Food and beverage brands stand to lose almost $300 billion if “plain packaging” laws similar to those recently enacted for tobacco products in several countries were applied to alcohol, sugary drinks, confectionery and savory snacks, according to a report from brand valuation consultancy Brand Finance.
The move to plain packaging, the report says, would limit the effectiveness of brands as marketing tools, and make it far more difficult for companies to differentiate their products. In addition to hurting the bottom line of the companies themselves, it would also have a strong effect on the advertising and PR industries that aid in the creation and implementation of brand strategies.
“To apply plain packaging in the food and drink sector would render some the world’s most iconic brands unrecognizable,” said Brand Finance CEO David Haigh. “Plain packaging also means losses in the creative industries, including design and advertising services.”
Brand Finance’s study looks at the potential effects that widening the scope of plain packaging laws would have on major companies including the Coca-Cola Company, PepsiCo, Heineken and Nestlé.
Among the eight companies studied, Brand Finance says that Coca-Cola and PepsiCo are the two that would have most value at risk, with the potential for $47.3 billon and $43.0 billion losses respectively. That would account for a 24 percent loss in total enterprise value for Coca-Cola and a 27 percent dip for PepsiCo.
For such brands as Heineken and Pernod Ricard, which specialize in alcoholic beverages, plain packaging laws could result in losses of $10 billion and $12.2 billion.
When the eight examined countries are considered together, the report finds a potential loss figure of $186.7 billion. When extrapolating the data results to all major alcohol and sugary drinks brands, the study predicts a loss of $293 billion for the beverage industry globally.
Australia, France, Hungary, Norway and the United Kingdom have already enacted plain packaging laws toward tobacco products, under which corporate logos are not allowed to be used, the Association for Tobacco-Free Kids says in an August 2017 report.
To see the complete Brand Finance report, click here.