Marlboro is the world’s most valuable tobacco brand for the 10th consecutive year, but smokeless alternatives gain ground

• Marlboro maintains the top position for the 10^th consecutive year, with a brand value of $32.6 billion
• L&M remains the world’s strongest tobacco brand and surpasses Pall Mall to claim the second spot in the brand value ranking
• Chesterfield is one of only two brands to avoid a decline in brand value, holding steady at $3.1 billion

The total value of the world’s top 10 most valuable tobacco brands has decreased by 6%, with eight out of ten brands experiencing a decline in brand value this year, according to the latest ranking by Brand Finance, the world’s leading brand valuation consultancy. The ranking reveals a significant shift in the industry towards smokeless alternatives, driven by changing consumer preferences and increasing regulatory pressures. Despite these changes, traditional combustible tobacco brands remain the most valuable, supported by loyal customer bases and effective pricing strategies.

IQOS (brand value up 8% to USD3.5 billion) is the fastest-growing tobacco brand, driven by rising revenue from smoke-free products. Philip Morris International reported smoke-free products reached nearly 40% of total net revenues in the fourth quarter of 2023. This was driven by the continued growth of IQOS, which has now surpassed Marlboro in net revenues, solidifying its position as the leading premium nicotine brand less than 10 years after its launch.

Despite a 6% drop in brand value to USD32.6 billion, Marlboro retains its position as the world’s most valuable tobacco brand for the tenth consecutive year. It leads the sector by a significant margin, with a brand value more than five times that of L&M, which holds the second spot.

Altria, which owns Marlboro in the USA, and Philip Morris International, which owns the brand elsewhere, have both faced declining revenue from combustible products. Altria has struggled with lower shipment volumes and increased promotional investments, including a recent 17-cent per pack price increase on Marlboro and other brands in the USA. Similarly, Philip Morris has reported a drop in revenue from combustible tobacco. Nevertheless, Marlboro retains its top position due to its loyal customer base and strong promotional strategies.

L&M (brand value USD6.2 billion) has climbed to second in the ranking, despite recording a 2% decline in brand value. It has overtaken Pall Mall, which now sits in 3^rd following a 9% loss in brand value to USD5.9 billion. L&M’s brand value has taken a hit as shipment volumes have declined. L&M is the sector’s strongest brand with a Brand Strength Index score of 77 out of 100.

[i"While Marlboro continues to lead as the most valuable tobacco brand for the tenth consecutive year, the industry is undergoing significant transformation. The rise of smokeless alternatives like IQOS highlights shifting consumer preferences and changing market dynamics. Earlier this year, BAT’s announcement of a USD31.5 billion impairment on the value of some of its US cigarette brands marked the first significant write-down in a major market. Acknowledging the reality that the market for traditional cigarettes is shrinking and taking action should be seen both as a bold and an important step in addressing an existential problem for the company. With 8 out of the top 10 brands experiencing declines in value, tobacco giants must be brave in admitting market shifts and strategically planning their next moves to sustain global dominance and relevance"[/i]

Richard Haigh, Global Managing Director, Brand Finance

Chesterfield (brand value USD3.1 billion) has maintained its brand value year-on-year and advanced one position to 7^th place. The brand has seen a rise in shipment volume, with a 8% increase in Q4 2022 and a 14% increase for the full year which has contributed to its stable brand value this year.

The latest rankings highlight the dominance of US tobacco brands, which make up a remarkable 92% of the total brand value in the ranking, totalling USD61 billion. Only two brands in the ranking are from outside the US, the UK’s Rothmans(brand value down 8% to USD2.9 billion) and Indonesia’s Sampoerna (brand value down 12% to USD2.7 billion).

Note:

Every year, leading brand valuation consultancy Brand Finance puts 6,000 of the biggest brands to the test and publishes over 100 reports, ranking brands across all sectors and countries. The 10 most valuable and strongest Tobacco brands are included in Tobacco 10 2024 ranking.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.  

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.

Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.

Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Discount post-tax brand revenues to a net present value which equals the brand value.

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance’s proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.