What will COVID-19 cost the world’s top alcohol brands?

12 August, 2020 by Andy Young

The Brand Finance Alcoholic Drinks 2020 report claims that the world’s most valuable alcoholic drinks brands could lose up to $33bn worth of brand value as a result of the COVID-19 pandemic.

The report says that it expects beer brands to be the most heavily impacted, potentially losing 20 per cent of their brand value. Spirits, Champagne and wine brands are likely to be moderately impacted by the pandemic, with a potential 10 per cent brand value loss.

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Brand Finance assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1 January 2020. The likely impact on brand value was estimated for each sector.

Richard Haigh, Managing Director of Brand Finance, said: “We are witnessing mixed fortunes across the alcoholic drinks industry as a result of the COVID-19 pandemic.

“On the one hand, the almost global lockdown and closures of bars and restaurants has resulted in the standstill of on-trade sales. Off-trade sales, however, in the supermarkets and bottle shops, have spiked as consumers shift towards consuming alcoholic drinks at home.

“It is yet to be seen whether this spike can offset the loss and therefore how brands will fare in the coming year.”

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation.

According to these criteria, Budweiser is the world’s strongest beer brand with a Brand Strength Index (BSI) score of 85.2 out of 100 and a corresponding AAA brand strength rating. This is despite Brand Finance estimating Budweiser’s brand value has dropped by 14 per cent to US$6.4bn.

The company said that AB InBev has positively exploited the strength of Budweiser by rebranding the company name to Budweiser Brewing Group in the UK and Ireland as of March 2019 to boost its profile in those two markets.

Haigh added: “Despite AB InBev citing a drop in revenue for its global brands, including Budweiser, from the pandemic, the trend for consumers to pivot towards well-known brands rather than trying new beers stands the brand in good stead in the coming year compared to its lesser known counterparts.”

Don Julio is the world’s strongest spirits brand with a BSI score of 88.7 out of 100 and a corresponding AAA brand strength rating.

Don Julio registered a sales increase of 14.5 per cent this year, reaching 1.7 million nine litre cases and being subsequently named the Tequila Brand Champion of 2020.

Don Julio’s parent company, Diageo, has however warned of a significant sales hit, estimated at just over €200 million, as the brand suffers with bar and pub closures as well as travel restrictions, which are significantly impacting airport sales.

In terms of wine, the strongest brand is Moët et Chandon with a BSI score of 79.0 out of 100 and a corresponding AA+ brand strength rating.

Brand Finance said: “As the leading Champagne brand in the industry, Moët et Chandon has enjoyed an improved financial performance and brand equity score this year, also remaining a firm favourite amongst consumers, scoring highly for customer recommendation and consideration.

“Over the last year, the brand has worked hard at remaining accessible by focusing on charitable endeavours, sponsoring high-profile events, and most recently launching a social media campaign highlighting its sustainable ingredients and heritage.”

Brand Finance has also published details of the world’s most valuable alcoholic drinks brands, which The Shout will bring to you on Friday.