Tim Hortons brand value still strong
Reputational hit didn’t dampen financial results: U.K. consultant
Most brand surveys focus TORONTO solely on consumer perception polls to pass judgment on a corporation, which is why Brand Finance’s ranking of Canada’s most valuable brands looks quite a bit different than others.
The U.K.-based brand valuation and strategy consultant certainly considers consumer perceptions when it comes to evaluating a brand’s strength, but a big part of its Canada 100 2018 ranking take a company’s financial clout and performance into account.
As a result, it’s no surprise that six of the top performers in 2018 — as in other years — are in the financial services sector, or that the value of Tim Hortons Inc. actually increased by 16.6 per cent to $6.3 billion over the past year, despite taking a reputational hit in some recent consumer surveys.
“Tim Hortons has faced significant widespread media criticism, but their brand strength grew in the face of these challenges,” said Charles Scarlett- Smith, marketing manager at Brand Finance. “A lot of what is driving Tim Hortons’s brand growth is its international expansion.”
Tim Hortons has come under scrutiny amid a lengthy feud between head office and a group of franchisees, and the negative PR appears to have put a dent in its once-golden corporate reputation with consumers, according to other surveys.
The coffee and doughnut chain fell to No. 50 from No. 4 in a Leger survey last month of admired companies in Canada, and it plunged to No. 203 out of 300 in 2018 from No. 27 in 2017 in the annual Gustavson Brand Trust Index done by the University of Victoria’s Peter B. Gustavson School of Business.
But overall, and despite the bad press, Tim Hortons continues to grow: revenue rose 2.1 per cent in the last quarter as it added more locations in markets around the world, such as Scotland and Mexico.
“Consumer brand equity affects the bottom line: it drives customer loyalty, repeat purchases,” said Parul Soni, a Brand Finance consultant. “It’s the crux of a lot of branded businesses. There is definitely a risk that further damage to the (Tim Hortons) brand might result in its brand value going down. So far, they have been able to maintain their financials and they are also making efforts to invest in the brand, and appear to have recognized the issues they have had in recent times.”
In addition to assessing consumer perceptions, Brand Finance considers factors such as investment, revenue growth, market capitalization and profitability to arrive at a financial value for a brand. The brand’s value expressed as a dollar figure is what the company believes it would be able to earn in sustainable royalty revenue if its owners were to license the brand.
Vidéotron was one of the strongest performers on the Brand Finance index this year, jumping to No. 42 from No. 64 a year ago as its brand value surged 124 per cent to $1.7 billion.
“Vidéotron had a massive boost in mobile phone revenue — 19.5 per cent — which is in line with global trends towards increased data traffic on mobile networks,” Scarlett-Smith said.
“Vidéotron is accelerating quickly in its growth. Its average monthly revenue per user is up by 6.7 per cent and it also registered its millionth mobile phone subscriber.”
Another big mover was Manulife Financial Corp., whose brand value rose 60.5 per cent to $4.1 billion, Brand Finance said, driven by an increase in earnings, investment and its international expansion efforts.
“They are very healthy and continue to expand at a very good rate,” Scarlett-Smith said. “It’s mirrored in Sun Life, (whose brand value rose 35.3 per cent to $3.2 billion). Alongside banking, insurance is another sector in which Canadian brands are trusted internationally.”
Montreal-based Dollarama Inc. moved up to No. 29 from No. 37 last year as its brand value grew 29.7 per cent to $2.4 billion.
“They have made a lot of effort to expand their store network,” said Soni. “Strong financial performance is being reflected in investor confidence and analyst recommendations.”
Some of the big drops in brand value were recorded by Seven Generations Energy Ltd., which fell to No. 92 from No. 61 in 2017 as its brand value dropped 49.5 per cent to $409 million and Hydro One Ltd., whose brand value dropped 20.8 per cent to $547 million, putting it at No. 82, down from No. 68.