US food giant Kraft has made a bid for UK chocolate maker Cadburys – it values Cadbury as £10.2m. So where is the value… in the fixed assets? No, much of the value is vested in the iconic brands – including the Cabury brand itself. There is plenty of profit growth potential as analysts have already commented… but that growth depends upon the power and market strength of the brands.
It would be interesting to see an analysis of the brand valuation that informed Kraft’s offer. But that is unlikely… brand valuation is a dark and arcane art with no standardisation of approaches.
Then today I hear T mobile and Orange are talking merger possibilities and that is a whole different game. What will be their brand strategy? My gut instinct would be to maintain both brands, certainly for the near future. Both are strong performing brands, with loyal customers. Though one is German owned and the other French, in the UK their status is about neck and neck I would suggest – at least in consumers’ eyes and the mobile phone market is still relatively young. Having two powerful brands within a corporate portfolio allows a lot of flexibility to exploit the future.