"I agree to an extent but I also see brands ranking that have terrible websites, average products and use horrible blackhat techniques."
Yes, this happens.
But I would argue that their black hat techniques occur DESPITE their lack of branding. I don't think we should confuse their black hat techniques as being a form of branding.
While I understand and agree that associated words used in search can help google understand that your site has a relationship to a product or service.
But I think that google is also using non-linked citations as well to establish the connection. Having your site mentioned on a page in near proximity to the key words is, I think, also helpful to google.