Trade Marks and Brand Valuation

Intangible assets such as brands, patents and confidential information are often the biggest contributors to the total market value of a business. Episode 1 of The IP Kitchen kicks off the series by demystifying brand valuation for food and drink businesses. Joined by valuation expert Kelvin King, the episode explores what brand valuation really means, why brands and trade marks are often a company’s most valuable assets, and how they can be protected, enforced and leveraged for growth, investment and exit strategies. 

Timestamps:

• 1.16 – Why are tangible assets important
• 5:08 - Brand valuation
• 5:39 - What is brand valuation and why does it matter?
• 9:14 - How do you value a brand and the associated IP?
• 20:12 - What role do trade marks play in the strength of brand valuation
• 27:00 - Some of the other valuable IP that has developed with a brand

Transcript

SPEAKER_00 0:11

Hello everyone, welcome to the IP Kitchen. The IP Kitchen is a new podcast series from HGF that focuses on intellectual property within the food and drink industry. In each episode, an IP specialist from HGF will be joined by an industry expert, a food and drink business, or some other professional service provider to discuss useful practical topics with an IP spin. We hope that the collective experience and expertise of our hosts and guests will provide some useful practical guidance and commercial insights to help food and drink businesses maximize their IP rights. As this is one of our first episodes, I should probably briefly introduce intellectual property for those who are not too familiar with it, just to provide some context. So intellectual property protects creations of the mind. This includes trademarks, which protect brand assets, patents, which protect inventions and technological innovations, designs, which protect the appearance of a product, copyright that protects original works of authorship, such as literary, musical, and artistic works, and trade secrets, which protect confidential business information that give some sort of competitive edge, such as formulas, recipes, and processes. Collectively, they are intangible assets. They can be sold, they can be licensed, and even used as equity for loans. So why are intangible assets important? According to the Ocean Tonno Intangible Market Value Study, intangible assets such as patents, brand value, confidential information and product design have overtaken tangible assets such as inventory, factories and buildings and equipment to become the biggest contributor to the total to market value of V500 companies over the past 50 years. Intangible assets made up around 17% of market value in 1975, and this figure rose to 90% in 2020. So intangible assets are typically the biggest contributors to the overall value of the food and drink business, so you can see why they're so important to protect. So what better way to uh kick off the series than to talk about the value of IP? So in this episode, I'll be joined by Kelvin King, the founder of uh Valuation Consulting, to talk about brand valuation. So hi Kelvin, thanks for joining us. Good morning. Thank you for the invite. Well, perhaps you could start by briefly introducing yourself, um, your background and your experience in the food and drink industry.

SPEAKER_01 2:12

Thank you. Uh I began this um this um amazing topic in the early 1980s, where I was in a government department that specialized in the valuation of all assets which didn't have a ready market value, sort of coin collections, horses art collections, that the private company was seen as pretty valuable in those days. In the early um, well, March 1981, I was asked to set up a um a special unit within the corporate um valuation division, um, specializing in the value of intangibles and IP. I'll make that distinction um time and time again as we go through this little chat. Um, it was triggered by the sad murder of John Lennon in New York. The um UK Treasury felt that they may have a good chance of getting his domicile, didn't quite have in those ways, but also the recognition that a lot in his estate, if it was going to be valued, was of an intangible and intellectual property nature. Um, but in the 80s, you know, governments around the world found that companies were planning with intellectual property, their crown jewels, and it was no longer the fixed assets and the lumps of metal that were of concern to boards, but intellectual property and intangible assets. So I was in the right place at the right time. Left government, um, went to two investment banks, um, managing director of their valuation divisions, not least, um analysts, um, market makers, corporate financiers in those institutions were very interested in the lack of transparency in public reporting of intangibles and IP, not least because, Jason, of the point you made, it was recognized as the most valuable asset class. So I was pretty fortunate of being in the right place at the right time, developed this study after the um investment bank set up valuation consulting, specialist in company um and IP and brand valuation about 30 years ago now. So we're just dedicated to that, this uh for all sorts of reasons, globally, pretty well known for it. And we aren't cluttered by the need or desire to offer any other advice. So we work with you know trademark and patent attorneys like yourselves, who I've known for about 25 years in the early days in Leeds, um, by recall. But um, but that's a little bit of a background. I wrote one of the first books on the topic in the um early 1990s. I think uh Russell Parr in the US was just about ahead of me. But uh yeah, I'm a lot of learning, but I'm still learning in this complex subject.

SPEAKER_00 4:50

Uh thank you, Kelvin. I mean, that's a really impressive background. It's great to have one of the leading authorities on brand evaluation joining us in this uh episode. And I mean, IP valuation is a very broad subject. Um we could run an entire episode on licensing and calculating royalty rates, for example. Um so this episode will focus specifically on brand evaluation, but we may release some follow-up episodes covering some other areas of brand evaluation later down the line. So I think a lot of food and drink um startup SMEs and Challenger brands will be aware that their brands and the associated trademarks have some sort of intrinsic financial value attached to them, but perhaps they don't know how brands are valued, the benefits of brand valuation, when to get them valued, and what the valuation can be used for. So it's great to have you on the FSO to demystify some of these points. So I guess um the logical starting point really, um, so what is brand valuation and why does it matter to food and drink businesses?

SPEAKER_01 5:42

Yes, well, I might just, you know, in particular this food and drink business sector, look, and you and you would know better the better than I. I think wasn't it the first trademark act, 1875 or something? And what was the first trademark? I believe it was the triangle bass, wasn't it? I thought as you say, no, to pedal forward to today, you know, some of the most well-known and most public litigations have concerns, you know, um this sector, you know, Thatcher's versus oldie cheese puffs and what bit, and um MS's calling the caterpillar versus oldie's puff birds. You know, time and time again, we are seeing exemplars of how companies, particularly in this sector, find that the brand asset is important. The trouble with this is as I alluded to in the in brief summary introduction, was accounting has been quite appalling in representing these assets. To their credit, um, Sir David Tweedy, um, an incredible accountant um on the global stage, was charged with his studies um of you know, how do we begin to account for intangible assets by reporting? You know, we see fixed assets, we see lumps of metal. You know, you mandatory, you have to report valuations in your accounting, but the most valuable asset class is missing here, you know, trademark patterns, design right, copyright, etc. And he did a long study. I was one of the many, many hundreds of experts, no doubt, that were called. And what we had, and we've had recently, counting has moved slowly to some point of recognition in terms of IFRS 3, International Final Range Reporting 3, FRS 102 for smaller businesses in the UK, to after acquisition, it is mandatory, you need to identify the intangible asset, including intellectual property acquired, and an independent valuer needs to put a proportion or ascribe a salami slice proportion of the value of a transaction, say it's 10. You know, I work with trademark patent attorneys. Well, what has been acquired? Well, there's some copyright here, some trademarks here, there's some design right here, and I need to ascribe valuations. So in the next year's reporting, we actually see these visibly, as it were, in the account by recognition following mergers and acquisitions. But, you know, even if you were Coca-Cola, have been a client in the past, um, it would say to their auditors, you know, oh, we think we're quite a valuable little brand here. Um, can we um recognize this in our accounting? No way, Jose, if you've generically built the trademark and brand in-house. It's a regretful still existing situation because, you know, financiers, bankers, I wrote a big report for UK government banking on IP a few years back now, four or five years, you know, trying to encourage bankers and lenders for securitization. That this is goes right from the largest to the smallest companies. This is really important. Bankers and financiers sadly believe accounts represent worth and value. They do not, far from it. And this is the big problem we have, and we still have it today. Um, but indeed, these assets are of significant value, and um, particularly in the um food and drink sector, not least as shown by public litigations, which are always quite good, fun and interesting.

SPEAKER_00 9:14

Absolutely. Um, so how how do you value a brand then and the associated IP? I know from speaking to you in the past that you've been quite instrumental in developing um some of the methodologies used. Perhaps you can give us a um a brief kind of overview of uh how you approach it.

SPEAKER_01 9:28

Yes, I think it might be worthwhile, Jason, just to say, you know, what actually triggers people to think about the valuation of intellectual property? And there are several reasons, um, you know, mergers, acquisitions, um, you know, acute forwards of managers actually saying, well, how can we manage our most valuable asset class if you don't understand its value and if you don't know if you're going up and down, et cetera? So just in-house management process, perhaps looking at the operation review document alongside public reporting, which is mandatory, but but the frustration of boards say, Well, look, we can't officially report it, but by jove, we're going to put a document alongside our public reporting, actually um uh showing that we understand the value of our assets and our licensing strategy, which is indeed another subject, which um, well, I uh, you know, it's very dear to my heart we might touch upon. But securitizations, tax purposes, of course, I've alluded to the fact that intellectual property and brands have been subject to considerable observance from tax authorities globally because crown jewels are put in advantageous locations. I say no more, and often license from the IP holding company, wherever they may exist, Switzerland, Luxembourg, Singapore, wherever in or Ireland, of course. You know, Ireland fought tooth and nail to retain the advantageous untax rate for intellectual property. And if you ever visit visit Sandiford Business Practice a little way south of Dublin City Center, you'll see the giants, US corporations and whatever, uh, are located there for one good reason. Um, but be that as it may, other reasons include, you know, um selling your IP, litigations, and distress. I've mentioned a few that you know triple into the public domain, and you know, everybody sees those and observes, you know, what's going on here. We do a lot of damages calculations for passing off and that kind of thing, and distress, you know, when something is, you know, goes badly wrong often. And there's two very well-known cases where we've have valued brands recently, globe, you know, UK top brands, everybody knows them, household names, where we've come in where the companies have been in distress for whatever reason, and sometimes overlaid by, you know, private equity debt or whatever, not necessarily, but management issues, whatever issues, we've come in to value the brands and associated assets for the receivers, the administrators, um, those that are you know charged with managing those distress situations and valued those brands and actually rescued the situation out of you know some quite awkward distress situations because the brand was valued. I also developed with um Hewitt, now part of Aeon, the Actuaries, and Deloitte um helped from my perspective as a valuer to develop valuing brands to plug pension deficits, which large companies have significantly. I mentioned this because, you know, trustees in these situations, pension trustees, have an attitude to risk which is zero, and quite rightly so, because of regulations post-Maxwell and all that stuff. Um, it's important that the valuation is seen in rigor. And for all of those that doubt the skills of IP valuers nowadays and the expertise, and the models that I developed with that um process were seen to be so rigorous that it satisfied these trustees that only had an appetite for zero risk, a most public one, all in the public domain. This was for Chewy, three of their largest brands, um travel brands, and they had a pension deficit situation. Um, you know, together with um Deloitte and Aeon and myself, the valuer, um, got through a significant situation of helping to plug pension deficits, where traditionally these deficits have been plugged with fixed assets and sometimes receivables. But in these cases, they had, they just didn't exist anymore. There was nothing left. And moreover, you know, we've had leading from my Sears was the largest one in the US three of their most well-known brands were securitized, uh, raising goodness knows how many billion, and then put into, I believe, um a Bahaman reinsurance vehicle. But all this is the brands, you know. So I I need to say no more as to what triggers these things. So how do we value these assets? Well, I mentioned a few quite significant names there, and immediately springs to mind the power of a brand to generate um prices, shall we say, and hopefully better gross margins and profits than their competitors because of the power of that brand and the power to charge more. And, you know, let's say I mentioned them a bit earlier, Coca-Cola, we got Coca-Cola, you know, we pay 10 for Coca-Cola, but what about the Saints Greys Tesco Cola brands? You know, we all trust them, but you'll find, I think, and believe, a little slightly lower price. And of course, you've got those brands of cola from Eastern Europe, which are even less. So immediately we're seeing price differentials, which help me understand where something's going on here. What are these differentials that are driving the value creation for the senior and top brands? The most, one of the most abused techniques and methods of relief from royalty, um, I could write another book on this. Um, it's fair enough in practice, which is saying this. If I don't own that brand, how much would it cost me, in a hypothetical way, to license that in? And there's quite a lot of statistics going on around, you know, the people like us, specialist business, we subscribe to databases to see what's going on in the licensing world globally in all sectors and subsectors. And people draw so-called evidence from licensing and royalty rates through this process of what's going on in a particular sector or subsector where they're valuing, say, the food and drinks business, and then apply that to that process. Well, if we didn't own it, we would have to pay this, and therefore the mathematical process tricks through to discounted cash flow calculations with a terminal value to produce today's value. Um, the problem with this, and why I say it's been quite an abused practice, not least in court cases where I've been involved as an expert. Um, quite luckily some experts have been up against me that haven't quite um understood the rigo that's demanded in looking at license agreements, you know. And I've lectured at LES about this time and time again, license, you know, look, start at the top, exclusive, non-exclusive, go down, terms and conditions and much else that affects the royalty rate being charged. If you don't use truly comparable exclusive licensing situations, then you are really going to be a goner to use those kind of comparable, that kind of comparable royalty rate information in your modeling to do um a brand valuation study, as it were. But so just be careful. Nothing wrong with relief royalty in good hands. And in that process, you use strength assessments, uh, which I'll come to, you know, brand strength assessments. I've just been looking at one on the peer review internally, and I'm happy, Jason, to share with you um maybe in a further question, you know, the sort of thing we go through with brand strength. Um, the other one is sort of um excess profits, you know, gross profit differentials. Um, we've dealt with excess profits, you know, you have your fixed asset base, there is a required rate of return, not forgetting the workforce, of course, and what's left. Or what is left is the financial performance driven by IP and intangibles. So your salami SMICE. So these methods are been well traveled, they've developed significantly since I wrote that book. And uh we, you know, we have an awful lot of study and method that goes on top of those, you know, three basic methods, but in truth, they are still there. Um, when you're doing these exercises, you've got to look at useful life, because I mentioned, you know, valuation is a process of bringing bringing forward value back, see forward value back to today's value. And so you go through physical, functional, technological, legal lives. Bear in mind I value quite a well-known drug for boots, um, which is still around today. I imagine actually just quite public knowledge, neurofit. Um, and a long time ago, when they were boots, you know, based not moved on a lot since those days. But look, um, when I was looking at that, you know, obviously when you've got drugs, and it happens when the food and beverage sector, recipes and all of this kind of stuff that backs up the brand. And I will deal with the issue that a brand doesn't travel in a vacuum, it's a combination asset. People say, Oh, can you just value my brand, Kelvin? Well, I need to understand what design right, coffee right, um, and much else. You can have a brand without actually a trademark registration as well. But that's not my topic, Jason. It's one for you. But but it is a combination asset, it's not a single asset. Um, but the issue is that it when you're doing a life calculation, which you have to do, you know, how long is this going to last? Most food and drink beverage sects of France are hugely long-lasting. But you know, a lot of tech tech stuff underneath. But I reckon in the neurofen example that the trademark and brand took over the sort of technological um base of that pharmaceutical product, and it's still, you know, singing from the highest uh to drawers today when you walk into boots. Sometimes it's difficult to avoid the neurofen signs, but it was the trademark and brand that took over in about year eight or nine, I would suggest. And you often get that. And I encourage people and owners to even startups in high-tech areas, you know, think about branding. It's not just patterns and tech IPs or coded software or whatever it is. The brand is important and it travels through. So that little thumbnail, Jason, hopefully gives people a little um little touch on the valuation process.

SPEAKER_00 19:46

Thanks. Yeah, there's a lot of really important points um raised there. I guess I'll I'll come back to the assessing badge um brand strength point. And I think it's worthwhile perhaps elaborating on um how a brand is a combination asset, and there are quite a few different IP rights that can be utilized to protect the different aspects of a brand. Um, but looking at um trademarks specifically to start, um, how do how what role do trademarks play in the strength of um a brand the assessment of brand strength and brand valuation? For example, does registering a trademark and taking appropriate enforcement action affect the brand value and the brand strength?

SPEAKER_01 20:21

Yes. Um let me um because I've got it in front in front of me here, as I've just been reviewing it, the sort of um exercise we it's all right producing figures, but part of the process when you've produced the figures, you think you have the figures, is having a look at the respective lives. So if it's uh And then you do a weighting as to the brand strength in the sector. So one one of the first questions we ask is brand protection, you know. Yeah, and we score all these. These are key headings, and this isn't just this isn't a list applied to every brand exercise, but it will just give you a flavor. Brand protection, clearly important, and more than that, the monitoring and enforcement. Okay, you've got a trademark. Funny that one call early yesterday, a really significant um brand. We we all know this brand, but it's actually quite tiny, but we know it because it's a stunning name. Um, and it's been around for nearly 40 years. Um, and but yeah, they're really a very small business. But one thing they do perfectly and brilliantly talking to the lawyers who act for this company, is uh great brand. I won't mention it. Um, but um is protection structure. They are hell bent on making sure this brand, whenever somebody else tries to use and it's a very sort of it's quite a sexy sexy couple of names, it's really quite a quite what one you all know, and a lot of people will, but they they are absolutely rigorous when there's any kind of infringement. So when you have infringement issues. It's far easier to have a registered trademark. Jason, that's another one for you for another day. But obviously, key question brand protection, how protected. But more than that, are you just sitting there? Okay, we've got a trademark registration and not actively enforcing on that strength of protection. Really important. And this is a key link here: brand marketing, advertising effectiveness, social media, measurement capabilities. You know, when I'm doing valuations, you know, the perceptual attitudes of customers, you know, through surveys and so forth, I always ask for that. Some companies have them, some don't. Some smaller companies have a better understanding than larger companies that sit back sometimes and you know, on the on the lovely situation of having a well-known brand, but you know, to have the information is really important to go into my weighting of scoring, shall we say? Um uh brand design, inherence, and management from the top, really important, as I said. And customers, you know, preference, loyalty, share of voice, um, brand attitudes, awards, press the media, you know, the PR machines, the brand clarity that may produce, the brand purpose. Is it there? Is it seen? Can customers understand it? And more than that, can they understand it? And companies, can they extend into other areas? We see companies with powerful brands extending and um constantly on just move away from the brand um from the food and drink process, because it's a better example. But food and drink do this, is is look look look in the fashion sector. You know, for one time is high high hook couture, shall we say, and the next minute it's a handbag, and the next minute it is a pair of uh very, very expensive sunglasses, et cetera, et cetera. And then perhaps, you know, food and drink and whatever. And I one of my clients in times past was Innocent Drinks, and Innocent Drinks, uh, you know, wonderful, wonderful brand that was created, and it's gone on and on and on. I I need to say no more. Um, but what was really important in that case was you know looking at that grand and those that team's desire and the their will to make sure that at that time, you know, the when it was being launched and in its and first being put into the retail marketplace, the the the importance of freshness it was really an attribute that was, you know, vital to their mission and and purpose and and and selling that brand. You know, one thing I went into the financials. You know, if you want that super freshness and everything else, this was not one of those orange drinks you could take to Mars and back and it would still be okay. You know, there's a cost involved in having a fresh, you know, fruit juice on the shelves, you know, because it doesn't last forever. Um I need to say no more. But all of these, you know, I'm really looking for my clients to provide help with it. Um financial performance, profitability growth, licensing strength. You know, you're looking at the power of licensing, you know, how you know attractive that brand is in licensing, and you know, unique factors, the image rights, the replaceability, all of these aspects go into, you know, our brand straight framework, if that makes sense, Jason.

SPEAKER_00 25:30

Yeah, absolutely. And I think the important the enforcement point's a very good one in uh protecting the distinctive and unique exclusivity of a brand. I mean, a lot of uh smaller businesses that I speak to typically recognise that getting trademark protection is important to increase their brand value, but that's only one side of the coin, as you pointed out. Um it is still very important to enforce your rights. And by enforcement, I mean challenging third-party applications through filing oppositions where the marks and goods and services overlap to keep the trademark registers clear, which is also important, as you um touched upon, if you're looking to expand in a different uh into a different area later on, for example. Um, and also taking appropriate steps against use. And um, I mean, enforcement can be expensive. I think a lot of businesses are put off by it. But often I generally find that a lot of uh disputes are settled at an early stage without having to go a distance in an opposition or having to resort to an infringement action. Often it's possible to settle a dispute by getting the other party to apply appropriate limitations to their goods and services, to reduce the overlap or to seek written assurances to control um how they use and register them out. It might be possible to enter into some coexistence agreement. And in some instances, the third party may simply withdraw their application or to stop using altogether and to avoid the cost of having to defend an opposition or an infringement action. So it is very important for businesses to take these actions and I'd encourage smaller businesses to um consider them and not necessarily be put off by the um anticipated cost. So I just want to bring it back as well to um where you said that a brand is a combination um of assets. Perhaps it's worthwhile just talking about some of the other valuable IP that's um developed um and embodied within a brand.

SPEAKER_01 27:08

Yeah, so again, we have a little checklist. Um and going back to Sir David Tweedy's study all those years ago, and you know, it take took years and years and years to get these initial accounting standards out. Um, but you know, I was pleasantly surprised when I saw the categorization, you know, a an auditor, trademark, and pattern attorney had to go through for my benefit ultimately, so I could do to prepare the valuation, the list of intangible assets. You know, and I was, you know, I thought, oh, this is just going to be trademarks, you know, design right, copyright, uh, patterns, if you're lucky, you know, the five keys categories. Um, but there were about 50 odd categories, and you know, if any listeners here would like that list, you know, I'm happy to share them with you, Jason, or you can, you know, put put put them out there. We have about 50 categories, and you know, there was a combination of, you know, quite a lot of um of interesting um definitions within, I've just caught them up in front of me. So, you know, and this is what I'm looking at. This is my checklist, you know. You say, Kelvin, you want to uh value our, you know, probably want you to value our brands. Well, I say, well, what do you mean by the brands? You know, so I I throw this custom this checklist out, and and it is derived fundamentally from Sir David Tweedy's work. Um so, you know, I'm looking at obviously the registration, trademark, trade name, service mark, trade rest, newspaper masters, internet, domain names, etc. That's marketing-related category for US FASB, custom-related, customer lifts, customer contracts, customer relationships, customer agreements, all of these naturally scan, or not, as the case may be, support a brand. Um, we have, you know, clearly the artistic related design right. I don't need to say much about this. Um, this sector will know well, not least because the litigation flexities of design right and copyright associated with those that try to closely copy others and the protected marks. Um, but also, you know, the um the the more intangibles, the trade secrets, you know, the recipes that I see in this sector, people don't want to go out and patent a lot of stuff. Trademark, yes, they do. So that's what we're hinging on here, because a lot of people, you know, and owners do not want to reveal too much about the recipes and secrets. I know it's the Ohney One Coca-Cola and all that, a lot of people flying in separate airplanes. But hey-ho, you know, recipes and secrets, trade secrets are vital in this sector and how you process something in the course of manufacturing. Let me give you an example outside of this sector, um, which was um a very large print machine, a sort of print machines that are used to do the Sunday supplements. Yeah, it was a long time ago when the Sunday supplements were first sort of being courageous, aging me a little bit. But um, you know, there was this big machine, there was lots of processed patents, you know, machinery is nearly always pretty much zero value without the IP and intangibles in them or used with them. And you know what I found? One of the most valuable assets was a few guys that knew how quickly and speedily you could actually manage the printing process. They were physically on the ground, making sure that the machine was working in the correct way and manner. Now, I know very well in the process of food and drink manufacturing, the machinery and its control and the knowledge and know-how of that process is absolutely key to getting, you know, the goods, the products on the shelves for us, the consumer. And so don't forget the human element. And please don't do what I found in Times Past doing some government valuation work is the chap that was a leading fellow in the world in fungi. Now, fungi are quite important for a lot of things. And he was on his own pretty much in his government department, you know, a key person, you know, out to Tokyo one minute, Singapore the next, you know, Chicago the next, bouting forth on all the wonderful UK IP and you know, controlling what you know UK taxpayer owes in terms of its secrecy and value. Um is always quite a challenge with the academic types. Um, but um, you know, that um probably didn't like me actually after I finished that exercise. He probably ended up with a group of six youngsters, bright young things learning and and they're learning from him and his knowledge. But it this is key, you know, the human element can be really important as well. So it is quite a long process, Jason, of understanding the key elements, but they can include a lot of intangible assets like trade secrets and no know-how, unregistered rights, you know, plant breeding rhymes, all this kind of thing. So if I send out checklists, well, let me tell you, let me ask you, what do you believe you would miss? That's the key word, missed by if I took that away, how would that destroy your ability to get this brand, this product, service out to the marketplace and please complete this checklist? So it's a raft of assets that I often see that companies, clients write down as key to that brand and its ability to perform in terms of a product or service.

SPEAKER_00 32:35

Excellent. Yeah, definitely great if you could uh share that checklist uh after this, um, because it's really important for businesses to have a process where they recognise um what's produced in IP, how to protect the IP, and the things they can do to manage risk as well. Um I'm just conscious on time. So just uh a couple more questions. Um the this this one's probably quite relevant to a lot of the challenger brands that I see. I mean, the food and drink industry is fast moving and constantly evolving um as a result of shifting commute um consumer demands. Um, for example, over the past few years, there's been a significant rise in uh functional foods, plant-based options, and alternative proteins to reflect the growing demand for sustainable and ethical products, applied some sort of health benefit whilst reducing the impact on the environment. Um, how do changing consumer tastes affect brand value?

SPEAKER_01 33:21

This is um yeah, I've peddled back slightly. I did vaguely laugh in terms of you know, one of my checklists here on brand strength, you know, customers perceived attitude. And and this changes frequently. It's a really important question, Jason, because you know, without the cut the perceptual attitudes of a customer and customer base, and how you change with the movement of expectation and also quality control um and regulation, food and drink sector highly regulated, needless to say. Um, and you know what can go in things, what can't go in things, but also at the end of the day, it's how the customer perceives those perceptual attitudes, those two words are vital for me to understand. And it goes to that brand clarity. Um, it's a really important point. So we do spend quite a bit of time understanding how companies are reacting to the changing way of the world. And I mean, you know, the I mentioned Innocent Drinks a little earlier on, you know, and how that brand evolved from the team that were in the Shepherd's Bush, Fruit Towers, or whatever it was, um, I recall Gold Hawk Road, and you know, how that brand had developed to become more of a global concern, but being very aware of those original, the original founding, founding people's um, you know, label, you know, what they wanted to get out and sell their message. So it is very important, and we spend quite a bit of time because loyalty at the end of the day, that's the word, loyalty is the one aspect which is key to retaining turnover margins and strength. And also the, you know, particularly in this sector, you know, if you want to charge for a premium range, well, you've got to convince the sector that it is worthwhile. The, the, the, the recipes are of a different standard to maybe the medium kind of offering. Um, and you know, those premium, I always remember, was it Tesco developing the first, the finest range, wasn't it? You know, that that, you know, selling that that message through. So, you know, we could go on forever on this point, but a very important questioning process, Jason, there.

SPEAKER_00 35:46

Perfect. And um, just to wrap up then, just briefly, I mean, we've spoken about some of the kind of um events and the circumstances that can uh necessitate going through the um brand valuation process. Um, is that are there any practical steps that a business can take to prepare for brand valuation?

SPEAKER_01 36:02

Um do keep a regular monitoring and assessment of the financial performance. Now that's easy if you're one brand company, say. Um, but where you have numerous brands with numerous brand managers, it's really important to see the segmented, you know, if I'm valuing a brand or a group of brands within a bundle of, you know, a huge morass of potential um, you know, ownership situations and global ownership situations, because again, globally, brands may be performing in different marketplaces in different ways for different reasons. We won't go there because we could spend another hour on that. But just the monitoring, it's a difficult thing sometimes. You know, we've really struggled, all of us in IP awareness, to get major boards or even subboards in big companies getting people on the boards who understand the IP position. So, you know, and boards encouraging those, you know, IP knowledge management manager director types to actually have these statistics available in a financial sense to be able to monitor the brand's performance, typically even simple things like turnover, gross margins, how they've been moving historically, how they are forecast to move. Going to your point, Jason, about the perceptual attitudes and how you are changing, reacting to taste and fashion and culture going forward, differentiating between countries as well, you know, because there's country risk, and countries are different in this aspect, but for global brands, um, you know, these are vital to, you know, to understand.

SPEAKER_00 37:46

That's great. Thank you. Thank you, Kelvin, and thank you for joining us. So I could honestly speak to you for hours on the um subject. It's so interesting and multifaceted. Um, and and perhaps we can follow up with um a more specific um episode, uh, an episode that looks at a specific aspect of brand valuation like licensing and calculating royalties, etc. But uh thanks again, uh Kelvin, and uh we'll speak to you soon. Pleasure to be invited. Thank you. Bye-bye. Thanks everyone for listening. Um join us again at the IP Kitchen, where we will be joined by other experts to talk about interesting topics within the food and drink sector, such as brand creation, licensing, and tackling counterfeits. So keep an eye out for upcoming episodes.