Report says plain packaging could cost beverage industry

Brand Finance has launched a report that estimates a potential value loss of $430.8 billion to businesses if a plain packaging policy was implemented on the beverage industry worldwide. The findings were launched on 30 September at the Food Ethics Council’s Food Policy on Trial event in London.

Since the introduction of plain packaging for tobacco products, there has been repeated requests to extend the legislation to other sectors and a growing demand for more up-to-date analysis.

Brand Finance’s report builds on previous findings from its original 2017 study, providing analysis of the potential impact of the legislation on food and beverage brands in four categories: alcohol, confectionery, savoury snacks and sugary drinks.

Estimations have increased from its 2017 valuations of a loss of $300bn for beverage businesses. Brand Finance says this is due to the growth of brand values and parent companies increasingly relying on the brands’ performance.

Brand Finance based their findings on measuring the impact on eight major brand-owning companies: AB InBev, The Coca-Cola Company, Danone, Heineken, Mondelēz International, Nestlé, PepsiCo, and Pernod Ricard. It predicted a loss of $234 billion and identified alcohol and sugary drinks brands as the most vulnerable.

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

According to the report, alcoholic drink producers like Heineken, AB InBev, and Pernod Ricard would see 100% of their revenues exposed to the legislation.

The report states at 36.2%, Pernod Ricard has the largest proportion of enterprise value at stake, while AB InBev and The Coca-Cola Company have the most absolute value at risk. Companies with more diverse portfolios are apparently less exposed than those in the drinks industry.