts for luxury in 2014, which hover between 3-5% depending on the category.
The highest-ranking luxury goods brands remain Louis Vuitton (#19) and Gucci (#41). According to the study, Louis Vuitton’s brand value doubles Gucci’s, estimated at over $22 billion. Indeed all the luxury brands that ranked in the Top 100 were valued over $4 billon, proving once and for all that luxury is just as important an industry as fast moving consumer goods and technology.
When we look at the evolution in ranking over the past ten years, Mercedes-Benz has proved itself as an incredibly stable brand in terms of increasing value, largely unaffected by a massive influx of technology and platform based brands, such as Amazon, Google, Apple and Facebook. In fact Mercedes has ranked 10th, 11th or 12th consecutively since 2004.
In 2014 Mercedes Benz again ranked at #10, climbing one spot since 2013, with an increase in brand value of 8%. This beat out German rival BMW, which ranked #12, with an increase in brand value of 7%. Both brands are now valued at over $34 billion.
Prada again proved itself an interesting case. Recently its share price declined significantly, after CEO Patrizio Bertelli announced H1 2014 results and forecast flat growth for the remainder of the year. Despite concerns about ubiquity, raised by analysts after aggressive expansion of the Prada brand, the Italian maison achieved a 7% increase in brand value on 2013.
Prada, overall, has experienced a relatively meteoric rise on the Interbrand ranking in the past five years. In the early 2000s the brand generally ranked above 95th place, until 2009 when it jumped up to #87. Prada then disappeared altogether until 2012, when it reappeared at #84, after its 2011 ($2.14 billion) IPO and rapid retail expansion. Today it is ranked as the 70th most-valuable brand in the world.
“ Prada is ranked as the 70th most-valuable brand in the world ”
It is perhaps unsurprising to see Louis Vuitton (#19) and Gucci (#41) brands drop a few places on the ranking, given their recent concerns regarding overexposure and consumer fatigue in the marketplace. Both brands are focusing on top-tier luxury products, less so than ‘entry level’ heavily branded items that have somewhat flooded the market.
Brand value growth at Gucci was reasonably flat (up 2%) and actually dropped at Louis Vuitton by 9%. Indeed, in 2013, Rebecca Robins, Director at Interbrand, reminded us that Louis Vuitton was on a journey, where it is refocusing its efforts in a bid to protect its luxury legitimacy.
“Missing revenue potential should be seen not as a cost, but as an investment in rarity,” Robins explained. “Louis Vuitton continues to place great emphasis on elevated products and on evolving its overall value proposition.”
In 2013, Audi delivered a record number of 1,580 million vehicles, an increase of 8.2% on 2012 deliveries, but also the second consecutive year that it has globally out-delivered Mercedes-Benz. Indeed Audi is now the worlds #2 luxury car brand in terms of deliveries, nestled between BMW (#1) and Mercedes-Benz (#3).
In Europe and China it was the top-selling premium car brand in 2013, though it only ranked 51st in Interbrand’s brand value rankings in the same year, whilst Mercedes and BMW sat just underneath the Top 10.
Finally in 2014 we are seeing a rise in brand value reflective of its sales. Audi’s brand value increased by a massive 27% in 2014, earning its place as one of five ‘Top Risers’, which also included Facebook, Amazon, Nissan and Volkswagen.
Interbrand attributes part of this success to thoughtgul digital brand building initiatives and innovative social media campaigns, which created viral sensations and attracted widespread media attention. Audi’s City Showrooms have also played their part, deploying high-tech brand experiences in some of the world’s most revered retail locations.
“ Hermès increased its brand value by 18% in twelve months ”
Hermès (#46) was the fastest-rising luxury goods brand, increasing its value by 18% in twelve months. “Brand relevance to luxury customers remains strong in all geographic areas,” explains Interbrand, “with double-digit growth from 2013 through Q1 2014, across leather goods and saddles, accessories, silk, and textiles.”
It’s continued performance has been attributed to its long-term strategic focus. In 2014, the company made a significant investment in talent and restructured internally in order to reinforce the brand’s positioning and values. Alongside this, Hermès expanded its distribution and production network, and launched several social media efforts in order to remain accessible to its connected clients.
“The brand has a very strong sense of itself,” continues Rebecca Robins. “It excels at remaining relevant to luxury consumers. It is also significant that Hermès is once again run by a family member, with Axel Dumas at the helm.”
Audi City, London
Land Rover made a star debut at #91, as did Hugo Boss at #97, both joining the top 100 ranking for the first time. Rebecca Robins explains; “Since being acquired by Tata Motors in 2008, Land Rover has witnessed double-digit growth each consecutive year. This past year, Land Rover’s unit sales rose 15 percent year-over-year.”
Indeed Land Rover recently experienced the best global sales performance in its history with records set in 42 markets. The British brand has invested heavily in product creation, facility, and infrastructure. The Range Rover family was refreshed from the ground up to provide ultimate luxury with maximum capability, including significant weight loss thanks to Land Rover’s investment in what is now the world’s most advanced aluminum manufacturing facility.
“ Land Rover made a star debut at #91, as did Hugo Boss at #97 ”
Hugo Boss is experiencing similar success, growing both in terms of sales and in the number of directly owned stores, the latter of which now account for 54 percent of sales. “Hugo Boss, was one of the strongest-performing apparel brands globally in the past year,” explains Rebecca Robins.
“The company saw revenue grow 10 percent in Europe, which constitute more than half its sales. The brand is also seeking to assert greater control, as it is moving away from selling through partners and starting to run its own stores. The brand strategy is well defined: maximizing brand identity, expanding retail, increasing global presence, and improving operations.”
Jason Wu’s appointment as creative director of womenswear signals both the first real ‘star designer’ for the house, alongside a more strategic courting of the lucrative women’s fashion market, by a brand best known for its menswear and suiting.
The house has also entered into new positioning territories, expanding beyond longstanding Formula-1 agreements, into partnerships with French footballer Olivier Giroud and yacht racer Alex Thompson. For the first time the house has ventured into the art world, sponsoring a career retrospective of fashion and portrait photographer David Bailey in London.
Jason Wu and CEO, Claus-Dietrich Lahrs, are clearly moving the Boss brands into a period of modernity, where it could be better positioned to compete with other luxury goods rivals in the Top 100 best global brands.
Hugo Boss Black, by Jason Wu
“Ferrari is a great brand, but at the lower end of the table it was always vulnerable to new entrants,” explains Rebecca Robins. “The table as a whole rose by over 6.5% so you have to be showing good value growth just to stay in …”
Indeed, brand #100 (Nintendo) on the Interbrand list was valued at $4.1 billion. When you consider that, in 2013, Ferrari delivered just 6,922 cars – which was a (deliberate) drop of 5.4% on 2012 – it is easy to see why one of the world’s most recognised brands may not be a contender for the Top 100 most-valuable brands in the coming years. It simply may not have the comparative sales revenue.
“Ferrari has dedicated itself to exclusivity,” continues Robins. “This trade-off keeps the brand highly desirable and maintains a supply that is less than the demand, but it also limits the potential sales volume that can generate profits over the long-term.”
Indeed, before his recent departure, then-CEO Luca Cordero di Montezemolo had repeatedly confirmed to the press that he was looking to reduce the number of Ferrari vehicles delivered each year and increase the value of the product to the customer, and also its profitability to the house. In 2013 he delivered on that promise. Whilst vehicle unit sales were down 5%, Ferrari achieved record profitability.
“ Ferrari has dedicated itself to exclusivity ”
As in previous years, the one thing to takeaway from this ranking is the enormous and ever-increasing power of luxury brands. And in some cases, their incredible staying power. Mercedes has managed to maintain its brand value for nearly a decade, despite the global financial crisis and the information revolution, which catapulted the value of brands like Apple and Amazon into the billions.
Indeed, both Apple (#1) and Google (#2) are now valued at over $100 billion, according to the study, increasing by 21% and 15% respectively since 2013. What is surprising is that luxury really is not only holding its own on this increasingly competitive global stage, but most brands are advancing up the ranks year-on-year.
As always, the industry should cast a watchful eye on when brands become too big, too exposed and too ubiquitous. But this ranking does provide some optimism for luxury, not seen this year in global growth forecasts. And once again reminds us that whilst growth might be slowing, revenue at the world’s biggest global luxury brands is beyond significant.
To further investigate Interbrand’s ranking on Luxury Society, we invite your to explore the related materials as follows: