Chinese dairy company Yili has risen eight places to become the sixth most valuable brand, and third most valuable food brand, according to Brand Finance’s annual ranking.
Coca-Cola retains the top spot in terms of overall brand portfolio, despite seeing 5% wiped off its value in the last year. The world’s largest food and beverage company by turnover, Nestlé, is unmoved from its position as the most valuable food brand.
Nestlé’s brand value registered virtually no change from last year, with revenues performing at only a “satisfactory level”, Brand Finance said. This was caused by challenging sales in both the North and South American markets.
The most valuable food and drink brands
Kraft and Heinz both fell out of the top ten, losing almost $2.2 billion in value during the last year.
But there was more positive news for Danone, Pepsi, Red Bull and Gatorade; the four brands all appear in the top ten and have all grown their value since the last ranking.
Brand Finance publishes an annual ranking of the 50 largest food brands and 25 largest soft drinks brands based on the net economic benefit that a brand owner would achieve by licensing it in the open market. Alcoholic beverages are not included in the ranking.
David Haigh, CEO of Brand Finance, commented: “With producers and analysts used to the lack of change among the food and drink industry leaders, performance of emerging market brands is likely to cause a stir. We are already starting to see this from brands like Yili. The value of China’s largest dairy brand jumped ahead of international leaders such as Kellogg’s, Kraft, and Heinz.”
Brand Finance’s ranking is only a measure of brand value and not corporate scale or revenue, hence why companies like PepsiCo and Nestlé – makers of several well-known brands – have two brands in the top ten.
In fact, PepsiCo – the second largest food and drink business in FoodBev magazine’s annual top 100 – has four brands in total featured in the top 20: Mountain Dew and Tropicana complete the rest of the list, after Gatorade and trademark Pepsi cola.
Despite losing over $1.5 billion in value, Coca-Cola retains the top spot overall; PepsiCo is some $10 billion behind its soft drink rival.
Kellogg’s lost 23% of its brand value – or $1.61 billion – despite a year characterised by generally strong financial performances.
Why is Yili profiting?
According to Brand Finance, dairy is one of the strongest performing sectors in the food industry, registering average year-on-year value growth of 13. Within the sector, the Chinese market is the most dynamic in the world, set to overtake the US as the largest market for dairy products by 2022. This phenomenon is due to rising affluence and improved accessibility of products in China’s lower-tier cities. As Chinese consumers increasingly prefer dairy products which are more premium, with health benefits and innovative flavours, leading brands such as Yili are set to reap the rewards through innovative new product launches.
Yili stands out as the best performer among the ten most valuable food brands in the world, rising to third place from eighth in 2017 following an eye-watering 43% growth to $6.2 billion brand value. This is off the back of fast revenue growth and high profitability, meaning it is now a darling of investors, Brand Finance said. The brand is dominant in the Chinese market but has a clear potential for expansion into non-dairy categories or internationally as many major Chinese brands take advantage of the Belt and Road initiative to bolster growth abroad.
Although Yili is ahead of Danone in terms of brand potential, the French giant still boasts a more valuable brand, growing above the average for the industry at 15% year on year. Its performance was mainly driven by good sales. Also noteworthy is the performance of Mengniu, another Chinese dairy brand growing at a similar pace to Yili, which was up 45% year on year from a lower base. Mengniu’s brand value is now estimated to be $3.4 billion.
© FoodBev Media Ltd 2018
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