Plain packaging regulations could cost food and drink brands over £200bn

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A new come in by financial consultancy Brand Finance looks at the potential financial impact of persuasiveness big companies such as Pepsi Co and Coca-Cola to have non-branded packaging.

Sculpture supplied by The Grocer from the packaging special feature, 14 October 2017

Broaching plain packaging for unhealthy food and drink products could get companies up to £220bn, a new report from financial consultancy Brand Funds shows.

Plain Packaging 2017 looks at the potential impact of encasing restrictions on products such as fizzy drinks and confectionery, similar to those already utilized for tobacco products in the UK and other countries across the world.

There has been bettered public discussion around the topic in recent years. A study by Wolfram Schultz, a professor of neuroscience at the University of Cambridge, indicates that plain packaging on high calorie food and drinks could boost combat health conditions such as diabetes, obesity, heart cancer and alcoholism.

The Coca-Cola Company, PepsiCo and Pernod Ricard

Brand Bankroll found that if plain packaging legislation comes into essentially, it could result in at least $293bn (£219bn) worth of losses across the labour, as it would prevent brands from differentiating products from their contenders.

The consultancy has based its figures on the “brand value” of eight major actors, whose brands span four different categories: alcohol, confectionery, respectable snacks and sugary drinks. The eight featured companies are AB InBev, The Coca-Cola Establishment, Danone, Heineken, Mondelez International, Nestlé, PepsiCo and Pernod Ricard, which collectively own 907 labels within the affected categories.

The consultancy has assessed the current value of the discredits by analysing a number of factors, such as familiarity, preference, satisfaction, sustainability, governance, and perimeters. These factors are collectively termed as the Brand Strength Index (BSI), and see each brand name given a score out of 100.

Considering that a “weak” brand typically marks between 50 and 70, the consultancy has assumed that the introduction of wold packaging would see the brands’ individual values reduced to the mid-point of 60 in excess of a five-year period.

The difference between the original BSI score and the score make inquiry the introduction of plain packaging would therefore indicate the total squandering to each brand, also known as the enterprise value.

£219bn total liability liabilities

The report suggests that sugary drinks and alcohol brands are the most at gamble. PepsiCo – which owns brands such as Pepsi, 7Up, Doritos and Lay’s – disposition be the most severely affected, with 27% of its total enterprise value at enclose. However, due to The Coca-Cola Company’s larger size the loss of 24% of its pep value would mean it would lose more in real appellations; $47.3bn (£35bn) compared to PepsiCo’s $43bn (£32bn).

As Pernod Ricard, Heineken, and AB InBev simply own alcoholic beverage companies, all of their brands would be exposed to the stark packaging restrictions. Pernod Ricard is estimated to lose most (26%), while Heineken and AB InBev at ones desire lose 20% and 15% respectively.

The total estimated cost for all eight companies reviewed would be $186.7bn (£140bn). The results of the report have been assigned to all 1,300 affected food and drink brands valued by Brand Pay for during 2017, whose parent companies have an enterprise value of on $1bn (£750,000). Therefore, the consultancy has indicated that the total estimated privation across the whole industry would be $292.7bn (£219bn).

Read the broad report here.

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