What Is Brand Equity?

Brand equity is the value your brand adds beyond the functional product—captured in the price premium (or discount) consumers are willing to pay versus a generic. In CPG, where products are often near-commodities, that premium is the core driver of company value.

For mid-market CPG brands, this isn’t abstract theory. Liquid Death and Fiji both sell water, yet command outsized valuations and margins because their brands carry meaning, identity, and trust that private label cannot replicate. Academic research backs this up: a 1% change in brand equity is associated with a 0.33% change in market cap, and intangible assets (with brand equity as a major component) account for 50–75% of market capitalization on major exchanges. In CPG, investors and acquirers are fundamentally buying the equity your brand holds in consumers’ minds—its imagery, loyalty, and pricing power—not just your current revenue.

How Brand Equity Works

Price premium as the financial signal. If a generic bag of chips sells for $3 and your brand reliably sells for $4.50, that ~50% premium is your brand equity in action. It reflects everything your brand stands for: perceived quality, taste, values, story, and identity.

Equity doesn’t always show up as a premium price. Costco’s Kirkland Signature has enormous equity expressed as trusted value at a discount. Consumers believe Kirkland delivers reliable quality at lower prices. That’s not negative equity; it’s a different strategic expression of strong brand equity.

Brand Imagery Attributes: The Building Blocks

Brand equity is built through specific brand imagery attributes—the concrete perceptions consumers hold about you, such as:

• High-quality or not
• Cool or boring
• Popular or niche
• “For someone like me” or not
• Sophisticated or casual
• Natural or artificial

Winning brands choose a small set of priority attributes and reinforce them relentlessly across every touchpoint.

Stella Artois is a classic example. The brand identified “sophistication” as its core attribute in the U.S. Every decision—from creative to partnerships to events—was filtered through that lens. Partnering with John Legend wasn’t random; his persona (poetic, refined, culturally sophisticated) directly reinforced Stella’s desired image.

For mid-market CPG brands, the job is to define your key attributes early and embed them everywhere: packaging, social, website, sell sheets, retail execution, and partnerships. Every interaction either builds or erodes those attributes. Over time, consistent reinforcement compounds into a moat that private label and me-too competitors struggle to cross.

Why a Brand Manual Is Non-Negotiable

As your team and channels expand, a brand manual becomes essential. It codifies:

• Your core imagery attributes
• Visual identity (logo, color, typography, layout rules)
• Voice and tone
• Do’s and don’ts for execution

Without this, equity erodes through small inconsistencies—off-brand posts, mismatched packaging, random partnerships—that individually seem harmless but collectively blur what your brand stands for. A strong manual keeps every decision aligned with the equity you’re trying to build.

Brand Equity in Action: CPG Examples

Liquid Death

• Product: water (commodity)
• Equity drivers: irreverent humor, counter-cultural identity, environmental stance
• Outcomes: $333M in 2024 revenue, ~$1.4B valuation, 133k+ retail doors, successful extensions into sparkling, tea, and energy
• Insight: the value is the brand; the liquid is the vehicle.

Fiji Water

• Product: bottled water
• Equity drivers: distinctive square packaging, origin story (artesian water from Fiji), premium positioning and channels
• Outcome: durable price premium and long-term premium perception
• Insight: consumers pay for what the brand signals about quality and taste.

Stella Artois

• Product: standard lager in its home market
• Equity driver: single-minded focus on “sophistication” as the core imagery attribute
• Execution: refined creative, selective partnerships, premium on-premise placement
• Outcome: sustained price premium in a crowded beer market.

Private Label Contrast

• When consumers reach past store-brand cereal to pay more for a branded box, that gap is brand equity.
• When they don’t, it often signals that the branded product’s equity has eroded or was never meaningfully built.

Brand Equity vs. Brand Awareness

Brand awareness and brand equity are related but distinct:

You can have high awareness and weak equity: everyone knows you, but few are willing to pay more, choose you over cheaper alternatives, or stay loyal after a price increase.

How to Measure Brand Equity

The right approach depends on your stage and budget, but every mid-market CPG brand can and should measure equity in some form.

1. Quantitative Brand Tracking (for brands with budget)

• Run periodic surveys (annual or semi-annual is sufficient for most mid-market brands).
• Ask target consumers to rate your brand and key competitors on priority imagery attributes (e.g., high-quality, for someone like me, cool, natural, sophisticated).
• Track scores and gaps over time to see if your investments are moving perceptions in the right direction.

2. Qualitative Research (accessible to all)

• Conduct small focus groups or 1:1 interviews with customers and prospects.
• Explore what comes to mind when they think of your brand, what it “says about them,” and how it compares to alternatives.
• Use this to validate or refine your chosen imagery attributes.

3. Price Premium Analysis

• Compare your average selling price to generic/private label equivalents.
• Track the premium (or discount) over time.
• A widening premium suggests growing equity; a shrinking premium is an early warning signal.

4. Repeat Purchase & Loyalty Metrics

• Monitor repeat purchase rates, retention, and response to price changes.
• If consumers continue to buy despite cheaper options or modest price increases, that behavior is equity expressed in the real world.

MorningAI helps mid-market CPG brands build the consistent, distinctive brand presence that compounds into real equity over time.

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