Analysis from Markables reveals some key factors about the trademark valuations of brands of pasta. A sector snapshot and peer group analysis illustrates trademark comparable data for 17 pasta brands from 11 countries. In this sector, trademark royalty rates range from 1.5% to 4.7% of revenues, with a median rate of 3.0%, not very much for fast-moving consumer goods (FMCG) brands (see the chart below). Typically, the remaining useful life is assumed to be indefinite. With these royalty rates, trademark accounts for approx. 20% of enterprise value. Average enterprise value multiples for the sector are 1.25x revenues.
Boiling it down: A closer look at the data reveals some important details. First, trademark valuation multiples are lower in developed economies, where margin pressure from private labels and volume pressure from low-carb nutrition is prevalent, compared with emerging economies. Second, valuation multiples have considerably decreased since the beginning of the millennium, illustrating a change in market conditions and consumer behavior over time. The peer group analysis clearly shows the importance of using in valuations comparable data that is both up-to-date and adjusted for economic stage (developed versus emerging).
Markables, based in Switzerland, has a database of over 6,500 trademark valuations published in financial reporting documents of listed companies from all over the world. The database reports value solely for the use of trademarks (not bundled with other rights).
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