Have you ever stopped to think about how much brand ? In the business world, a company's name and reputation can be worth billions—often surpassing its physical assets. Large companies can launch products without even advertising, simply by leveraging their brand's clout. This is the power of a strong brand, and valuing it correctly is crucial. In this article, we'll explain what brand valuation is , why it's important for companies and investors, what factors influence a brand's value , the main valuation methods , and show examples of valuable Brazilian brands. We'll also clarify the a brand's book value and market value brand valuation connects to the company's overall valuation. Enjoy!

What is Brand Valuation and Why is it Important?

Brand valuation is the process of measuring, in financial terms, the value of a brand—an intangible asset that exists in the public's mind. It's often confused with brand equity , which is the added "emotional" value that a brand brings beyond the products or services themselves. In other words, brand equity reflects the image consumers have of the brand and the impact of this perception on the business's financial results. Measuring this value may seem abstract, but there are techniques to translate brand strength into numbers.

A strong brand represents competitive advantages . Companies with established brands can charge higher prices than competitors for equivalent products. They spend less to retain loyal customers and win new ones, as they already have trust and recognition in the market. Famous brands attract investors and partners more easily, serve as collateral for loans, and add credibility in mergers and acquisitions. It's no wonder that giants like Apple, Coca-Cola, Disney, etc. are valued at tens of billions of dollars based on their brand alone. In fact, studies indicate that intangible assets currently represent over 80% of the market value of S&P 500 companies – demonstrating how the modern economy is driven by intangibles.

For investors , understanding a company's brand value is crucial. Strong brands often translate into lower barriers to entry and consumer loyalty, ensuring stable cash flow and future growth. Legendary investor Warren Buffett, for example, always seeks companies with strong brands and lasting competitive advantages. In short, evaluating a brand helps reveal a company's hidden asset: the "good name" built over the years that can translate into real value .

Factors that Influence the Value of a Brand

A brand's value doesn't arise by chance—it's built by a variety of qualitative and quantitative factors. The main factors that influence a brand's value include:

• Reputation and image : A good reputation in the market increases brand value. How consumers perceive a company—positive associations of quality, innovation, and reliability—directly impacts its value. Admired and trusted brands (think Natura or Embraer ) are worth more because they generate purchase preference.
• Customer Loyalty : Brand loyalty is one of your greatest assets. Loyal customers who repeat purchases and recommend the brand generate a secure revenue stream in the long term. This brand loyalty reduces marketing costs and market share defense, increasing brand value.
• Brand Awareness : The better known a brand is, the higher its value tends to be. brand awareness means that, when thinking about a product or service, the brand immediately comes to mind. This share of mind makes the brand more frequently considered in purchasing decisions.
• Market Share : Brands with market share are generally worth more. Having a large market share indicates competitive strength and influence over distributors and consumers. Valuation models attribute significant weight to market leadership when calculating brand strength.
• Perceived quality : The quality that consumers attribute to a brand's products/services increases their value. If consumers believe that a brand consistently delivers high quality (e.g., Nespresso in coffee shops or BMW in cars), they are willing to pay a premium price —which translates into greater profitability and brand value.
• Innovation and differentiation : Innovative brands or those with a unique proposition stand out. differentiation in the consumer's mind (whether through superior technology, design, or brand purpose) builds value by creating preference and reducing price sensitivity.
• Customer Experience and Relationships : A history of good service and positive experiences reinforces brand equity. Companies that deliver consistent value and cultivate relationships (after-sales, support, fan communities) create an emotional bond that adds value (customers become brand ambassadors).
• Legal protection and associated assets : Aspects such as trademark registration patent portfolio , and copyright also play a role. A registered and legally protected trademark has a defensible market value. Patents or associated characters (mascots, famous slogans) reinforce intellectual property , increasing brand value.

All of these factors are part of what's known as brand equity . They indicate how strong a brand is in the minds of consumers and in the market. Strong brands combine high perceived value (reputation, quality, desirability) with market performance (sales, share, growth). Therefore, any robust brand assessment must consider both financial metrics and qualitative brand strength indicators

Most Used Brand Valuation Methods

Just as there are different reasons to value a brand (sale, merger, licensing, branding strategies), there are different methodologies for calculating its value. Each method seeks to estimate, from a different perspective, the financial value of the brand . Each approach can produce different numbers, as it involves a certain degree of subjectivity . Below, we explain the most widely used and recognized brand valuation methods in the market:

Interbrand Methodology:

• Interbrand is one of the most renowned brand valuation consultancies, known for publishing annual rankings of the most valuable brands. Its proprietary method combines three key analyses: Financial Performance – how profitable the products/services associated with the brand are; Brand Influence on Purchase Decisions – an analysis of how much revenue is attributable to brand strength; and Brand Strength – an assessment of factors such as market leadership, consumer perception, loyalty, and engagement. In partnership with the London School of Economics, Interbrand developed a Brand Strength Index based on market research and financial data, converting this into the brand's economic value. It is a comprehensive methodology that seeks to reflect both numerical and intangible factors (such as public perception ).

• Royalty Relief Method : financial methods for valuing brands, even adopted by companies like Brand Finance. It's based on a simple concept: if the company didn't own the brand, it would have to pay royalties to license the name. The brand value, therefore, equals the present value of these future royalties that the company is exempt from paying. In practice, the calculation involves projecting future sales attributable to the brand, estimating a market royalty rate , applying this rate to sales projections to obtain hypothetical royalty streams, and then discounting these streams to the present value using an appropriate discount rate. Because these royalties are a percentage of sales (not profit), a slightly lower risk is generally assumed, adjusting the discount rate to reflect this greater certainty of receipt. The result is how much it would be worth paying today to enjoy the brand without paying royalties to third parties.

Historical or Creation Cost Approach:

• This methodology seeks to answer: how much did it cost (or would it cost) to build this brand from scratch? In cost-based assessment , all historical investments made in marketing, advertising, promotion, research, and development related to the creation and maintenance of the brand over time are added up. In theory, this total investment would represent the "replacement cost" —that is, how much would need to be spent to build a similar brand today. The attractiveness of this method lies in its simplicity of calculation and objective basis (real expenditures). However, it has clear limitations: successful brands are not always the result of heavy investment alone—factors such as creativity, market timing, and word of mouth play a significant role. Furthermore, distinguishing which expenditures truly create brand value and which are merely maintenance is challenging. Therefore, the cost method serves more as a benchmark or value floor, but it hardly reflects the brand's future earnings potential

Brand Discounted Cash Flow (Income Approach):

In this approach, the brand is valued as a profit-generating asset, directly estimating the future cash flows attributable to the brand and discounting them to present value. It is similar to corporate valuation (which typically uses discounted cash flow), but focuses solely on the share of earnings generated by the brand. In practice, the attempt is made to isolate the "extra profit" or incremental cash flow that a strong brand generates, beyond what a generic product would generate. For example, the price or sales volume of a branded product is compared to an unbranded product: the difference in margin or revenue would be the brand premium . This surplus, projected over future years, constitutes the brand's cash flow. An appropriate discount rate is then applied (taking into account market risks, competition, etc.) to calculate the present value of these flows. This method requires some difficult assumptions, such as determining exactly how much of the profit comes from the brand and not from other factors, but it is theoretically robust, as it is based on the premise that the value of any asset is the present value of the economic benefits it will provide. Many consultancies combine this DCF logic with brand strength indices (as Interbrand and others do), weighting flows according to the strength of the brand (stronger brands project greater growth and lower risk).

It's worth noting: Specialized consultancies often use variations or combinations of these methods. For example, Brand Finance primarily uses the Royalty Relief method, while Interbrand uses a hybrid approach similar to discounted cash flow weighted by brand strength. The market multiples (comparing with sales of similar brands already traded) can be used as a check when there are public references. Each method has its advantages and limitations , so it's common to use more than one to arrive at a value range .

Examples of Brazilian Brands with High Market Value

Brazil boasts brands that are truly giants in terms of value. Every year, consulting studies rank the most valuable Brazilian brands , and the results demonstrate the influence of financial institutions and consumer companies in the country's imagery. According to Interbrand's "Most Valuable Brazilian Brands 2022/23" , the top five were: Itaú , valued at R$44.3 billion (leading for the second consecutive year); Bradesco with R$28.6 billion ; Skol, in third (R$18.8 billion); Brahma , in fourth (R$13.3 billion); and Banco do Brasil, in fifth place (R$10.3 billion). These figures underscore the strength of bank and brewery brands in the Brazilian market, sectors that have invested decades in branding and built enormous familiarity with the public.

Brazilian case studies illustrate well how brands generate value : Itaú, for example, is not only a bank with significant financial assets, but also a brand associated with trust and leadership—which has led to its name being worth tens of billions of reais. Beer brands like Skol and Brahma, in turn, enjoy an emotional connection with Brazilian consumers, translating into shelf preference and market dominance. Another recent highlight is the fintech Nubank , which debuted in the ranking shortly after going public, occupying 7th place with an estimated brand value of R$3.8 billion. In just a few years, Nubank has built a brand beloved by its customers, based on simplicity and disruption, demonstrating that innovation and good branding can quickly create tangible value.

It's also interesting to note cases of brand equity loss, which highlight the connection between reputation and value. One example was Lojas Americanas : after accounting inconsistencies were revealed and a crisis hit in 2023, the traditional retail brand suffered a blow to public perception. In an Interbrand study, Americanas' brand value plummeted 53%, falling from 10th to 19th place, now worth approximately R$844 million. In other words, crises of confidence can quickly destroy brand value, just as consistent, customer-focused management can build it over time.

For Brazilian investors and entrepreneurs, these examples make it clear that valuable brands generate valuable business . Often, the brand itself accounts for a substantial portion of a company's total value. Learning about national case studies helps to understand the importance of investing in branding : the leading brands mentioned remain at the top because they have consistently strengthened their relationships with consumers and innovated in the experience they offer.

Book Value vs. Market Value of a Brand: What's the Difference?

When it comes to valuing brands, it's important to distinguish between book value and market value . Book value (or balance sheet value) refers to what's recorded in the company's accounting books for that asset. Market value the other hand, is how much the brand is actually worth in the market—whether in a transaction or in an independent appraisal (what an investor or another company would pay for it).

In the case of brands , this difference is often glaring . According to accounting standards (such as CPC 04 in Brazil, equivalent to IAS 38 internationally), internally created brands cannot be recognized on the balance sheet . Spending on marketing, advertising, brand development, etc., is treated as an expense and cannot be reliably segregated from the costs of the business as a whole. In other words, if you created your brand from scratch, all the value it generates is "invisible" on the balance sheet, as there is no specific capitalized historical cost to recognize. Accounting only allows a brand to be recorded as an intangible asset if it has been acquired from a third party (for example, you bought or incorporated another company and paid a premium for its brand). Even then, this value is generally recorded as goodwill or a generic "intangible asset," without subsequent adjustment, unless there is an impairment test.

This means that many companies have incredibly powerful brands worth billions in the market , but whose accounting values ​​are zero or negligible. An illustrative case: in 2017, the Itaú was valued at R$28.2 billion by Interbrand (leading the national ranking), while Bradesco was valued at R$22.1 billion, Skol at R$16.0 billion, and Brahma at R$11.2 billion. However, in Itaú's financial statements for that year, although the bank had a registered intangible asset consisting of goodwill, portfolio rights, software, etc., there was no reference to the value of the brand itself —it simply wasn't included on the balance sheet. In other words, the book value a market value in the tens of billions .

This phenomenon is not exclusive to Brazil. Coca-Cola , for example, has a large part of its market value tied to its brand – its name and formula are intangible assets more powerful than any factory or machine. However, internally, Coca-Cola does not record the value of the brand it has built, only annual marketing investments. If the brand is not reflected as an asset , the company's net book value is much lower than its actual market value – reaching astronomical differences. In other words, the market (investors) recognize the brand's value in the stock price, but traditional financial statements do not capture it. This accounting distance can even generate misleading perceptions of "low" profitability on equity, when in fact part of the equity (brand) is not recorded.

It's important to emphasize that this isn't an accounting error , but rather a conservative stance: since brands have an indefinite useful life and their value is volatile, the regulations prefer not to recognize anything that can't be reliably measured through objective transactions. For managerial and strategic purposes, companies can (and should) calculate the value of their brands for decision-making purposes . Some companies even disclose brand value estimates made by third parties in reports or explanatory notes—they just can't formally activate them.

In short: a brand's book value is typically low (or nonexistent), while market value can be extremely high. Investors and managers need to look beyond the balance sheet to see this hidden value. Many multimillion-dollar acquisitions essentially involve purchasing brands and customer bases, paying well above book equity—the difference lies precisely in the intangible value (goodwill) that the brand includes. Recognizing this discrepancy helps explain why companies with modest physical assets can be worth so much: what they "sell" is trust, meaning, and brand.

Brand Assessment and Total Company Valuation

How does brand valuation connect to company valuation ? Quite directly: the brand is a—often significant—part of a company's total value. When analysts value a company using the traditional method (discounted cash flow, multiples, etc.), they are evaluating the company as a whole, which includes all tangible and intangible assets. In this sense, a strong brand tends to increase a company's valuation because:

• Increases revenue and margins : Established brands attract more customers, sustain higher sales volumes (market share), and allow them to charge premium prices. This means more robust future cash flows , which, when discounted, result in a higher present value. In practice, when projecting the revenue of a market leader with a strong brand, one assumes more solid growth and less loss of market share to competitors, compared to an unknown company.
• Reduces risks and costs : A well-known and well-positioned brand tends to have more loyal customers and predictable sales, which reduces business risk . It also costs proportionally less on marketing to generate each dollar of sales (thanks to already established recognition). In valuation, this can translate into a lower discount rate (due to lower risk) and higher margins – both of which increase the company's value.
• Attracts investment and partnerships : Companies with strong brands have easier access to capital (investors are more willing to pay for shares in established businesses) and obtain better terms in partnerships and contracts. This may not be directly reflected in a valuation calculation, but it translates into competitive advantages that sustain value over time.
• Goodwill component : In acquisitions, we often see that the price paid exceeds (often significantly) the book value of the acquired assets. This difference is accounted for as goodwill , and the brand is usually the largest component of this goodwill. In other words, when a company acquires another, it is paying for both the customers and the brand it has built. Therefore, evaluating the brand separately helps understand how much of the target company's value lies in this specific asset. Companies with weak brands tend to be valued closer to the value of their tangible assets; companies with strong brands achieve much higher multiples.

Although interconnected, company valuation and brand valuation are not the same thing. Company valuation considers everything (operational assets, human capital, technology, financial position, etc.), while brand valuation isolates the value of that specific intangible asset . A company may have a valuable brand and yet unprofitable businesses in other areas, or vice versa. For example, Nokia, mentioned earlier, saw its mobile phone business lose value drastically, but the Nokia brand itself remained strong and recognized. The solution was to decouple the brand from the original business : Nokia licensed its brand to other phone manufacturers instead of producing its own, monetizing the strength of its name without having to maintain its loss-making operational structure. This case illustrates that a brand has a life of its own—it can be bought, sold, licensed—and its separate valuation allows for creative business strategies to extract value.

Generally speaking, when a company's overall valuation is performed, a strong brand is already reflected in the numbers (in sales, margin, and growth projections). However, calculating brand value separately provides additional insights: it reveals how much of the total value comes from customer perception and how much comes from physical/operational assets. It also allows for monitoring the evolution of brand equity over time. For example, by periodically evaluating the brand, the company can see whether branding initiatives are increasing value (and, hopefully, contributing to a higher company valuation) or whether the brand is depreciating due to lack of investment or image issues.

For investors, understanding the brand-valuation connection is vital. Strong brands sustain high valuations and often indicate companies with a lasting competitive advantage —a key factor for long-term investments. Companies without a strong brand, on the other hand, may rely more on price or efficiency, making them more vulnerable. Therefore, when analyzing investments, it's worth considering brand value rankings and brand equity indicators, as they signal the intangible health of the business behind the financial numbers.

The Strategic Value of a Well-Evaluated Brand

In a market full of options, brands are compasses that guide consumer choices – and, therefore, are assets of immeasurable value. Evaluating your company's brand goes far beyond fulfilling a formality or generating a number for reports; it's a strategic exercise that reveals how much public trust and loyalty translate into real financial value . We've seen that factors such as reputation, customer loyalty, market share, and perceived quality build (or erode) this value, and that structured methods – from Royalty Relief to discounted cash flow – can measure the intangible.

The key insight here is: strong brand = strong business . Companies with valuable brands reap tangible rewards: higher sales, repeat customers, less sensitivity to crises, and greater investor attraction. On the other hand, underestimating your brand or letting it weaken can be costly, as the Americanas case demonstrated. For investors, understanding brand value means seeing beyond the balance sheet, identifying hidden advantages and intangible risks. For entrepreneurs, it means understanding the return on investment in branding and guiding decisions—whether for expansion, improving image, or even preparing for a business sale.

So, what's the next step? If you don't yet know your brand's value, it might be time to find out. Consider conducting a professional brand valuation —whether to attract investors, negotiate a fair sale, or identify opportunities to strengthen your brand . Use the methods we've presented as a starting point, or seek out consulting firms specializing in intangible asset valuation. The important thing is not to neglect this invisible asset. Remember: in today's business world, those who build a strong brand build a valuable legacy. Evaluate your brand, invest in your reputation, and reap the rewards —your business (and your wallet) will thank you in the long run!