The top 25 most valuable beauty brands were revealed by Cosmetics Business today, unveiling L'Oréal as the most valuable beauty label.
But what about brand strength? Before unveiling the highest player by brand strength, it’s worth fully exploring how Brand Finance’s league tables are created.
Annie Brown, General Manager, Brand Finance, explains: “There are several different ways to value brands under the international standard of brand valuation, which is called ISO 10668, and the one that we use is the royalty relief method. That’s the favoured approach by tax and legal authorities as it’s both an income approach, but also a market approach, because it looks at comparable transactions for a brand licensing.
“The way the methodology works is it looks at how much brand owners would hypothetically have to pay to licence their brands if they didn’t own them. So it’s looking at comparable licensing agreements to determine that and also looking at how strong the different brands are, because one of the key considerations in any licensing decision is, how strong is this brand?"
This contributor to brand value – brand strength – is determined by looking at different attributes of how brands are perceived by stakeholders.