• Transform magazine
  • March 31, 2020

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World biggest companies to lose up to £1 tn in brand value as impact of Covid-19

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A new ‘Europe 100’ report by Brand Finance, a brand valuation consultancy, says the brand value of the world’s biggest companies will decrease by €1 tn as a result of the Covid-19 outbreak, with the aviation sector being the most affected.

Brand Finance assessed the impact of Covid-19, which has infected 218,663 people worldwide as of 18 March, based on the effect of the outbreak on ‘enterprise value’ compare to what it was on 1 January of this year. Based on the business value impact, Brand Finance estimated the impact for each sector, classifying them into three categories based on the severity of business value loss in the past three months.

"The Covid-19 pandemic is now a major global health threat and its impact on global markets is very real. Worldwide, brands across every sector need to brace themselves for the coronavirus to massively affect their business activities, supply chain and revenues in a way that eclipses the 2003 Sars outbreak. The effects will be felt well into 2021. However, it is not all doom and gloom. Some brands will fare better under Covid-19: Amazon, Netflix, WhatsApp, Skype, BBC and Bupa are all booming,” says David Haigh, CEO of Brand Finance.

Airlines, leisure, tourism, aviation, aerospace and defence will be the hardest hit sectors, with many major airlines grounding their fleets and announcing plans to lay off thousands of staff. The global airline industry called for €200bn in emergency support while Boeing asked for €60bn in assistance for aerospace manufacturers.

Luxury apparel brands, though strong performers in the Europe 100, are also experiencing loss in addition to sporting events and sponsorships.

“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,” adds Haigh.

At a European level, all of Europe’s top 100 strongest brands will see an estimated 13% drop in value because of the global pandemic.