More Than $400 Billion at Stake in the Beverage Industry From Plain Packaging

 Breaking News

More Than $400 Billion at Stake in the Beverage Industry From Plain Packaging

More Than $400 Billion at Stake in the Beverage Industry From Plain Packaging
October 07
12:05 2019
Spread the love

Following the introduction of plain packaging for tobacco products and repeated calls to extend the legislation to other sectors, Brand Finance has once again analysed the potential impact of such a policy on food and beverage brands in four categories: alcohol, confectionery, savoury snacks, and sugary drinks. Responding to growing demand for more up-to-date analysis, this second iteration of the Brand Finance Plain Packaging report builds on the findings of the original 2017 study and was launched at the recent Food Ethics Council’s Food Policy on Trial event in London.

Eight major brand-owning companies are predicted to lose a total of US$234.0 billion, with alcohol and sugary drinks brands the most vulnerable. Given the growth of brand values over the last two years, the estimation is nearly US$50 billion larger than the US$186.7 billion calculated in 2017, when the first study was conducted.

Alcoholic drinks producers like Heineken, AB InBev, and Pernod Ricard would see 100% of their revenues exposed to the legislation, jeopardising the current business model. Pernod Ricard, at 36.2%, has the largest proportion of enterprise value at stake. Similar to other drinks giants, AB InBev and The Coca-Cola Company are both set to lose over a quarter of their enterprise value. They are also the two corporations in the study with most absolute value at risk: US$64.6 billion and US$57.2 billion respectively.

PepsiCo, owner of popular snack brands such as Lay’s, Doritos, and Cheetos, as well as its iconic eponymous soft drink brand, would see over two-thirds of its brands affected by legislation, the highest proportion of any company outside of alcoholic beverages.

An extrapolation of the results to all major alcohol and sugary drinks brands, points towards a potential loss of US$430.8 billion for the beverage industry globally.

The estimates refer to the loss of value derived specifically from brands and do not account for further potential losses resulting from changes in price and volume of the products sold, or illicit trade. Therefore, the total damage to businesses affected is likely to be higher.

This should raise concerns not only for brand owners, but also for governments, policy makers, marketers, and campaigners.

David Haigh, CEO of Brand Finance, comments: “Since we produced the first Brand Finance Plain Packaging report in 2017, a number of other countries have either implemented – or legislated for – plain packaging for tobacco products. With health advisors labelling obesity ‘the new smoking’, it is not surprising that there have been repeated calls for this type of legislation to be expanded into the food and drinks sectors. It is obvious, however, that this would severely damage these companies’ business values.”

He adds: “However, the predicted loss of brand contribution to companies at risk is just the tip of the iceberg. Plain packaging would also lead to losses in the creative industries, including design and advertising services, which are heavily reliant on FMCG contracts.”


Warning: count(): Parameter must be an array or an object that implements Countable in /home/fdbusiness/public_html/wp-content/themes/legatus-theme/includes/single/post-tags.php on line 5

About Author



Related Articles

Food & Drink Business Conference & Exhibition 2016

Jobs: Food Packaging

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

    Subscribe Here