How Lego Became One of The World's Most Valuable Brands

Danish toy company Lego has been ranked as one of the world's most valuable brands for the first time, listed alongside some of today's most iconic and profitable companies, including Apple, Google and Facebook.

The brand consultancy company Interbrand released its 16th annual Best Global Brands list of 2015 on Monday. It identifies the 100 most valuable brands in the world, with the top five spots this year going to Apple, Google, Coca-Cola, Microsoft and IBM. Lego entered the ranking for the first time in 82nd position, topping the new entry list, with a calculated brand value of 5.6 million Danish kroner ($5.4 million), beating the likes of Ralph Lauren, Land Rover, Smirnoff and Hugo Boss. The company's annual revenue increased 13% to a massive 28.6 billion kroner ($43 billion) in 2014.

The Lego Group was founded in 1932 by Ole Kirk Kristiansen, in a small carpenter's workshop in rural Denmark. It is now owned by Kjeld Kirk Kristiansen, Ole's grandson. So how did a toy company famed for its colorful toy bricks, and born in a town so small the company had to build a hotel there for employees, become a global icon?

This has been a good year for Lego. As well as making it onto Interbrand's list, the privately-owned and family-controlled company overtook Ferrari to become the world's most powerful brand, according to the 2015 Global 500 study from Brand Finance report, an independent brand valuation and strategy consultancy.

It is a remarkable feat, considering that in 2000, Lego was facing bankruptcy due to an over-extended product range—the company unsuccessfully introduced clothes, watches and a TV show—and problems with stock control. Since then, it has almost quadrupled its revenue. Such is the demand for the company's products, that an analysis by the Daily Telegraph newspaper carried out in August, found that investors were able to secure a better return buying Lego sets than from the stock market, gold or bank accounts.

A large part of the company's success lies in its licensed toys, an animated feature film and video games the company has developed in the past few years, helping Lego to become the world's biggest toy company.

The 2014 Lego Movie, which was regarded as a critical and commercial success and took nearly $500 million at the box office, has done much to raise the company's profile as well as its profits. A sequel to the movie is scheduled for 2017. Licensed partnerships have been another aspect of the company's success. The partnership between Lego and Star Wars, in particular, has proved widely popular, becoming one of 2014's top-selling lines and "Lego Star Wars" has become a hugely successful video game franchise, according to the company. Overall in 2014, Lego increased sales by 15 percent, made a net profit of $831 million and employed almost 900 additional staff.

Some analysts credit Jorgen Vig Knudstorp, the company's chief executive since 2004, for Lego's rise, and his decision that the company must go "back to the brick" by focusing on its core products, cutting jobs and selling off its theme parks, when he first took over the company—the first non-family member to do so.

Roar Rude Trangbæk, a spokesperson for Lego, points out that the Lego Movie and branded video games are not made by the company, but by partners. The spin offs all "resonated with they key values of Lego, such as creativity," however, and have resulted in much greater brand recognition and have ultimately boosted sales. "It's also important for us to meet children wherever they are," says Trangbæk, "whether on digital platforms or playing at home on the carpet with the physical Lego bricks."

Yet according to Brand Finance, part of Lego's appeal lies in its traditional values. "Lego's appeal spans generations; as well as the creative freedom it gives children, the brand appeals to the nostalgia of adults. It generally avoids gendered marketing, by appealing to boys and girls equally Lego maximises the size of its target demographic," Brand Finance wrote in its report.

"We hope to continue innovating every year," concludes Trangbæk, "and carry on bringing something to the market children love and want to engage with because that's ultimately the precondition for our success."

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