Taking plain packaging beyond the realm of cigarettes and into alcohol and soft drinks could eliminate close to AU$400 billion in sales from the beverage industry, a new report has found.
The report by Brand Finance, available here, analysed the potential financial impact of such a policy on food and beverage brands in four categories: alcohol, confectionery, savoury snacks, and sugary drinks.
The report was hypothetical and based on the impact of brands globally. There are, as yet, no plans to introduce plain packaging to FMCG goods and alcoholic beverages in Australia.
However, an increasing number of countries are introducing strict regulations on the marketing and advertising of food and drink products in an attempt to prevent obesity and lifestyle diseases.
With calls for more intrusive measures growing, the prospect of further applications of plain packaging looks increasingly likely, the report authors said.
Eight major brand-owning companies were predicted to lose a total of $US187 billion should plain packaging be mandated for other FMCG products, with alcohol and sugary drinks brands most vulnerable.
The Coca-Cola Company and PepsiCo are among those corporations with most value at risk: $47.3 and $43 billion respectively, equal to 24 per cent and 27 per cent of their total enterprise values.
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.
An extrapolation of the results to all major alcohol and sugary drinks brands points towards a potential loss of $US293 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.
Commenting on the findings, David Haigh, CEO of Brand Finance, 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.”