$300bn at stake as plain packaging threatens the beverage industry

By Laura Mullan
In recent years, several countries have introduced plain packaging for cigarettes and tobacco products to discourage consumers from smoking. In a bid t...

In recent years, several countries have introduced plain packaging for cigarettes and tobacco products to discourage consumers from smoking.

In a bid to encourage a healthy lifestyle and reduce obesity, some have some have called for the legislation to be extended to other sectors such as the food and beverage industry.

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Brand Finance, an independent business valuation consultancy, analysed the impact the policy would have it was extended to four food and beverage categories: alcohol, confectionary, savoury snacks and sugary drinks.

It found thought that the beverage industry would be most vulnerable, with a value loss of US$300bn at stake if plain packaging was extended to the sector.

The Coca-Cola Company and PepsiCo would be the companies with the most value at risk with about US$47.3bn and $43.0bn respectively, which translates to about 24% and 27% of their total enterprise values.  

Entire brand portfolios of major corporations specialising in alcoholic drinks, such as AB InBev and Heineken, would also be adversely affected if it fell within the scope of the legislation.

The impact to major alcohol and sugary drink brands is significant, pointing towards an estimated loss of US$293bn for the beverage industry globally.

“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,” said David Haigh, CEO of Brand Finance.

“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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