Ranking by Brand Value
1 | Best Russian Brands 2008 | Interbrand | 10 November 2008
1. Creating and managing brand value
2. The Best Russian Brands League Table
3. Breakdowns by industry and trends
4. New entrants
5. Selected brand profiles
6. Top four decliners
7. Our approach and experience
2 | Best Russian Brands 2008 | Interbrand | 10 November 2008
1. Creating and managing
3 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Welcome to Best Russian Brands 2008
Interbrand in cooperation with Kommersant DENGI magazine -the financial industry in Russia seems not (yet) affected as
presents the fourth annual ranking of the 40 most valuable much as in others countries, there is even one newcomer from
Russian brands arranged by brand value. the insurance fields, losses are minor. Sberbank as the by far
biggest and state-owned bank even gained value, representing
Interbrand pioneered with the method of brand valuation 20 “a safe financial heaven” for a lot of Russians. The leading
years ago and has since used to value more than 5000 brands. financial brands in Russia are very B2C-oriented which seems to
The same brand valuation methodology has been employed to help them compared to the international giants
arrive at the top 40 most valuable Russian brands.
We also would like to stress the point that brand valuation is not
We present our ranking when economies all around the world the same as pricing on a stock exchange. Brands are not so
including Russia are facing huge financial and possibly economic volatile but obviously more stable assets. You can see that
problems. We based our calculations on the data available one comparing the dynamics of brands’ values in our ranking and
month before the date of publication. We think that especially the changes on a stock market. Stocks position themselves
the next ranking will be crucial and we will see who and how will mostly to the investment community, while brands position
have handled this crisis. themselves mostly to the consumer.
The following insights could highlight the specifics of this year’s Overall we believe that in a crisis, where ‘trust’ is one of the
ranking and the situation of Russian brands: most used words the role of brands will incresae. Or to put it
-brands number 1 and 2 would from a pure value point of view differently: you can downsize, rightsize, focus and outsource,
fit in the Best Global Brands around rank 50, the first three take but, you can’t fire the brand. Instead, brands must become
more than 60% of the total value more effective and efficient, in order to not only survive, but
-the top 10 again proved to be stable and demonstrate
increasing professional brand management capabilities We hope you enjoy this report and that it provides valuable
information in the creation, management and measurement of
-from 40 brands only six come from a pre-soviet era with two your brands. We would like to congratulate the brands that are
prominent new entries in Automotive. Maybe the beginning of a featured in our 2008 brand league table and wish you every
trend success in your exciting journey forward.
-10 newcomers prove the ongoing changes in the market, half Sincerely,
of them entered due to newly available financial data
-the number of industries increased with entries from Real
Estate and increased number of brands in Retail and Automotive
Interbrand Zintzmeyer & Lux, Moscow
4 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Why the ranking is important
The Best Russian Brands study provides a brand It tells you whether you are investing
value that is a top-line measure of economic adequately into your brand. Putting an economic
performance driven by the brand, stating what the value on a brand (overall and by segment) can help
particular brand is worth overall and among make a strong business case for marketing
competitors. Brand value brings to marketing what investments, overall and across a company’s
“revenue goals” or “financial hurdle rates” bring to portfolio.
other aspects of the business.
It tells you whether you have a marketing
The payoff comes when one looks behind the number strategy that positions your brand around the
– a single number only tells you so much. It’s right messages. Your customers make decisions
important to understand what drives brand value: every day between you and your competitor;
intangible earnings (the cash flow of a business not analyzing the role of brand in those decisions helps
associated with tangible assets such as equipment or focus your strategy on the attributes that
materials), the role of brand (a measure of how much differentiate your brand from others and strengthen
brand influences purchasing decisions) and brand your relationship with your best customers, ensuring
strength (a benchmark of a brand’s relative risk future earnings.
compared to competitors).
It tells you whether you have the right short-
Understanding the drivers of brand value can inform term tactics to drive value. By analyzing the
management action, from overall business strategy strength of your brand, you can target marketing
to specific marketing tactics. It’s an easy-to- campaigns to the most valuable customers and
understand metric to help brand owners determine against your most formidable competitors, driving
where they are, where they’re going and how to get short-term sales.
there. It helps to make branding a more important
There are many insights from this ranking, but the
aspect of global business management.
core message is clear: brands are important assets
requiring proactive and consistent investment,
management, and measurement.
5 | Best Russian Brands 2008 | Interbrand | 10 November 2008
2. The Best Russian Brands
6 | Best Russian Brands 2008 | Interbrand | 10 November 2008
TOP 10 BRANDS
7 | Best Russian Brands 2008 | Interbrand | 10 November 2008
8 | Best Russian Brands 2008 | Interbrand | 10 November 2008
9 | Best Russian Brands 2008 | Interbrand | 10 November 2008
10 | Best Russian Brands 2008 | Interbrand | 10 November 2008
3. Breakdowns by industry
11 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Breakdown by number
Break down 2008 Trends 2005-2007 (units)
INDUSTRY BREAKDOWN 2008 2007 2006
ALCOHOLIC BEVERAGES 4 5 5
AUTOMOTIVE 3 1 1
BEVERAGES 4 5 4
CONFECTION RY 2 3 3
ENERGY 0 0 1
FINANCIAL SERVICES (BANKS) 5 5 7
FOOD 2 3 5
CONSTRUCTION 2 0 0
GAS 0 0 1
INSURANCE 2 2 1
MEDIA 2 2 0
METAL 2 2 0
OIL 4 4 4
PERSONAL CARE 0 0 1
RETAIL 3 2 2
STEEL 2 1 1
TELECOM 3 5 3
WHITE GOODS 0 0 1
12 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Breakdown by brand value
Break down 2008 Trends 2005-2007 ($b)
INDUSTRY BREAKDOWN 2008 2007 2006
ALCOHOLIC BEVERAGES 2,97 3,17 2,29
AUTOMOTIVE 0,34 0,14 0,03
BEVERAGES 0,57 0,61 0,45
CONFECTION RY 0,40 0,53 0,45
ENERGY 0 0 0,07
FINANCIAL SERVICES (BANKS) 1,35 1,38 1,35
FOOD 0,56 0,63 0,70
CONSTRUCTION 0,40 0 0
GAS 0 0 0,19
INSURANCE 0,30 0,32 0,17
MEDIA 0,53 0,52 0
METAL 0,33 0,32 0
OIL 2,26 2,22 2,62
PERSONAL CARE 0 0 0,04
RETAIL 0,55 0,45 0,34
STEEL 0,49 0,33 0,42
TELECOM 0 0 0
WHITE GOODS 14,9 13,8 10,6
13 | Best Russian Brands 2008 | Interbrand | 10 November 2008
4. New entrants
14 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Rank 2008 (m) Growth
20 $212 New
22 $195 New
23 $191 New
24 $187 New
32 $108 New
33 $106 Re-entry
34 $104 New
15 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• MIRAX is a brand which is well known in the world
markets of real estate. It is associated with success,
unconventional approach to any situation, drive and
creativity. In conditions of ever growing competition,
increasing interest of investors and presence of
international developers the Russian real estate
market becomes the most transparent and
professional. Because of this we’ve got a chance to
estimate the brand value and include the strongest
developers’ brands in our 2008 ranking.
• At present, MIRAX is active in the markets of Russia,
the CIS, and in foreign markets, like France, Turkey,
Cambodia, Montenegro, the USA, and Switzerland.
The goal of MIRAX for the nearest two years is to
become No.1 in Europe. Aggressively moving to this
goal the company grows constantly. The competitive
advantage is fastness: fast decision making, fast
construction and, consequently, fast rate of
development. Success of MIRAX is not a bottom but
a start line to new ambitious goals and projects.
16 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• CTC (pronounced STS) was launched in
December’96 and is today the major private owned
TV Channel and simultaneously a leading
entertainment network in Russia. Focusing on
entertainment, CTC broadcasts an optimal mix
between Russian productions and international
programming of interest to its target audience,
viewers aged 6-54, with a particularly strong appeal
to younger audiences. CTC’s powerful brand has
strong recognition with a broad cross-section of
viewers who are attracted by its original and
dynamic programming which has a youthful and
• For the last year media market and especially TV
market high rapidly increased. The main reason was
increase of advertising costs in 2-3 times. In spite of
decreasing the overall audience share from 10,4% in
2006 to 9,0% in 2007 CTC has been the fourth most
-watched broadcaster in Russia for four consecutive
years. At the moment CTC has become a really
national TV network reaching the technical
penetration of 87,4%.
17 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• EVRAZ is one of the largest vertically-integrated
steel, mining and vanadium businesses in the world.
EVRAZ is an international player having activities as
in Russia and CIS countries (in Ukraine) as in
Europe (in Italy, in the Czech Republic), North
America (in the United States, in Canada), Africa (in
South Africa) and the Asia Pacific region (in China).
• To the moment customers, investors and other
authorities have been starting perceiving EVRAZ as
a brand communicating widely and not only as a
legal entity for group of companies. The company
built the brand being one of the most powerful B2B
brands in Russia. In our ranking the EVRAZ brand
takes the 23th place with the value of US$191 mln.
18 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• PIK is one of the leading residential developers in
Russia, with a concentration in Moscow and the
Moscow region and an increasing presence in many
of Russia’s other regions. Its core activity is the
development and sale of residential real estate in
Russia with a focus on mass-market neighbourhood
centres for raising middle class families.
• On June 1, 2007 PIK successfully completed their
Initial Public offering (‘IPO’) on the London and
Russian stock exchanges and became a public
company that gave us a chance to include the brand
in the long list of Russian Brand League Table. In
our ranking the PIK brand takes the 24th place with
the value of US$187 mln.
19 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• The Svyaznoy brand embodies a huge national
mobile communications retail chain of 1,6 thousands
point of sales covering all of Russia’s neighbourhood
centres for rising middle class families. The
differentiation of Svyaznoy is the high quality of
provided services. The company has been investing
heavily into the brand and plans the renovation of
• We notice that the time when the Russian retail
industry was presented mostly by privately held and
highly secretive organisations belongs to tha past.
More and more of them are becoming public and
transparent. As a consequence the Svyaznoy brand
makes debut in our ranking at the 32d place with
the value of US$108 mln.
20 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• This is re-entry for one of the strongest originally
local Russian oil brands.
• For the last years the company has been becoming
more and more national and even multinational after
opening Ukrainian market than a regional player.
After widening the retail network has reached 561
gasoline stations. These changes were supported by
rebranding and modernizing gas stations. A new
Tatneft brand launched at the beginning of 2007
embodies energy, ecology, transparency of the
business and also represents the results of
qualitative changes. A new brand has saved the
heritage but combined it with the innovativeness
and future achievements.
• In our ranking the Tatneft brand returns at the 33d
place with the value of US$106 mln.
21 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• KAMAZ is the largest automobile corporation of the
Russian Federation. KAMAZ ranks 11th among the
world leading heavy truck manufacturers and takes
8th place in the world by production volumes of
• The last year was the most successful for KAMAZ
after the crisis in 90s. They reached the highest
production level for the last 13 years. Plus the
highest export level since the beginning of
production becoming a really international brand
well-known all around the world. That success was
based on innovations, launching a new sales
program “leasing from manufacturer” and also was
supported by high rapidly increased market demand.
• In our ranking the KAMAZ brand takes the 34th
place with the value of US$104 mln.
22 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• The comeback of the major Soviet/Russian car
brand is linked with serious changes which have
been taken place with Avtovaz during the last and
this year. First of all the collaboration with Renault
influenced the perception of the brand and the
internal processes within mother company Avtovaz
positively. Secondly the brand continues innovating
by launching new models like LADA Priora (2007)
and simultaneously by improving sales and post-sale
• At the moment the brand has a huge challenge
based on brilliant heritage, new technologies from
Renault. We expect a further positive trend for LADA
as a consequence of the financial crisis when
demand might shift from upper middle foreign car
brands to mainstream not so expensive Russian
• In our ranking the LADA brand returns at the 35th
place with the value of US$98 mln.
23 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• RESO-GARANTIA. This is a case where a successful
retail strategy has a big positive influence on the
brand value. RESO-Garantia focused on auto
insurance and this sector has increased multiple
times since the last years after the state had
launched the OSAGO program.
• RESO-Garantia is an agent-based company. Its
products are sold by over 18 thousand agents. Its
sales network is one of the largest in Russia, and
includes over 800 points of sale all over Russia.
RESO-Garantia’s products and services are provided
to over 3 million corporate and retail clients.
• In our ranking the brand despite of the financial
crisis debuts at the 36th place with the value of
24 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• SEVENTH CONTINENT was established in 1994 and
today is an international retail chain and one of the
leading Russian national chains. The Company
operates in two major formats: supermarkets and
hypermarkets. At the moment the Company has 138
stores in Moscow and Moscow region, in Kaliningrad
region, in Perm, in St-Petersburg, in Ryazan,
Chelyabinsk, Yaroslavl and in Minsk, Byelorussia.
• As we’ve already mentioned the Russian retail
industry is becoming more and more public and
transparent. Seventh Continent was one of the first
retailers that completed its IPO in 2004.
• The last year was one of the most successful for
Seventh Continent therefore the brand makes debut
in our ranking at the 38th place with the value of
25 | Best Russian Brands 2008 | Interbrand | 10 November 2008
5. Selected brand profiles
26 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Top 2008 risers
27 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• For the last year MTS was successful in market
expansion in scope and depth.
• Rebranding of the second Ukrainian mobile operator
UMC fully changed its brand was the major event for
MTS last year. Despite some opposition to
innovations from some parts of the Ukrainian society
the rebranding had been successful and after that
the MTS brand could gain about 20 million
• Acquisition of K-Telecom (the VivaCell brand), the
leader of Armenian telecommunications having 60%
market share, was the second successful activity of
MTS in 2007. In penetration depth of 40% of
Armenian mobile communications market MTS by 6’917 $m 19%
this acquisition has shaped its future. The company
has already announced its plans to launch the 3G 5’813 $m
network in Armenia.
• Among quality innovations for MTS we should notice
the strategy of marketing politics on creating sub-
brands/communities in cooperation with such brands Brand MTS
as Cosmopolitan, Central Partnership and, Sector Mobile Telecom
especially, A1. It influences actual diversification of
brand’s architecture, creating sub-brands and Brand Value ($m) 6’917
targeting special socio-cultural communities that Brand Value (RUR mln) 176’727
theoretically opens unlimited possibilities for the Rank 2008 2
growth of subscriber base and set of offering
products for MTS. Rank 2007 2
28 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• Last year Megafon has increased its market share
from 19,5% to 20,5%. As a whole the Megafon
brand has been perceived more consistent in
compare with previous years. Huge investments into
promotion together with consistent branding policy
when promises are verified by the according
activities gave positive impact.
• Megafon became the leader in covering Russia and
only one presenting in all Russian regions. Megafon
won a pitch and got the first license in Russia to
provide services of new generation based on 3G
UMTS technology. Focus on innovations also has
been verified by the tariff policy. Megafon has
offered its B2C and B2B clients special proactive
niche tariffs. 19%
Sector Mobile Telecom
Brand Value ($m) 569
Brand Value (RUR mln) 14’547
Rank 2008 6
Rank 2007 6
29 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• KLINSKOYE. The brand is successfully managed by
InBev. For the last year when the Russian beer
market increased by 15,7% the growth of Klinskoye
sales has been 26,8%. This dynamics was based on
successful marketing policy. The brand has one of
the best indicator of brand awareness in the market
and simultaneously is perceived consistently.
• The range of Klinskoye sub-brands has been added
by the new one. Klinskoye Freez is a new lager beer
launched in May 2007 which provides superior
refreshment and a long lasting cooling sensation.
Delivering strong appeal to young adults consumers
in Russia, the brand is supported by innovative
packaging such as twist-off bottle with a holographic
Sector Alcoholic Beverages
Brand Value ($m) 88
Brand Value (RUR mln) 2’249
Rank 2008 37
Rank 2007 37
30 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• The brand YA is successfully positioned in the
premium segment of juice market. Because of
changing customer preferences from cheap products
to more expensive juices and therefore high rapidly
extension of this segment the main its participants
such as YA increased their market shares.
• Progress of the YA brand was reasoned as by
expanding a product range as by providing effective
advertising activities. In 2007 Lebedyanskiy started
a new advertising campaign supported the YA brand
(series “Morning” and “The Main Instinct”) which
consistently continued the previous ones combined
by one concept named “Enjoyment”.
175 $m 13%
Brand Value ($m) 175
Brand Value (RUR mln) 4’472
Rank 2008 25
Rank 2007 26
31 | Best Russian Brands 2008 | Interbrand | 10 November 2008
6. Top 4 decliners
32 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Top 2008 fallers
33 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• RUSSIAN STANDARD BANK. It’s no surprise that the
credit crunch has left a dent in the brand value of
most financial services brands, but Russian Standard
Bank is one of the worst affected in Russia. Negative
news have already appeared at the end of 2007
when the bank had to reduce some credit programs
such as mortgage and some others. It was reasoned
by the problems with liquidity and high risks.
Simultaneously some rating agencies decreased the
credit rating of the bank from “stable” to “negative”.
• Also we expect the current deep financial crisis to
influence the stability of the bank a lot. And only a
wide retail network which Russian Standard Bank
has can save it to avoid endangering the business
and the brand.
Brand Russian Standard Bank
Brand Value ($m) 219
Brand Value (RUR mln) 5’596
Rank 2008 18
Rank 2007 21
34 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• SEVERSTAL. The global economic crisis takes its toll
on the basic steel industry. And Severstal are among
those who has been facing the crisis. As a result of
slower demand for steel products due to recent
changes in global economic conditions, Severstal in
October announced its decision to reduce production
at its steel plants in Russia, North America and
Europe. In Russia, Severstal will reduce production
at its Cherepovets steel plant by approximately 25%
for crude steel. In the United States, Severstal will
be adjusting production to balance with customer
needs to an aggregate of approximately 30% across
its facilities. In Italy, Severstal is scheduling October
production cuts of 30%. Simultaneously about 800
employees at the Steubenville North Plant of 303 $m
Severstal Wheeling have been laid off.
• The important thing that is also holding Severstal 334 $m
back is its brand. There are a lot of problems with
brand architecture, with a clear brand positioning
and brand strategy. Also internal brand engagement
seems to be an urgent topic. Severstal needs a Brand Severstal
global brand to speak with a clear voice, to get them Sector Steel
noticed and better understood. A powerful brand
that supports a powerful ambition and helps in crisis Brand Value ($m) 303
times. Brand Value (RUR mln) 7’746
Rank 2008 12
Rank 2007 12
35 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• YARPIVO. Last year the more expensive market
segments were developing the most rapidly,
especially the licensed beer segment, which grew
three times faster than the overall market. The
active growth of the licensed segment was caused
by continuous changes in beer consumption profile
closer to European and worldwide patterns and the
transition of domestic consumers to more premium
products. We expect this tendency will continue and
our national brands except the leaders like Baltika,
Klinskoye will continue losing its popularity and
market share in strong competition with
• For the last year Baltika has been concentrating on
promoting and developing the title Baltika brand and
its licensed brands (Tuborg, Carlsberg, Foster’s and
Kronenbourg 1664) and reached great success 248 $m
becoming a leader in all beer segments.
Simultaneously the role of other brands like Yarpivo
in the Baltika’s brand portfolio became less
important. Brand Yarpivo
Sector Alcoholic Beverages
Brand Value ($m) 213
Brand Value (RUR mln) 5’431
Rank 2008 19
Rank 2007 18
36 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• ARSENALNOE. Here we face the same situation as
with Yarpivo. The active growth was caused mostly
by the transition of domestic consumers to more
premium products. The discount and low
mainstream segment which Arsenalnoe belongs to
reduced by 1,3% for the year. We expect this
tendency will continue in future.
• For the last year Baltika has been concentrating on
promoting and developing the title Baltika brand and
its licensed brands and reached great success with
them: Baltika +33,5%, Tuborg +70%, Carlsberg
+34%, Foster’s +63% and Kronenbourg 1664
+132%. Simultaneously the role of other brands like
Arsenalnoe in the Baltika’s brand portfolio has been
becoming less important.
Sector Alcoholic Beverages
Brand Value ($m) 294
Brand Value (RUR mln) 7’516
Rank 2008 14
Rank 2007 11
37 | Best Russian Brands 2008 | Interbrand | 10 November 2008
7. Our approach and experience
38 | Best Russian Brands 2008 | Interbrand | 10 November 2008
The business purpose for brand
• Extending the business based
on the brand’s equity
• Assessing the economic
impact on branding decisions,
investments and supporting
• Setting performance metrics
for controlling purposes
• Providing a fair opinion and
• Reporting, litigation and taxes
• Financing projects and
businesses, defining royalty
39 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Interbrand’s method for valuing the
2008 Best Russian Brands
40 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Criteria for consideration
• Using our database of Russian brands, populated with critical information over the past
20 years of valuing brand and about 35 years of consulting with organizations,
Interbrand formed an initial consideration set. All were then subject to the following
criteria that narrowed candidates significantly:
- There must be substantial publicly available financial data.
- It must be a real brand communicated widely and not a pure legal entity.
- The brand must be Russian origin and made for Russia using independently if it’s
owned by Russian company or international company.
- The brand must be a market-facing brand.
- The brand must not be a monopoly brand as in a whole as within its sector of
- The Economic Value Added (EVA) must be positive.
- The brand must not have a purely b2b single audience with no wider public profile
- The company to which it belongs is supposed to generate profit.
• These criteria exclude heavyweights such as Gazprom, MGTS, Alrosa, RZD which are
monopoly brands, leading brands in tourism and media which are privately held and
not public, or some brands from the mining, energy, metal industries as not a market-
facing brand and as having a purely b2b single audience with no wider public profile.
41 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• Interbrand pioneered the development of brand valuation techniques in 1988 for Rank
Hovis McDougall (RHM), who was resisting a hostile takeover bid. The company needed
to demonstrate that their value had been severely underestimated and hired
Interbrand to quantify the value of RHM’s portfolio of brands.
– Our approach is the industry standard, endorsed by
Academics – Government bodies
Auditor – High courts
Accountancy firms – Management consultants
Analysts – Stock exchanges
Advertising agencies – Tax authorities
– Interbrand completed more than 5000 brand valuations
– Valuation services used by more than 400 leading companies
– We’ve conducted brand valuations in all industry sectors
42 | Best Russian Brands 2008 | Interbrand | 10 November 2008
• Accepted standard across the industry: Interbrand • Provides a diagnostic tool for on-going
invented brand valuation almost 20 years ago and measurement: The methodology allows for not only
has continued to innovate its methodology to measurement, but also management of the brand.
remain the “gold standard” across the industry. We The various inputs to the model provide insights into
have been recognized by a range of constituencies the drivers of brand value that inform both strategy
that include academics (such as Harvard and tactics that ultimately maximize shareholder
University), accountants (such as Accountants’ value. We work with our clients to leverage insights
Digest), business journalists (such as gained from the analysis to develop on-going brand
BusinessWeek), and even our competitors. valuation metrics and tracking tools. Many of our
clients conduct on-going brand valuations (yearly as
• Measures brand as a financial asset: Our definition well as quarterly) and incorporate these measures
of brand value, as the current and future earnings into their performance management systems.
driven by the brand, gives management a
defensible approach to quantify the value of an • Focused on actionable results: These diagnostic tools
intangible asset much like the valuation of tangible and strategic insights lead to recommended actions.
assets. We work with clients to identify both short and long-
term actions that will protect and grow their brand
• Incorporates rigorous analytic techniques: Our value based on the various insights gained from the
brand value methodology is built on accepted analyses in the brand valuation model.
practices in both finance and marketing. In finance
we apply established principles of Economic Value • Customized to fit specific client needs: Finally, we
Added (EVA) and Net Present Value (NPV). In tailor brand valuation for each client based on its
marketing we utilize the latest analytic techniques specific branding and business needs. Our brand
such as structural equation modeling (SEM) and valuation methodology provides a framework in
choice modeling to quantify brand measures in an which the various inputs to the model can be
objective way. Our consultants stay on top of the analyzed based on available data and to the level of
latest industry trends and often pioneer new granularity most relevant for each client.
techniques for the industry.
43 | Best Russian Brands 2008 | Interbrand | 10 November 2008
We have led over 5,000 brand
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45 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
What is brand value? How did you take account of the fact that brands
are run through franchisees?
Why value brands?
What is the relationship between the following
How does Interbrand derive the value of brands? terms: brand awareness, brand equity, brand
What was the basis of the financial assessments? share and brand value?
What was the basis for the marketing Do the valuations reflect the underlying state of
assessments? the economy?
What was Kommersant DENGI’s role in the Best How should one understand the brand value as a
Russian Brands ranking? % of market capitalization?
Why are certain brands not on the list? How does brand value rank against ad spending?
Certain strong Russian brands are missing. Were Is it possible to recognize brand value on a balance
they considered? sheet?
Within certain large industry sectors there are no What is Interbrand’s view on brands appearing on
brands that appear on the list. Why? balance sheets?
What new industries appear on the league table for Why is Interbrand an expert in assessing brand
the first time and why? value?
What are criteria for the Russian brands to be Does Interbrand conduct other brand studies?
presented in Best Global Brands ranking? What is the difference between the valuations in
Was there a limit to the number of brands included Best Russian Brands and consulting valuations for
from any one industry? clients?
Are there any brands that have a sufficient brand
value but did not make the list?
46 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
What is brand value? How does Interbrand derive the value of brands?
Brand value is the dollar value of a brand, calculated as Net Our valuation approach is a derivative of the way businesses
Present Value (NPV) or today’s value of the earnings the and financial assets are valued. It fits with current corporate
brand is expected to generate in the future. Like any other finance theory and practice. There are three key elements and
financial value, brand value is at a point in time based on the they are detailed below:
assumptions and information available at that point in time.
Brand value is calculated according to the most widely
accepted and used valuation principles. This makes brand We identify the revenues from products or services that are
value comparable to business - and all NPV-based asset generated with the brand. From these Branded Revenues we
values. deduct operating costs, applicable taxes and a charge for the
capital employed to derive Intangible Earnings. Intangible
The valuations of brands appearing in the Best Russian
Earnings are the earnings that are generated by all of the
Brands (BRB) are calculated in their current use to their
business’s intangibles such as brands, patents, R&D and
current owner. They, therefore, do not necessarily represent
management expertise. This is a prudent and conservative
the potential purchase, extension or licensing value of the
approach as it only rewards the intangible assets after the
tangible assets have received their required return. The
Why value brands? concept of Intangible Earnings is therefore similar to value-
based management concepts such as economic profit or EVA
The purpose of these valuations is to demonstrate to the
(Economic Value Added is Stern Stuart’s branded concept).
business community that brands are very important business
Based on reports from financial analysts we prepare a forecast
assets and in many cases the single most valuable company
of Intangible Earnings for six years.
asset. We also aim to show that branding and marketing are
key business issues that have direct shareholder value Role of Branding
impact. Through six years of publishing Best Global Brands in
Since Intangible Earnings include the returns for all intangibles
Businessweek magazine we have created the world’s most
employed in the business, we need to identify the earnings that
significant and influential brand and marketing study. In fact,
are specifically attributable to the brand. Through our
the Businessweek/Interbrand best global brands ranking was
proprietary analytical framework called role of branding, we can
the third most sought-after benchmark report by CEOs and
calculate the percentage of Intangible Earnings that are entirely
CFOs. And in Russia at the fourth time we are creating the
generated by the brand. In some businesses (e.g. fragrances or
Russian most valuable brands based on the same method as
packaged goods), the Role of Branding is very high as the
we create Best Global Brands League Table.
brand is the predominant driver of the customer purchase
47 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
However, in other businesses (in particular b2b) the brand is For example, $100 from the Lukoil brand in five years requires
only one purchase driver amongst many and the Role of a lower discount rate than $100 from the TNK brand in five
Branding is therefore lower. For example, people are buying years, as the Lukoil brand is stronger and therefore more likely
Microsoft not only because of the brand but mostly because to deliver the expected earnings.
the company has an installed base of 80% of the market and
The assessment of Brand Strength is a structured way of
it would be for most users extremely difficult to switch their
assessing the specific risk of the brand. We compare the brand
existing files to a new software platform. In the case of Lukoil
against a notional ideal and score it against common factors of
people buy not only because of the brand, but also because
Brand Strength. The ideal brand is virtually ‘risk free’ and
of the location of the petrol stations.
would be discounted at a rate almost as low as government
For each of the brands (and categories) we have assessed bonds or a similar risk free investment. The lower the Brand
the Role of Branding. The Role of Branding is derived as a Strength the further it is from the risk- free investment and so
percentage - thus if it is 50%, we take 50% of the Intangible the higher the discount rate (and therefore the lower the Net
Earnings as Brand Earnings. If it is 10%, we only take 10% Present Value).
of the Intangible Earnings.
What was the basis of the financial assessments?
Published annual reports were used to examine the revenues,
For deriving the net present value of the forecast Brand earnings and balance sheets of the brand - owning companies.
Earnings, we need a discount rate that represents the risk Analyst reports and expert prognosis are used as the basis for
profile of these earnings. There are two factors at play: identifying the specific brand revenues and earnings and for
firstly, the time value of money (i.e. $100 today is more forecasting future earnings.
valuable than $100 in five years because one can earn
What was the basis for the marketing assessments?
interest on the money in the meantime); and secondly, the
risk that the forecast earnings will actually materialize. The Unlike other brand value league tables, Interbrand does not
discount rate represents these factors as it provides an asset- rely on a single source of marketing information. Using a single
specific risk rate. The higher the risk of the future earnings brand study would limit the type of information (usually limited
stream, the higher will be the discount rate. to perceptual data) and the type of customer (usually general
public) that can be considered. Because many leading brands
To derive today’s value of a future expected earnings stream
operate in specific customer segments (especially b2b), only
it needs to be ‘discounted’ by a rate that reflects the risk of
considering the general public can be very restrictive. Instead,
the earnings actually materializing and the time for which it is
Interbrand refers to a wide array of primary and secondary
sources which are applicable to each brand.
48 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
Moreover, Interbrand utilizes its network of valuation brand Certain strong Russian brands are missing. Were they
experts from offices around the world. considered?
What was Kommersant DENGI’s role in the Best Russian In each case there was a reason why they could not be
Brands ranking? evaluated based on purely public data.
Kommersant DENGI did not influence the selection of brands
or the determination of any of the values. Their role was to RTR - a unique media organization since it’s a government-
publish the study and to tie the reported performance of owned corporation that is not supposed to generate a profit.
brand value to some of the wider issues affecting these There are, however, parts of it which are commercial and which
brands. They also provided the specific one-line comments do generate profits but these are still the minority of the
that appear in the table. Interbrand is not responsible for business. And also the company does not produce public
these and they do not necessarily represent our views. financial data.
Kommersant DENGI is our local partner in publishing Best
Russain Brands ranking. Gazprom - is the biggest Russian company, “the face of
modern Russia” and Russian property today. Obviously
Why are certain brands not on the list? Gazprom is a monopoly brand and cannot be included in the
This is a frequent question especially from companies who BRB ranking.
would expect their brands to be on the list. There are five
reasons: Monopoly character or public available data are the most
- The brand is not Russian origin. common causes that the strong brands are missing. And
- The brand has a pure b2b single audience and has no wider Interbrand can evaluate these brands as a separate project.
public profile and awareness.
Within certain large industry sectors there are no brands that
- The company does not produce public data that enables us
appear on the list. Why?
to identify the branded business (the company has multiple
brands or has unbranded production). Airlines - there has clearly been significant investment in airline
- The brand is not big enough (brand value below $77 million brands but they are still operating in situations where the brand
falls below the 40 brand ranking). plays only a marginal role. In most cases, the customer decides
- The business is driven by a number of intangible factors and based on price, route, schedule, corporate policy or frequent
it is difficult to separate the brand from the rest. flyer points. The brand may often only have a real impact when
- The brand is a monopoly brand. all these other items are at parity. We have assessed the brand
value for airlines by using internal data to strip out the impact
of these other factors.
49 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
But from purely public information this is difficult to do The brands first of all must be global. What does it mean?
It means that minimum 30% of the branded business needs to
Energy - although there are many large energy brands that be outside the home country to be considered global. However
are highly valuable, at present none of these brands fulfill our if the home country of the brand is small (e.g. the Netherlands)
criteria. They are or monopoly brands or pure b2b single we required a higher percentage. For US brands, the overseas
audience oriented. sales ratio can be smaller due to the size of the US market,
which is nearly as big as all of Europe. Applying the one-third
Pharmaceuticals - there are no pharmaceutical brands in this
overseas sales requirement would penalize US brands for being
year’s league table. In the pharmaceutical industry, it is the
successful in their domestic market.
product brand rather than the corporate brand with which the
consumer builds a relationship. We also need evidence that the brand is established in a wide
number of markets around the world. At the very least it needs
What new industries appear on the league table for the first
to have a substantial presence in at least one country in each
time and why?
of the following 4 regions: North America, Latin America,
For the first time Construction industry appears on the league Europe and Asia-Pacific. It also needs to be managed
table 2008. consistently as a global brand. As an example, Wal-Mart is a
valuable brand however it is not consistently branded as Wal-
Two real estate companies - Mirax and PIK - have entered
Mart around the globe. From the Russian brands we see only
the league table this year. It connects with our more detail
Lukoil having the best chances to be presented in the Global
view on before closed construction industry. In conditions of
ranking in the years to come.
ever growing competition, increasing interest of investors and
presence of international developers the Russian real estate Was there a limit to the number of brands included from any
market becomes the most transparent and professional. one industry?
Because of this we’ve got a chance to estimate the brand
No, however, one of the requirements of a leading Russian
value and include the strongest developers’ brands in our
brand is that it is in fact leading. The mark of leadership is not
just about market share but also about behaving as a leader -
And as a whole we hope that Russian economy will continue setting trends, quality standards, authority, etc. Thus, there
the tendency of becoming more public and transparent and are brands that are in the top three of their category’s market
we will see more strong brands in our ranking. share but did not make the cut; and there are brands that are
not top three that did make the ranking. The rules described
What are criteria for the Russian brands to be presented in
are guidelines and ultimately each brand was assessed for
Best Global Brands ranking?
inclusion on its own merits.
50 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
Are there any brands that have a sufficient brand value but a customer thinks or does, it is not an assessment of the
did not make the list? economic value created by those thought or actions.
There are certainly strong Russian brands that have a value Do the valuations reflect the underlying state of the economy?
exceeding $77 million but which did not make the list
Yes - in two ways. The forecasts are prepared with an overall
because they do not meet our ranking criteria. This would be
view on economic growth at a point in time. The formula for
true of many of the industrial and transport brands, but also
converting the Brand Strength Score into a discount rate is tied
surprisingly true of a lot of media, hi-tech (IT&Internet) and
to the underlying government bond yield.
How should one understand the brand value as a % of market
How did you take account of the fact that brands are run
The market capitalization represents the market’s valuation of
This was an issue with some of the oil retail brands - Lukoil,
all the equity of a company. In theory, the market
TNK, Tatneft. We based our valuation on the earnings that
capitalization is the value of all tangible and intangible assets
the brand owner makes from the brand and an estimate of
owned by the company less all the debt owed by the company.
the earnings that the franchisees make from the brand (what
The brand value/market capitalization relationship can be read
is called a total- system view). as in all other valuations,
in a number of ways:
these earnings were then reduced to take account of a return
for the use of the tangible and other intangible assets. - If the brand value percentage of market capitalization is low,
it suggests that the business is driven by other kinds of assets
What is the relationship between the following terms: brand
(tangible and intangible) and that the brand is relatively
awareness, brand equity, brand share and brand value?
unimportant. It could also mean that the business is failing to
Brand value is the only measure that looks at the economic leverage the brand as much as it should be and that investors
benefit of the brand to its owner. In other words, it is an end should be concerned about that.
in itself. Brand awareness and brand equity are a means to
- If the brand value percentage of market capitalization is high,
an end. Brand awareness is simply knowledge that a brand
it suggests that the business is driven by the brand and that
exists, thus brand awareness may prompt customers to
investors should take care of how the brand is being managed
consider buying a product. Brand equity is a measure of
since this will have a very direct effect on shareholder value. It
customer perceptions of a brand; thus it may give a customer
could also mean that the business is under-valued by the
reason to prefer a product over the alternatives. Brand share
market and that they are failing to reflect the true value of all
is simply the market share achieved by the brand. Thus
the assets of the business of which the brand is one (but only
brand awareness, equity and share are all measures of what
51 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
The comparison of brand value to market capitalization is Unfortunately the Russian accounting standard RSBU doesn’t
mainly useful for mono-branded businesses as the market let our companies recognize brand value on a balance sheet.
capitalization relates to all company assets. For companies
What is Interbrand’s view on brands appearing on balance
that own and operate under many different brands such as
Nestle a comparison with market capitalization is less useful.
We support the stance of the different accounting standards
How does brand value rank against ad spending?
which recognize the value of brands on the balance sheet.
It is not really appropriate to try to correlate these two. Interbrand has led the debate on this issue for many years.
Brand value is a measure of the output from a series of brand However, current accounting standards allow only for the
investments and initiatives over a long period of time. recognition of acquired brands, not internally developed
Advertising is one element in wide spectrum of brands. Also, the impairment test for brands on the balance
communications companies employ. Other communications sheet allows only for a potential value reduction but not
include sponsorships, online, point of sale, customer service, increase. The acquisition criterion means that the Gucci
and so on. In some cases brands are built with very little or brand is recognized on the balance sheet of PPR as an
no advertising as in the case of Pyaterochka where retail intangible asset while the Louis Vuitton brand does not show
space and employees are the key communications channels. up on the balance sheet of LVMH.
Is it possible to recognize brand value on a balance sheet? We conclude that the recognition of acquired brands on the
balance sheet is a step in the right direction for providing
Several accounting standards - such as International
shareholders with better information about the assets they
accounting standards IFRS and US-GAAP - require the
have invested in. However, it’s still not sufficient, as the
recognition of acquired goodwill, including brands on the
value of internally generated brands cannot be disclosed
balance sheet. The standards clearly identify brands as
despite making up the vast majority of the most valuable
intangible assets with an infinite economic life. This means
brands around the world.
unlike other intangible assets (e.g. patents, databases) or
goodwill (e.g. training, workforce) brand value does not have As the need for some formal statement about brand value
to be amortized through the income statement. However, (and the value of other intangible assets) is becoming
they are subject to an annual impairment test and their increasingly important we would advocate some type of
carrying value needs to be reduced if the value declined. The statement in the annual report on the intangible business
technique is consistent with the way in which Interbrand has assets including brands. Whether this happens in the
assessed brands for balance sheet inclusion - though of traditional balance sheet or whether it happens in a new
course using more extensive and proprietary data. ‘Statement of Intangible Value’ would be a secondary
52 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Frequently asked questions
Why is Interbrand an expert in assessing brand value? France, Spain, Australia, Singapore, China, Taiwan, Mexico,
Canada and Brazil. In April 2008, Interbrand also published a
In 1988, Interbrand developed and introduced the first
table of the 25 most valuable European retail brands.
valuation of a portfolio of brands that used a brand-specific
valuation approach. Since then we have continuously updated What is the difference between the valuations in Best Russian
and improved our valuation approach to make it the global Brands and consulting valuations for clients?
industry standard of brand valuation. The Interbrand brand
The valuation methodology is the same, however, the level of
valuation methodology is the widest endorsed and used
detail and the data input significantly differ. The BRB valuations
valuation approach around the world. Interbrand alone has
are mostly consolidated top-line assessments based on publicly
valued more than 5,000 brands in all industries worldwide.
available marketing and financial data. We recognize segment
Our valuations have been endorsed by leading academic differences for diversified brands by product or service but not
institutions including Harvard, Thunderbird, Columbia, Emory geography or any other classification (e.g. financial services or
and St. Gallen. Our valuation approach has the highest depth technology). As the valuations are based on publicly available
of applications including strategic brand management, data, they are only as reliable as the data that the brand-
marketing budget allocation, marketing ROI, portfolio owning companies publish about themselves (in annual reports,
management, brand extensions, M&A, balance sheet analysts briefings, press articles, syndicated market research
recognition, licensing, transfer pricing and investor relations. etc.).
Our valuations have been audited for inclusion on the balance
Consulting valuations are based on detailed customer
sheet by all leading accounting firms. Also, many tax
segmentations, as well as in-depth marketing and financial
authorities and law courts around the world have accepted
analyses. They have a much higher level of accuracy and
our valuation approach.
granularity. The purpose of a consulting valuation goes well
Does Interbrand conduct other brand studies? beyond assessing financial worth. It identifies and quantifies
value drivers, and helps the company to manage its brand to
Since 2000, Interbrand has partnered with BusinessWeek to
increase the shareholder value of the underlying business.
produce an annual study of the Best Global Brands, creating
However, if clients undertake consulting valuations we are in a
the world’s most significant and influential brand and
much better position to identify publicly available data that are
marketing survey. PRWeek magazine conducted a survey of
likely to align the BRB valuation with the consulting valuation.
the important rankings to senior executives. Their survey
In cases where companies make our consulting valuations
concluded that the Best Global Brands study is regarded by
publicly available, for example through a note in the balance
senior management as the third-most influential ranking. In
sheet, these values will also be published as the BRB ranking
addition to the global study, Interbrand has established
national or regional brand value league tables in Switzerland,
53 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Creating and managing brand value Interbrand has 34 offices in more than 20 countries around the
globe and clients from among the most respected businesses.
The Interbrand Brand Value Management Model TM
Moscow office of Interbrand was opened in 2005, March, 24. It
Brands do not become and remain successful on their own. provides a whole complex of branding services - Creating,
Nor are they ensured ongoing leadership without proactive, Managing and Evaluating brands.
diligent and detailed management. Interbrand works
Interbrand is a wholly owned subsidiary of the Omnicom Group,
collaboratively with clients to consistently and continually
the industry leader in Marketing Communications.
evaluate, create and manage their brand assets. We do this
by employing the following model.
The Brand Value Management model is a closed loop with
neither a specific beginning nor definite end. The model
begins at a different point for every brand, based on business
need. However, one aspect does remain constant: once in
progress, the model actually accelerates, by generating
synergies and capturing new opportunities through carefully
crafted and integrated activities. It becomes an inexhaustible
source of energy and competitive advantage for every brand.
Brand Value Management comprises three distinct, yet
interrelated, phases: Evaluate, Create, and Manage - three
phases where the brand and market opportunities are
painstakingly examined, creatively brought to life, and
thoroughly and holistically coordinated.
For about 35 years, Interbrand has worked with leading
global brands to create and manage brand value through an
integrated set of offerings. We offer brand and business
strategy, brand valuation, quantitative and qualitative
research, retail design, brand architecture and portfolio
optimization, naming, corporate identity design, packaging
design, communications creation and online digital asset
54 | Best Russian Brands 2008 | Interbrand | 10 November 2008
Managing Director IBZL Moscow
Tel: +7 495 787 4600
Managing Director IBZL Moscow
Tel: +7 495 787 4600
Consultant, Project Coordinator, IBZL Moscow
Tel: +7 495 787 4600
Additional information on brands
55 | Best Russian Brands 2008 | Interbrand | 10 November 2008