Skip to main content
rob magazine

Lots of Canadian corporations are consistent profit-gushing machines, but how many can crank their game up to a higher level and become iconic brands? A brand is much more than a logo or a slogan; it's a total approach to doing business. And the best brands win strong and lasting loyalty from their customers, employees and investors. Working again with the Toronto office of Brand Finance, the leading global brand valuation firm, we present our third annual ranking of Canada's most valuable brands. Plenty of those brands—ranging from big banks to Tim Hortons, to major oil sands players such as Suncor—have won that loyalty at home. But leveraging it into success abroad is tougher. Growth in the value of many traditional leading brands is slowing, and some surprising challengers are gaining on them.

No. 56 Air Canada
Loyalty: Airlines need to do more than fly passengers to keep them coming back

Current brand identity
Even in the early 2000s, long after Air Canada was privatized in 1988, it was still shaking off its image as a government monopoly—bloated and beset by union trouble. In 2003, it filed for legal protection from its creditors. But after several rounds of restructuring, it has hit its stride as a more efficient and profitable airline. And as fuel prices have eased and the global airline industry has settled down, Air Canada has begun to focus more on its customers.

Threats to brand growth
Where to start? How about a limited market within Canada, intense international competition and the growth of online travel sites that let passengers find the lowest fare almost instantly? Building a sustainable business meant hard choices for Air Canada—fewer staff and shaving costs. But what customers often experienced was a harried flight attendant asking them to pay for a pillow or blanket. There's also WestJet, founded in 1996 on the premise of being cheaper and—well—more fun, and now a mature competitor.

The play to build the brand
In a high-volume, low-margin sector like airlines, loyalty programs can be very effective tools to prevent attrition and win new customers. Aeroplan, which Air Canada founded and then spun off, and Air Canada Altitude, an in-house program launched in 2013, offer much more than frequent-flier miles. Alliances with partners such as Avis and Fairmont give travellers more choices for using their loyalty points, and generate a broader range of customer data for Air Canada and its allies. "The goal of their business isn't just to fly passengers; it is also to earn the loyalty of those passengers," says David Kincaid, managing partner of Level5 Strategy Group, a Toronto-based brand consulting firm.

Expected outcome
Air Canada's $323-million profit in the third quarter of 2014 was one of the biggest in its 77-year history. Its share price has climbed by about 800% over the past five years, compared with a far-from-shabby 140% increase for WestJet. The Calgary-based carrier beat up Air Canada badly in the early 2000s.

But its loyalty program isn't as broad as Air Canada's, and the Montreal-based airline is now building brand value at a faster rate.

****************************

No. 6 Rogers
Content: Hockey is the message—across all mediums

Current brand identity
For decades, Rogers was a utility—consumers had to deal with the company if they wanted cable TV. Few people like a monopoly, although Canadians seem to be remarkably tolerant of them. Today, Rogers is trying to reposition itself as a friendly provider of digital services and content, offering customers an array of choices on multiple platforms.

Threat to brand growth
Rogers is now primarily a wireless company—the segment generates more than half of its revenue and about two-thirds of its operating profit. One problem is that the Canadian wireless market is now mature. Growth in subscribers slowed to less than 2% over the first three quarters of 2014. Rogers also has to compete on almost all platforms with a handful of similar telecom behemoths—Bell, Telus and Shaw. The only way to expand is to steal a rival's customers, or to sell more services to your existing clients. But there are also pesky new competitors in individual businesses—in TV, Rogers is losing customers to non-traditional providers such as Netflix.

The play to build the brand In November, 2013, Rogers signed a 12-year, $5.2-billion deal to become the National Hockey League's exclusive broadcast and multimedia partner in Canada. By buying what one analyst called "the most valuable live content in the Canadian market," Rogers is aiming to secure viewers for its broadcast properties, provide content for its print publications and lure wireless customers from competitors. The company also hopes to attract cable-cutting young viewers on mobile devices, and win over new immigrants—a growing customer base—by providing a window into Canada through hockey.

Expected outcome
After signing the NHL deal, Rogers CEO Guy Laurence said the company had "neglected our customers over recent years." But will 500-plus hockey games a year hold them and bring in new business? Rogers started by temporarily offering subscribers free streaming of hockey on mobile devices. So how will it recoup its $5.2-billion investment? The NHL deal took effect last fall, and CFO Tony Staffieri said he expects revenues to improve as income from advertising and other parts of the deal starts to arrive.

****************************

No 64 Onex
CEO as brand: The brains behind the operation

Current brand identity
Onex isn't one of the biggest private equity firms in the world, but it is one of the most consistent performers. Founded in 1984 by chairman and CEO Gerry Schwartz, it has generated a compound average annual return on invested capital of 28%. It tends to take a more active role in actually running companies than Wall Street private equity giants such as Blackstone Group and KKR. Onex typically acquires control, lifts up the hood, and tries to reduce costs and improve operating margins. If all goes well, it sells at a profit a few years later. Its current roster of almost two dozen major companies and sector funds includes window and door manufacturer Jeld-Wen Holding and Carestream Health, formerly the medical and dental imaging arm of Eastman Kodak.

Threat to brand growth
Schwartz is a robust and healthy 72-year-old, but he'll likely reduce his role at Onex over the next few years. "He is a very smart guy," says Scott Chan, an analyst at Canaccord Genuity, who covers the company and uses the words Gerry and Onex almost synonymously. "The value of Onex today is a direct result of his vision."

The play to build the brand
Twenty years ago, Onex looked like Schwartz and a gaggle of acolytes. Those acolytes are now very savvy and experienced in their own right. Schwartz has built a culture of retaining and promoting talent, and turnover is low. Onex has four senior managing directors, and the most recent hire among them arrived in 1999. Every Monday, junior and senior members of the private equity team meet to review the details of all current and potential investments. That gives them a unique insight into a wide range of deals.

Expected outcome
The transition to the next generation is already under way. Senior managing directors Robert Le Blanc and Anthony Munk in New York, and Seth Mersky in Toronto, can and often do step in for Schwartz in various roles. "Gerry is certainly the head of the team and the chairman of the board, but I think he's got less to say. When you buy the stock, you're betting on the team," says Chan. But do they have that vision thing? Schwartz has a lot riding on them—he owns 20 million Onex shares, worth more than $1.4 billion.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
AC-T
Air Canada
-0.15%19.61
KODK-N
Eastman Kodak
+3.13%4.95

Interact with The Globe