The brand value of the world’s biggest companies is set to decline by $1 trillion due to the coronavirus outbreak, a Brand Finance 2020 report suggests.
While aviation will likely emerge as the worst-affected sector, oil and gas, tourism, leisure, restaurants and retail will also log huge losses due to the outbreak.
The study has assessed the effect of the COVID-19 outbreak on enterprise value, compared to what it was on January 1, 2020. The industries have been classified into three categories – limited impact (minimal brand value loss or potential growth), moderate impact (up to 10 percent loss) and high impact (up to 20 percent loss).
Household products, utilities, telecoms, food, pharma, cosmetics and personal care, real estate, soft drinks fit safely into the first category with minimal loss or potential growth.
Tech, healthcare, exchanges, auto, car rental services, logistics, tobacco, mining, iron and steel, commercial services, spirits, media, engineering and construction were grouped in the moderate category with up to 10 percent loss.
Industries hardest-hit due to the coronavirus crisis, that may suffer up to 20 percent loss, are airlines, airports, apparel, hotels, retail, chemicals, oil and gas, restaurants, beers, tires, insurance, IT services, leisure and tourism, auto components, aerospace and defence, banking and airports.
"COVID-19 is undoubtedly going to wreak havoc on the hotel sector in the coming year -- both financially, as hotels are forced to close and bookings are cancelled and reputationally, as brands that do not manage to avoid association with coronavirus may suffer lasting reputational damage. Our analysis has shown that hotel brands could face a 20 percent brand value loss, following the pandemic," said Savio D'Souza, Director, Brand Finance.
According to the report, brands that have adapted to the new normal by offering "in-home or remote working solutions" have seen an immediate surge in demand.
Zoom online video conferencing platform saw a massive spike in the number of users. Similarly, food delivery apps like Deliveroo and UberEats, which offer contactless delivery, have also seen a huge surge in demand for their services. In such a setup, the parcel is conveniently left on customer's doorstep and payments are made online to ensure social distancing norms are followed.
While many companies have suffered due to social distancing norms and restrictions on movement, some brands, especially streaming services, are booming as more and more people stay indoors.
"Brands like Amazon, Netflix, WhatsApp, Skype, British Broadcasting Corporation (BBC) and British United Provident Association Limited (BUPA) are all doing very well," said David Haigh, CEO, Brand Finance.
Effects will linger into 2021?
The 2003 SARS outbreak, which infected about 8,000 people and killed 774, cost the global economy an estimated $50 billion.
"The COVID-19 pandemic is now a major global health threat and its impact on global markets is very real. Worldwide, brands across every sector need to brace themselves for the coronavirus to massively affect their business activities, supply chain and revenues in a way that eclipses the 2003 SARS outbreak. The effects will be felt well into 2021," added Haigh.Find the full Brand Finance India 100 2020 Report here.
Read our entire coverage on India' Most Valuable Brands 2020 here.