Plain packaging and health warnings on food and drink could cost companies hundreds of billions

Plain packaging on food and drink, akin to that on tobacco products in many countries, could cost companies hundreds of billions of dollars, says a new report. The research by Brand Finance has analysed the possibility of brand censorship being imposed on alcohol as well as confectionery, savoury snacks, and sugary drinks, to combat diabetes, obesity, heart disease, and alcoholism.

The report was in part a response to public discussion around the subject, ignited by prize-winning neuroscientist Wolfram Schultz suggesting it would help tackle overeating and obesity. He said colourful wrapping and attractive advertising of calorie-rich foods encouraged people to buy them, and introducing plain packaging could stem that desire.

However, Brand Finance says a change in legislation for food and drink packaging could dramatically impact the industry’s economy. It analysed eight major brand-owning companies including PepsiCo, The Coca-Cola Company, Nestlé, Danone and Pernod Ricard, and found that they stood to lose $186.7 billion by converting to plain packaging. Together the eight companies own 907 brands.

This would translate to $293 billion total implied loss across the beverage industry alone, the report says. PepsiCo has the largest proportion of enterprise value at stake, 27%, as it owns brands such as Mountain Dew, Gatorade, 7Up, Doritos, Cheetos and Lay’s. The Coca-Cola Company would stand to lose $47 billion, it is projected.

“Activists are increasingly advocating more intrusive measures than taxation, minimum pricing, and regulation of advertising,” says the report. “In 2015, Tobacco Atlas called for extending plain packaging to alcohol and some food and drink products in a bid to prevent non-communicable diseases. The Ontario Medical Association has mocked up images of plain packaging on food and drink products, and, in 2016, Public Health England released a report calling for plain packaging to be considered for alcohol… The prospect of further applications of plain packaging looks increasingly likely.”