Santa may sell many brands but outvalues all of them

Brand Santa is worth $1.6 tn (around Rs 98.8 lakh cr). Apple, the most valuable brand of 2013 was valued earlier at $87.3 bn

In line with Christmas wishes, branded goods would be left in stockings or under Christmas trees to be unwrapped. But Brand Finance, a brand evaluation firm, says that Santa is more valuable than any brand he might have been imagined to have delivered.

Brand Santa is worth $1.6 trillion (around Rs 98.8 lakh crore). In contrast, Apple, the most valuable brand of 2013 was valued by Brand Finance earlier this year at $87.3 billion (Rs 53.9 lakh crore).

Using an analysis similar to its corporate brand valuations, Brand Finance took in the economic areas where Santa makes his mark such as travel, retail and accommodation, then looked at the festive period uplift in revenues and applied a royalty rate to arrive at the final figure.

Santa Claus has been integral to the year-end festive season for over a thousand years and has unrivalled brand equity. Santa would earlier appear in green, red or gold robes.

However, a shrewd portrayal by Coca-Cola resulted in a more consistent visual identity, dressed in red. Santa now enjoys unrivalled recognition and is an extremely lucrative ambassador for hundreds of brands.

Brand Finance CEO David Haigh says, "Santa is the gold (or should that be red & white) standard when it comes to branding...recognised the world over..."

David Haigh says, "There is no doubt that Santa Claus is the world's most valuable celebrity brand and it is no wonder that brands form Coke to Volkswagen to KFC want his endorsement."

To value the 'Santa' brand, Brand Finance used a methodology used to value corporate brands. This is called 'royalty relief' and is based on a hypothetical licensing charge (on revenues) for the use of the brand. The approach assumes a hypothetical scenario in which the business does not actually own its brand but instead is required to license it from a third party.

By determining the royalty fees the businesses affected would theoretically be required to pay, the agency can estimate the proportion of future cash flows that are attributable to the brand - the present value of the post-tax royalties are held to represent the value of the brand today.

A royalty rate, based on Brand Finance's internal database and sector-specific studies,was applied to the forecast GDP (2013 to 2017) for each sector to determine the royalty stream of earnings globally. While accommodation had a rate of 2 per cent, retail had 4 per cent and transportation 1 per cent.

Applying the royalty rates to the forecast revenue of the 'Christmas-related' GDP for the three sectors over the five year-period and discounting the post-tax royalty stream (at a discount rate of 4 per cent), results in a value for the Santa brand for each sector. The sum of the three values is $1.6 trillion.