Big brand food and drink companies could lose almost £140bn if plain packaging was introduced in the market.Brand Finance, which analysed the potential financial impact of the introduction of plain packaging on food and beverage brands in alcohol, confectionery, savoury snacks, and sugary drinks, found that the Coca-Cola Company and PepsiCo are among those corporations with most value at risk. The companies would lose $47.3bn and $43.0bn respectively, equal to 24% and 27% of their total enterprise values, if plain packaging legislation was introduced to the food and drink sector.
The research also points towards a potential loss of $293bn for the beverage industry globally. However, losses are expected to be higher, because the estimates are based on reduced brand strength and marketing effectiveness, and do not take into account 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: “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.”