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Plain packaging threatens industry

Since the introduction of plain packaging for tobacco products in some countries, there have been numerous calls for its extension to the food and drink sector, with alcohol, confectionery, savoury snacks and sugary drinks among the categories highlighted as potential targets for plain packaging.

In 2015, for example, the WHO-backed Tobacco Atlas called for the extension of plain packaging to alcohol and some other food and drink products, while in 2016, a Public Health England report called for the consideration of plain packaging for alcohol.

In addition, with more and more countries regulating the marketing of various food and drink products, such as introducing bans on the advertising of ‘junk food’ in children’s media, the prospect of plain packaging as a measure in the fight against obesity doesn’t seem too farfetched.

Now, Brand Finance has analysed the potential financial impact of such a policy on food and beverage brands. If plain packaging is extended to the beverage industry, it estimates the loss to businesses at close to $300 billion.

The Coca-Cola Company and PepsiCo are among the corporations with most value at risk, according to Brand Finance, with losses of $47.3 and $43 billion respectively, equal to 24 and 27 per cent of their total enterprise values. Meanwhile, the research suggests those specialising in alcoholic drinks, such as Heineken, AB InBev and Pernod Ricard, risk seeing 100 per cent of their brand portfolios exposed to the legislation, jeopardising future revenue streams.

David Haigh, CEO of Brand Finance, comments, “To apply plain packaging in the food and drink sector would render some of the world’s most iconic brands unrecognisable, changing the look of household cupboards and supermarket shelves forever, and result in astronomical losses for the holding companies.

“Predicted loss of brand contribution to companies at risk is only the tip of the iceberg. Plain packaging also means losses in the creative industries, including design and advertising services, which are heavily reliant on FMCG contracts.”

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