The Valuation of Brand Architectures: An Empirical Investigation in the Wine Sector
In recent years, consulting firms and academics have developed a plethora of methods to place a monetary value on brands. The models used in practice either focus on product brands - the commercial trademarks used to target specific client segments, or on corporate brands - all the intangibles that come under an umbrella name. However, the current marketing strategies reveal that few companies use commercial brands and corporate brands separately, as they are typically integrated into complex brand architectures that combine product brands and corporate brands in different flavours. This study critically reviews the brand valuation literature to assist practitioners in choosing appropriate methods to estimate different brand architectures. The analysis is carried out applying the Brand Finance valuation process to two Italian wineries. The findings suggest that whenever wineries use strong umbrella brand strategies, it is feasible to bundle the product brands into one comprehensive brand. The latter can be measured either by splitting the incremental benefits from the core brand, as suggested by Anson (2000), or by assembling the core brand and the incremental benefits together, as proposed by the Excess Earnings Method. For integrated wineries producing high quality wines, it is proposed that brand strength analysis be combined with the relief from royalty method.