The real potential of branding and how it can bring value to the brand and shareholders

The topic of branding has been widely explored, but, in conversations with fellow engineers, I still notice that it is often associated only with logos, names or visual identity. The market often does not clearly understand the real potential of this tool and how large brands use the concept of brand value to support financial operations, support strategic decisions and monitor one of the most valuable intangible assets of many companies.

It is important to highlight that there is a robust and well-structured methodology that supports numerous operations. In my case, one of the companies I founded (BrandAnalytics), specialized in Brand Valuation, was acquired by one of the largest multinational communication and market research groups, which reinforces the relevance and seriousness of this topic in the global corporate context.

What is branding and what is not?

“Branding is what they say about you when you’re not there,” as Jeff Bezos put it. Branding is the process of building, managing and consistently delivering a brand promise to consumers and stakeholders. It goes far beyond logos or slogans; it’s about creating unique and meaningful experiences that differentiate the brand in the market and generate sustainable value for the company. On the other hand, branding is not limited to advertising, the name or the logo. These are just visual or tactical elements. True branding integrates organizational culture, business strategy and public perceptions.

Why is branding relevant for investors?

The Snapple case is emblematic. Created in 1972, the brand stood out as an alternative to soft drinks, with a strong and unique culture, expressed by the slogan “If it’s not in nature, it’s not in Snapple” (“if it’s not in nature, it’s not in Snapple”, in free translation) and by the charismatic “Snapple Lady”, Wendy Kauffman, who became a success in the United States by interacting directly with consumers.

When Quaker acquired Snapple in 1994, it decided to apply a mass marketing strategy similar to that used for Gatorade, focusing on centralized distribution in supermarkets. This approach, however, ignored the essence of the brand and its alternative positioning. The result was disastrous: in just three years, Quaker sold Snapple to Triarc for less than 1/5 of the original price paid.

Triarc rescued Snapple’s original identity, recovering the slogan “Made from the best stuff on Earth” (“Made with the best things on Earth”, in free translation), relaunching products and bringing back the “Snapple Lady”. In 2000, Cadbury acquired the brand for US$1 billion, demonstrating how respecting the brand’s identity can be decisive for its appreciation.

This case reinforces two important lessons:

1. Poorly managed brands can destroy value.

2. Undervalued brands offer investment opportunities for repositioning and generating profits.

Many bankers and private equity in my circle of friends confessed to me that it was in this case that they learned and verified that branding can be a great opportunity for investments, and that its correct management process can bring substantial value to shareholders.

And in Brazil?

National examples also illustrate the impact of branding on financial transactions. In 2017, M. Dias Branco acquired Piraquê for R$1.55 billion. The amount paid far exceeded that of physical assets, highlighting the weight of intangible assets, such as:

• Manufacturing process – high quality standard.

• Iconic products – like the famous guava, recognized for generations.

• Distribution system – strong presence in the Rio market.

• Governance and financial control – solid practices and consistent profitability.

• Mark – a strong brand, capable of guaranteeing stable sales and a premium price.

Another example is Nestlé’s acquisition of Kopenhagen in 2023, where intangible assets such as iconic brands (Cat’s Tongue e Hey Benta), distribution systems and artisanal manufacturing processes, played a central role in the operation.

These cases demonstrate that brands are intangible assets that are often more valuable than physical assets, directly influencing shareholder value through consumer loyalty and competitive differentiation.

Brand value to support financial operations

In my book, I explain in detail cases of Brand Value to support financial operations, as was the case with Klabin and Casa&Video, respectively, for a brand transfer from one company (Sogemar) to another (Klabin SA) and to provide the brand as a guarantee of a judicial recovery process. Both cases were quite successful.

It is indisputable, as in all cases, that branding is one of the important levers of business value, and its monitoring process can be strategic for the company and investors, guaranteeing the long-term sustainability of the company.

It is indisputable that there is a value, but how do you evaluate brands?

There are several methodologies for evaluating brands, such as analysis of economic use, royalties, market valuations and financial projections. I highlight economic use as the main reference, based on three pillars:

1. Deep connection with the business – brands are part of shareholder value and must be evaluated using models such as Discounted Cash Flow.

2. External perception – the evaluation must consider the consumers’ point of view, through quantitative market research.

3. Legal protection – the brand must be registered with intellectual property bodies.

The ISO 10668 standard guides these aspects, ensuring consistency in assessments.

Brand value as a strategic metric

Monitoring brand value is essential to identify strengths and weaknesses, validate strategies and align actions with corporate objectives. Furthermore, brand value beyond financial uses offers executives a strategic tool to:

1. Return on marketing and communications investment (ROI), surpassing traditional short-term models, such as Marketing Mix Modeling.
2. Brand architecture decisions – how many brands do I have to have in my portfolio, how do I decide to discontinue a brand or enhance the creation of a corporate brand?
3. Brand Extension Decisions – What are the categories that the brand can extend, and which are what we call over-stretch?
4. How to support a marketing plan and structure to optimize the value of a brand?

Conclusion

I conclude this article with a statement by Warren Buffett at a conference, respecting the topic of brand reputation. Therefore, understanding the value of this asset can be very strategic for companies:

“If you lose dollars for the firm I will be understanding.

If you lose reputation for the firm, I will be ruthless.”

Warren Buffett in his speech at the BIG/MRS conference 2014

(“If you lose dollars for the company, I will be understanding. If you lose reputation for the company, I will be ruthless”, in free translation.)

In my book I explore the role of brands as levers of competitive differentiation and financial impact, bringing valuable reflections to companies and investors.