What makes Coca Cola a big brand
Coca-Cola, Apple or BMW : The power of brands
Practically everyone knows the brown shower, whether in Berlin, Timbuktu or Canberra. Coca-Cola is one of the most famous brands in the world. According to figures from Interbrand, a Swiss company that evaluates brands, Coca-Cola is the third most valuable brand in the world - topped only by Google and Apple since 2013. In the places are IBM, Microsoft, Samsung, Toyota, McDonalds and, in tenth place, for the first time a German company: Mercedes or Daimler. Brands, say brand specialists like Interbrand, bind customers, facilitate expansion into new markets and also bring higher margins through premium prices or better sales. So is it worth investing in successful brands as well?
A look at the past shows: it was worth it, at least mostly. However, staying power and patience are often required. The bottom line is that stocks rise consistently despite temporary setbacks, most companies pay out regular, often steadily increasing dividends, and brands recover more easily from crises.
Known and loved - by customers and shareholders
Brands are recognizable worldwide - often across generations. According to the asset manager AMF Capital, which specializes in branded shares, they act as a symbol of quality and an attitude to life. "Because of their strong market position and high brand loyalty, brand companies have great pricing power," said the AMF fund managers. According to a study by Citigroup, the excess return of a portfolio made up of pure large branded stocks compared to the MSCI World index was around a third. Stefan Albrech, head of the asset manager Albrech & Cie, even believes that the orientation towards strong brands can bring added value of 50 percent in the long term because the brands are better equipped for times of crisis. However, brands such as Nokia or Kodak can also lose their good reputation.
Coca-Cola - a fairytale gain
Anyone who would have invested $ 10,000 in Coca-Cola shares 30 years ago would be $ 284,432 richer today, a gain of 2,746 percent. The dividend, which is usually around three percent of the price, is not included here. The company, whose beverages over the counter 1.8 billion times a day in more than 200 countries, has increased its dividend every year for 53 years. The group owns a total of 20 brands, each with a sales volume of more than one billion dollars.
Apple and Google - the heavyweight and the newbie
At Apple, in the same period, i.e. within 30 years, even 34 357 percent would have been there. However, after the IPO in 1980, Apple only became the strong brand that the company is now after the turn of the millennium. Apple has just announced new record sales of $ 58 billion - for one quarter. Google, on the other hand, had a rather bumpy stock market launch in the summer of 2004, and as a relatively young company is not yet able to match the stock market successes of the brand shares Coca-Cola and Apple. Forbes, which also compiles rankings with the most valuable brands, estimates the brand value of the search engine giant at around 45 billion dollars. That's a little less than Microsoft and less than half of Apple.
Microsoft and the best German core brands
An investment in the brand giant Microsoft would have turned investors into millionaires: Anyone who had bought 100 shares at $ 21 each when they went public in 1986 would now own 28,800 shares at $ 49 each, i.e. a good $ 1.4 million. Unlike Interbrand, Forbes is the first German company to list BMW in eleventh place, followed by Daimler in 17th place and SAP in 25th place. Siemens, Adidas, Volkswagen and Allianz are also among the top 100.
Buffet as a model - brand shares are one of them
It has been the credo of an investment legend for many years that brand shares belong in every portfolio: Warren Buffet, US investor and portfolio manager, has bundled stocks such as Coca-Cola, Heinz, IBM and Kraft Foods in his subsidiary Berkshire Hathaway - and that's good for it earned. Berkshire Hathaway, which 50 years ago started Buffets for under $ 100, is now the world's most expensive stock at $ 199,105. In Germany, too, fund managers are orienting themselves towards Buffet's brand strategy, which primarily targets undervalued core brands.
A number of funds take the brand argument into account when composing their portfolios. The Morgan Stanley Investment Fund Global Brands, for example, ranks Nestlé (“Nescafé”), British American Tobacco (“John Player”) and Microsoft among its top positions and has earned a good ten percent every year since 2005 with the selection.
However, the fund is very expensive with a front-end load of just under six percent and high regular costs. AMF Capital AG Family & Brands, which was launched in 2014 and selected brand shares such as Lindt and Sanofi in addition to Apple, achieved an annual performance of a good 22 percent. The Swiss Pictet Premium Brands, on the other hand, has an annual profit of a good 25 percent and relies on Nike, L'Oréal and Swatch, among others.
The big German brands of all things show, however, that wrong decisions and major crises can also cause great problems for big brands. Daimler, for example, has not been a good investment in the past ten years despite its strong brand value. The share, whose Mercedes brand was last valued by Interbrand at around 25.6 billion euros, has not yet reached its previous all-time high from 1998 at 102. For example, the Stuttgart-based carmaker was troubled by the failed American adventure with the Chrysler brand, which is now owned by Fiat. However, the Stuttgart-based company has recently started rolling again under a better star and has just presented the best quarterly figures in its history.
The other top brands from Germany also offer stable, if not outstanding, returns. Siemens shareholders were able to increase their stakes fivefold within 20 years, and with SAP, ninefold. Deutsche Bank, on the other hand, did not make it among the big bank brands, such as the British HSBC or the Spanish Santander, nor was a profit possible with the share in the past 20 years. The share is currently about two euros lower than at the end of April 1995. BASF is completely different: The world's largest chemical company, which is considered a strong brand by experts and rather boring among investors, brought 259 percent plus within ten years and with a few exceptions regular dividends .
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