Plain packaging would cost drinks industry $300bn, finds study

Industry
08/12/2017 - 07:00
An analysis on the potential financial impact of plain packaging on alcohol and sugary drinks has estimated the industry would suffer a loss close to $300 billion (£224bn) were a policy introduced.

Brand and business consultants, Brand Finance, calculated that a ‘brand ban’ akin to that seen imposed on tobacco would cost eight major brand-owning companies a total of $187bn.

It found that the Coca-Cola Company and PepsiCo are among those corporations with most value at risk with estimated loses of $47.3bn and $43.0bn respectively, equal to 24% and 27% of their total enterprise values.

It added that entire brand portfolios of companies specialising in alcoholic drinks, such as Heineken, AB InBev, and Pernod Ricard, would fall within the scope of the legislation, jeopardising future revenue streams.

The estimated overall loss of $293bn referred to the loss of value derived specifically from brands and did not account for further potential losses resulting from changes in price and volume of the products sold, or illicit trade.

David Haigh, chief executive of Brand Finance, said this meant the total damage to businesses affected would likely be higher

He said: “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.”

In December last year, a report from the government advisory body Public Health England suggested that bottles of alcohol could be sold in plain packaging.

The ban of branding on cigarette packs introduced last year has hurt tobacco sales with wholesaler Booker reporting a significant drop in sales this year, while the change in cigaratte packaging legislation has been cited as a contributory factor for the recent collapse of fellow wholesaler, Palmer & Harvey.

Copyright 2017 EatOut Magazine
Dewberry Redpoint Limited is a company Registered in England and Wales No : 03129594 Registered Office:
John Carpenter House, John Carpenter Street, London EC4Y 0AN, UK, VAT registered, number 586 7988 48.

Design & Development by Eton Digital