Companies to lose some €1 trillion in brand value due to COVID-19

Brand values at risk due to COVID-19

The world’s biggest companies could lose up to €1 trillion in brand value due to the impact of the COVID-19 outbreak and could see effects well into next year, according to brand valuation consultancy Brand Finance.

Brand Finance’s Europe 100 report released today stated that on Europe’s top 100 most valuable and strongest brands are estimated to see a 13% drop in value following the impact of COVID-19.

The worst hit industries are set to be aviation, oil and gas, tourism and leisure, restaurants and retail, due to virus prevention measures like social distancing, border closures and advice against travel.

Aviation is set to be the most impacted sector, with the International Air Transport Association (IATA) reporting that most carriers will run out of money within two months as a result of border closures in governments’ attempts to curb the COVID-19 spread. The majority of airlines have grounded most flights and announced plans to lay off thousands of staff. The global airline industry has called for up to €200bn in emergency support.

While luxury brands are strong performers in the Europe Top 100, including Gucci, Louis Vuitton, Lancôme and Chanel, the luxury industry is also classified as a high impact sector.

The sector saw immediate effects from the virus outbreak when it hit China, where luxury sees its highest spending. With the outbreak’s spread now in Europe and elsewhere, shops are forced to close and, with it, the impetus for luxury purchases will be first to fall.

Brand Finance ceo David Haigh said: “The harsh reality is that many brands are not going to make their 2020 targets due to the unprecedented challenges of the coronavirus outbreak. It is hoped that lenders will be forthcoming in offering additional flexibility and liquidity.”

On the other hand, home delivery apps, online video conferencing platforms and digital media are expected to see growth thanks to the surge in remote working.

With social distancing and government-mandated confinement, brands offering in-home or remote working solutions have seen an immediate surge in demand. For example, virtual meeting platform Zoom has been inundated with signups as the outbreak has caused office closures and meeting cancellations, while business seminars and university courses have all moved online.

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