The top 100 European corporations will see their brand value erode by a whopping 1 trillion euros this year due to the impact of coronavirus pandemic on their revenue as well as profit, says a report.
This brand erosion will be mostly felt by airlines, oil & gas, tourism & leisure, restaurants, and retail companies whose businesses are the worst hit, Brand Finance said in a report.
However, the automobile sector led mostly by the German companies will be the main winners. Mercedez topped the list of gainers.
Hotels, airlines and airports are the worst affected by the pandemic and the impact on them will increase as more and more cities are under lockdowns and governments unveil more measures of social distancing by shutting down public transport, closing borders, the report said.
It can be noted that continental Europe has become the nerve centre of the pandemic. Already Italy has overtaken China in the number of deaths by a huge margin and Spain and France are also in the grip of COVID-19.
The coronavirus (COVID-19) pandemic has killed over 13,000 and sickened lakhs of people around the globe.
"Brand value of the Europe's largest corporations is set to lose up to 1 trillion euros as a result of the COVID-19 outbreak, with the aviation sector being the most affected, Brand Finance, an independent brand valuation consultancy said.
In comparison, the impact from the 2003 SARS outbreak, which infected over 8,000 people and killed 774, was only 50 billion euros.
Noting that aviation will be hit the hardest, the report said the global airline industry has already called for up to 200 billion euros in emergency support and Boeing alone has called for 60 billion euros in assistance for aerospace manufacturers.
The International Air Transport Association has said most carriers will run out of money within two months as a result of the closure of borders.
Many major airlines have grounded most of their fleet and announced plans to lay off thousands of staff as they now confront a crisis unlike anything ever seen before in the airline industry.
Another sector majorly hit was the sports with scores of sporting events either getting postponed or cancelled. Already the Premier League football, the London Marathon, PGA Tour golfing, the six-nations rugby fixtures are called off.
The brand value erosion is based on the companies' value between January 1 and March 18, 2020, Brand Finance said. Each sector has been classified into three categories based on the severity of business value loss observed for the sector during this period.
The report also warned that the impact of value erosion will be felt well into 2021 as well.
However, it is not all doom and gloom. Some brands will fare better such as Amazon, Netflix, WhatsApp, Skype, BBC and Bupa, as hundreds of millions of people are forced indoors, says the report.
From a European perspective, the top 100 brands here have a combined value of 1,164 billion euros as of March 18, and this is set to drop 13 per cent due to the pandemic.
On January 1, these brands commanded a value growth of 1,135 billion euros, down 5 per cent from 2019.
However, all the German auto brands gained this year — Mercedes up 13 per cent at 58 billion euros), BMW up 5 per cent at 37 billion euros, VW jumps 13 per cent to 40 billion euros, and Porsche up 21 per cent to 31 billion euros.
The European auto industry makes up almost 20 per cent of overall brand value and has grown 10 per cent this year.