Beverage industry could see significant losses over packaging law

1 October 2019 (Last Updated October 1st, 2019 12:44)

A second report released by Brand Finance has revealed that the beverage industry is expected to experience a potential loss of $430.8bn if plain packaging legislation is extended to other sectors.

Beverage industry could see significant losses over packaging law
Beverage industry is expected to lose $430.8bn over plain packaging law. Credit: Chris Yarzab / Flickr.

A second report released by Brand Finance has revealed that the beverage industry is expected to experience a potential loss of $430.8bn if plain packaging legislation is extended to other sectors.

The Brand Finance Plain Packaging report also stated that alcohol and sugary drinks brands are expected to be most the most vulnerable.

It will also have an impact on the current business model of various alcoholic drink makers, such as Heineken, AB InBev, and Pernod Ricard, as 100% of their revenues are identified to be exposed to the legislation.

The latest study has reported an increase of around $50bn to $234bn over the first study’s estimation of $186.7bn calculated in 2017.

According to the study, Pernod Ricard has 36.2% of its enterprise value at stake, while AB InBev and Coca-Cola are expected to have over a quarter ($64.6bn and $57.2bn respectively) of their enterprise value at stake.

The study also noted that over two-thirds of its brands of PepsiCo are expected to be affected by the legislation.

Brand Finance CEO David Haigh said: “Since we produced the first Brand Finance Plain Packaging report in 2017, a number of other countries have either implemented or legislated for plain packaging for tobacco products.

“With health advisors labelling obesity the new smoking, it is not surprising that there have been repeated calls for this type of legislation to be expanded into the food and drinks sectors. It is obvious, however, that this would severely damage these companies’ business values.

“However, the predicted loss of brand contribution to companies at risk is just the tip of the iceberg. Plain packaging would also lead to losses in the creative industries, including design and advertising services, which are heavily reliant on FMCG contracts.”