"Is your textile brand worth billions?" asks Naseem Javed

17 Jun '05

5 min read

Normally, year after year, Coke, IBM, Microsoft, Disney, Toyota and Gillette are given a combined value of close to half a trillion dollars.

Most people would think that if Coke were to restart its entire branding history, it would easily cost a trillion dollars, as the company marshaled a global country-by-country marketing and branding launch in a bid to repeat its branding success. The brand valuation of Coke is over $50 billion or so, but somehow the total stock value of Coke is still about $40 billion. Strange math.

Let's explore reality.

Brand Name Dilution
A globally protected unique brand with a unique name identity and steady sales growth can be valued by multiplying annual sales a few times, adding in all the advertising and promotional costs spent on that brand from its inception, and adding in expected sales and the value of each client spread over years. From that, subtract some key things, like competition, lawsuits and other risks, such as possibly losing ownership claim to the brand name and so on. The bottom line is that you might easily end up with a billion dollar number.

Certain things are very tangible and black and white, such as the brand name and its ownership; simply put, either you own this name outright or you don't. Most managers try hard to convince themselves that their single trademark filed in the country of origin is sufficient. They ignore the global e-commerce reality. Most CEOs are simply hat their single trademark filed in the country of origin is sufficient. They ignore the global e-commerce reality. Most CEOs are simply shy to check the dilution of their brand names on Google.Because less than 1 percent of names are globally protected, the chance is that the entire evaluation is on shaky ground. During any M&A, a price is established on hard and soft assets. Brand valuation is really a soft asset, as opposed to trademarks and intellectual property, which are hard assets.

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