Coca-Cola and Pepsi would lose $90bn if plain packaging restrictions come into force, report warns

The beverage industry could lose a massive $293bn (£217bn) globally in the value contributed by its brands if politicians pursue cigarette-style plain packaging on other types of products, a report from Brand Finance has warned.

Coca-Cola and Pepsi would lose $90bn if plain packaging restrictions come into force, report warns

An assessment of the value of tangible and intangible (brand) assets in the beverage industry found that brands contributed just over half of the enterprise value of the industry: $628bn out of $1,236bn.

The report claimed that if plain packaging rules, preventing brands from using logos and artwork on their packs, were enacted globally, almost half of this added value would be wiped out.

The impact on the beverage industry of global plain packaging rules

Speaking at a breakfast event to launch the report, David Haigh, chief executive of Brand Finance, said the assumptions that had been used to produce the figure of $293bn were "quite conservative – we have made an assumption that rather than eliminating that brand completely, it just makes a significant impact". The real number could be much higher, he said.

As well as looking at the beverage industry in its entirety, the report studied the potential impact of plain packaging on eight major food and drink companies.

Of the eight, soft drinks giant The Coca-Cola Company would face the biggest hit to its enterprise value in absolute terms: $47.3bn, equivalent to 24% of its entire enterprise value.

PepsiCo’s loss of $43.0bn, meanwhile, would account for an even larger 27% of ite enterprise value.

The potential financial impact of plain packaging to eight major food and drink companies

Tobacco giant JTI warned earlier this year that there was a slippery slope from plain packaging on cigarettes, which came into force in the UK in May, to similar restrictions on brands in alcohol and foods high in fat, salt or sugar.

There is little evidence that plain packaging for these products is on the agenda in the UK or other major economies at present – but last month, the Canadian territory of Yukon introduced large health warnings on alcohol, a step Haigh said should concern all brand owners.

Haigh acknowledged that there were impassioned arguments from health campaigners who wanted to see greater regulation, and admitted the topic was highly controversial, especially because of the involvement of tobacco companies.

"We’re stepping into a very controversial and emotional subject and giving our point of view to stir up debate," he said.

"People like JTI have a vested interest, and so their views are completely dismissed. But they have been very supportive of this study – I’m not embarrassed about that because I think it’s a very interesting public debate."

Moves to put greater restriction on how brands can operate were an "overreaction by the powers that be", he said. "It insults the intelligence of the average consumer about their ability to make a choice, and it restricts their freedom of choice.

"As a trigger for choice and time saving, the great thing about brands is that when you go into a supermarket you don’t have to waste time going up and down the aisles, reading all the packs," Haigh said. "When you remove that, you create great irritation for the consumer."

Become a member of Campaign

Get the very latest news and insight from Campaign with unrestricted access to, plus get exclusive discounts to Campaign events.

Become a member

What is Campaign AI?

Our new premium service offering bespoke monitoring reports for your company.

Find out more

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an alert now

Partner content