Unilever ranked at more than twice the value of KraftHeinz

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Nestlé is the most valuable company in the world in terms of its corporate value and collective brand value while Unilever's total brand portfolio is over double that of KraftHeinz, according to a report.

The report by brand valuation and strategy consultancy Brand Finance compiled rankings for 100 different global brands in the food and drink industry according to data from 2016. Nestlé ranked first both in its corporate brand and as a collective portfolio of all brands owned by the company, totalling $64bn (€59.5bn). 

An overall loss was felt throughout the industry however, with Kraft, Hersheys, Mars and Nestlé losing 4%, 10%, 14% and 17% of brand value respectively in 2016. This trend is not local to Europe, the report said, with Chinese manufacturers showing similar drops. 

Unilever was valued at $42.9bn (€39.8bn) for its total brand portfolio. This included the corporation’s many product lines such as Hellman’s, Knorr, Lipton Tea, Marmite, Colman’s and Ben and Jerry’s.

The value comes in at more than twice that of KraftHeinz, which registered just $20.2bn (€18.8) in total. 

This puts some perspective on the company’s recent bid to acquire Unilever in a potential $143bn deal. The offer was flatly rejected by Unilever CEO Paul Pohlman, who said the amount offered seriously undervalued the company.

Following the rejection, Unilever’s share prices dropped by 7%, which sparked fears that British companies face serious vulnerability in the face of Brexit and the devaluation of the sterling.

Foreign takeovers of UK firms rose dramatically in the second half of 2016; Pohlman called for greater government protection given the vulnerability.

Brand Finance, the UK-based consultancy firm behind the report, said this is a prime example of where valuation is most needed.

“Unilever has one of the world’s most valuable brand portfolios, more than double the value of KraftHeinz. Quantifying this and bringing it to the fore will be key to defending any future bids or ensuring that shareholders receive fair value.”

Good will 

Brand Finance said it believed many Unilever products have achieved ‘national treasure status’ and that its strong brands and customer loyalty allowed it to withstand heavy competition from store-brands.

The report also mentioned Unilever’s good record for action on sustainability issues. In particular, its emphasis on procurement of sustainably sourced palm oil has lent good ethical status to its products.

The report highlighted the importance of including ‘good will’ – often left unquantified - in measurements of brand value. Brand Finance said it calculates value through an index called the Brand Strength Index, which includes a number of attributes like emotional connection, financial performance and sustainability. 

“This situation illustrates one of the fundamental reasons to value brands. Since internally generated goodwill (which includes brands) is not listed in company accounts, it is often overlooked or underestimated. Therefore, valuing brands can prove essential in defending an under-priced takeover.”

Robert Haigh, marketing and communications director at BrandFinance, said this was the first time values have been collected for an entire brand portfolio, rather than just the corporate brand itself. 

"It's good to look at those portfolio values as it gives you a truer sense of the relative clout of both the corporations. If you look at the Unilever corporate brand on its own its looks fairly small and insignificant so it might seem unsurprising that KraftHeinz was bidding to take it over, but when you look at the fact that its more than double the size in terms of its brand portfolio this looks like a cheekier, more speculative move."

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