Top Brands Hold Valuable Intangible Assets

What  is the definition of a “Brand”?

When asked “What is a brand”, Jeff Bezos CEO of Amazon replied “Your Brand is what people say about you when you’re not in the room”. I can’t think of a better explanation. Brands are intangible assets that Wall Street analysts have a hard time valuing. Perhaps that’s why there are few investment strategies focused solely on the leading Brands.

Every company’s name is its calling card but a highly recognizable & still relevant Brand distances itself from peers. Does Coke have the best tasting soda? Maybe, maybe not but if you polled 100 people, gave them 3 choices , and tasked them with identifying the Brand they feel they know the best, it would likely be Coke. No offense to Pepsi, Monster Beverage,etc. How about in technology. You think Apple, Google, Facebook and Amazon are front of mind? Absolutely they are. Top Brands spend an enormous amount of time and money building a strategy to build trust and loyalty with consumers. It’s not easy or cheap, but it absolutely translates into customer loyalty, persistent purchasing of their products, and pricing power. Once a Brand accomplishes high recognition, trust and loyalty, the benefits to the company, its revenues, margins, and stock prices can be quite dramatic.

Top Brands – Multiple Sub-Brands:

Investing in Top Brands gives you ownership in many important sub-brands.  The hidden value in owning the stocks of leading brands is the embedded ownership you get in all the other important brands owned by the mothership.  Trends evolve and consumer interests change as we age. Another hidden benefit of owning the leading Brands is their interest in keeping their leadership by acquiring emerging Brands that breakaway from the pack in their categories.  The top brands understand their markets, who is taking share, and often roll up emerging brands under their umbrella and offer them highly valuable distribution and shelf-space. The best brands are often the most savvy acquirers.

Below I have highlighted some of the most Iconic Blue Chip Brands and the sub-Brands they control.  This list is a sub-segment of the Top 200 Brands that make up the Alpha Brands Consumer Spending Index.  Ownership in a basket of the leading Brands also offers exposure to an enormously powerful group of sub-brands. That’s the real value of investing in the intangible assets of the leading Brands.

 

footnotes

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s