Coca-Cola's (KO +0.74%) 13-year reign as the world's most valuable brand is over, according to the Best Global Brands 2013 report released by Interbrand. Coca-Cola's brand value increased 2% year over year to a record $79.21 billion valuation in 2013. Yet this monstrous number fell a good $19 billion short of the projected brand value of the new champion, Apple (AAPL +2.65%).
With a value of nearly $100 billion, Apple's brand grew a thunderous 28% year over year and was labeled as a "top riser" by Interbrand.
Other major movements on the list included Google (GOOG +1.71%) overtaking Coca-Cola for the No. 2 spot. Google's brand value fell roughly $5 billion short of the top spot. However, it was the second-fastest growing brand on the list, growing 34% year over year. The only company that managed to grow its brand at a faster pace was Facebook (FB +1.81%), which sported a 43% year-over-year growth rate.
Why brands are so important
So why should investors care that Apple is the most valuable brand in the world or that Facebook is the fastest-growing major brand in the world? Brand value is paramount in the highly competitive consumer landscape. Without their brands, companies have no way of distinguishing themselves from other offerings. A reputable brand helps a lot with acquiring new customers and retaining those customers.
That's one of the reasons why hordes of people flock to join Facebook every day, rather than MySpace. This trend holds true for Apple, Coca-Cola, and Google, too. Millions have adopted the iPhone, iPad, and iMac because of the prestige of possessing an Apple product. I am proud to say I own an iPhone, and millions of others share this feeling of pride.
When you go to the supermarket, you naturally reach for a Coke or Pepsi, as you trust and respect these companies. When you jump on your computer and need to look up something, do you use Google or Bing? Most will say Google, because its brand is the king of the space.
Google demonstrates another major advantage of a strong brand. A couple of months ago, I went to bingiton.com, where I searched five different things and was then presented with two search results -- one from Bing and the other from Google.
The catch was that I didn't know which one was which. At the end of the five searches, it showed that I preferred the Bing results four times. But do I use Bing now? No, because of Google's brand. Sometimes the value of a brand can outweigh the superiority of a competitor's product.
Capitalize on it
How can investors capitalize on brand value? How about investing in any of the top 100 brands, including these four great companies. Typically, a strong brand represents a strong overall company. If the brand value is growing, revenue is likely to be growing in lockstep.
Google and Facebook, both companies which grew their brand values by double digits from 2012 to 2013, are projected to grow their top lines by 39.5% and 46%, respectively. Apple is forecast to fall 2% short of the double-digit mark in terms of revenue growth during this same time period.For Coke, on the other hand, sales are projected to fall 1.4% from 2012 to 2013, even with 2% growth in its brand value. Yet the principle remains solid, and in most cases flourishing brands represent flourishing companies.
Just look at stock performances of Apple, Coca-Cola, and Google over the past 5 years. Every company has outperformed the Dow Jones Industrial Average over this time period on a total return basis, which accounts for dividends.
DIA Total Return Price data by YCharts.
Facebook, which has only been public for a little more than a year, has more than doubled the blue-chip average's total return performance since going public.
FB Total Return Price data by YCharts.
Not surprisingly, the two companies with the fastest-growing brand values, Apple and Facebook, have performed the best over their respective time periods.
The Foolish bottom line
It's finally official: Apple is the most valuable brand in the world. Coca-Cola's 13-year reign as No. 1 is over. The significance of brand value cannot be overlooked, and this is why the immense values of names such as Apple, Google, Facebook, and Coca-Cola are so important.
Traditionally, strong, growing brands translate into strong, growing companies. Long-term investors in Coca-Cola, Facebook, Google, Apple, and other companies sporting valuable and growing brands can attest to this. And while investing over the long term in stable, consistent companies with strong brands may not be sexy, it does produce impressive results.
