What is the world's most valuable luxury brand? According to a study released today compiled by market research firm Millward Brown Optimor, the most valuable brand is France's Louis Vuitton with a brand value of nearly $19.8 billion.
Hermes, with a brand value of $8.45 billion, landed in the second spot, followed by Gucci ($7.58 billion), Chanel ($5.54 billion) and Hennessy ($5.36 billion).
Millward Brown used an economic use approach to the valuation, with brand values based on the intrinsic value of the brand derived from its ability to generate demand. The values reflect the sum of all future earnings a brand is forecasted to generate, discounted to present-day value.
"The big takeaway is that brands that focused on heritage are the ones that topped the list," says Lauren Sherman, editor of Fashionista, a fashion news website. "Louis Vuitton, Hermes and Gucci all focused this year on heritage."
According to Sherman, Louis Vuitton's advertising campaigns focused on travel, which ties to its history of being a maker of steamer trunks, while Hermes began to again market their saddles and also sponsored a horse show in Paris, which they haven't done in years. "They are going back to the basics."
Gucci, on the other hand, is focusing on its vintage bags. The company recently formed a partnership with Christie's in which the auction house will provide appraisal services for owners of vintage Gucci leathergoods. "Gucci Collector: Presented by Christie's" provides auction estimates for vintage Gucci items that are of a type and value typically sold at Christie's. The service is provided free of charge.
"Gucci wants to bring back the company from mass luxury which it had become," says Sherman.
Millward Brown used the BrandZ database of its parent company, WPP, which owns several marketing, advertising and public relations firms, among others. BrandZ tracked sales and marketing for more than 1,000 brands over the course of a year to come up with the list.
The brand that saw the most growth on the list this year was Hermes, with an increase of 8%.
Perhaps most surprising about the list this year were the brands that didn't fare well. The brands that are more closely associated with trends and high fashion, such as Prada and Burberry, did not rank high on the list---in fact, Prada was knocked off the top ten list altogether.
Chanel's ranking dropped from where it was a year ago and lost 11% of its brand value. "Chanel will always sell perfume and leather goods which are classic products, but compared to Gucci and Louis Vuitton, they are more associated with high fashion," says Sherman. "Any brand where the runway is more important than the boutique, suffered a bit."
See Fashionista's report to view the rest of the top ten list of the world's most valuable brands.