Billions could be wiped off the value of food and drink firms if they have to use plain packaging
Cans of Coca-Cola (NYSE: KO) , bottles of Budweiser and packets of Oreos are instantly recognizable for their distinctive packaging and logos, which have helped them become billion-dollar brands. But their value could be sorely dented if food and beverage companies are forced to introduce plain packaging on alcohol, sugary drinks and snack products, which is already the case for cigarette brands in some countries. A report suggests that $186.7 billion could be wiped off the combined enterprise value of firms such as PepsiCo (NYSE: PEP) , Mondelez (NASDAQ: MDLZ) and AB InBev (Euronext Brussels: ABI-BE) if they were prevented from using logos, familiar brand colors and images. Marketing consultancy Brand Finance analyzed 907 brands from eight large food and beverage companies, including PepsiCo, Nestle (Swiss Exchange: NESN-CH) , Heineken (Euronext Amsterdam: HEIA-NL) and Danone (: ) , for its "Plain Packaging 2017" report published Thursday. It found that The Coca-Cola Company could lose $47.3 billion from the value of its brands if it was forced to put sugary beverages such as Coke and Powerade in plain bottles, while rival PepsiCo could lose $43 billion.The report suggests that AB In-Bev could lose $43.3 billion, with its Bud Light and Budweiser brands most at risk.Brand Finance CEO David Haigh said losses would be significant. "To apply plain packaging in the food and drink sector would render some of the world's most iconic brands unrecognizable, changing the look of household cupboards and supermarket shelves forever, and result in astronomical losses for the holding companies," he said in an emailed statement. Cigarettes have had to be sold in unbranded packaging in the U.K. since May 2016 , with similar rules in Australia, France and Ireland. Packs also include graphic images of how smoking affects health. Calls for similar regulations to be enforced within the food and beverage industry have been made by bodies such as The Tobacco Atlas (a venture between the American Cancer Society and World Lung Foundation) and Public Health England, while a group of scientists won a high-profile neuroscience prize in March for their work revealing how attractive packaging of high-calorie foods encourages people to buy them . "We should not advertise, propagate or encourage the unnecessary ingestion of calories," said Wolfram Schultz, a professor of neuroscience at the University of Cambridge, according to The Guardian. Large food and drink companies have been looking at ways to reduce sugar, salt and fat in their products, with Coca-Cola to test stevia-sweetened drinks next year and PepsiCo set to reduce calorie counts and salt in its products by 2025. Brand Finance calculates the value of a brand to a company by working out a number of factors, including the cost of licensing a brand name, and a "brand strength index" that includes measures such as consumers' familiarity with a brand, as well as its margin.Plain packaging: How much food and beverage giants could lose from their enterprise valueThe Coca-Cola Company - $47.3 billionAB InBev - $43.3 billionPepsiCo - $43 billionNestle - $24.3 billionHeineken - $12.2 billion Pernod Ricard (Euronext Paris: RI-FR) - $10 billion Mondelez International - $6.2 billionDanone - $299 million Cans of Coca-Cola (NYSE: KO) , bottles of Budweiser and packets of Oreos are instantly recognizable for their distinctive packaging and logos, which have helped them become billion-dollar brands. But their value could be sorely dented if food and beverage companies are forced to introduce plain packaging on alcohol, sugary drinks and snack products, which is already the case for cigarette brands in some countries. A report suggests that $186.7 billion could be wiped off the combined enterprise value of firms such as PepsiCo (NYSE: PEP) , Mondelez (NASDAQ: MDLZ) and AB InBev (Euronext Brussels: ABI-BE) if they were prevented from using logos, familiar brand colors and images. Marketing consultancy Brand Finance analyzed 907 brands from eight large food and beverage companies, including PepsiCo, Nestle (Swiss Exchange: NESN-CH) , Heineken (Euronext Amsterdam: HEIA-NL) and Danone (: ) , for its "Plain Packaging 2017" report published Thursday. It found that The Coca-Cola Company could lose $47.3 billion from the value of its brands if it was forced to put sugary beverages such as Coke and Powerade in plain bottles, while rival PepsiCo could lose $43 billion. The report suggests that AB In-Bev could lose $43.3 billion, with its Bud Light and Budweiser brands most at risk. Brand Finance CEO David Haigh said losses would be significant. "To apply plain packaging in the food and drink sector would render some of the world's most iconic brands unrecognizable, changing the look of household cupboards and supermarket shelves forever, and result in astronomical losses for the holding companies," he said in an emailed statement. Cigarettes have had to be sold in unbranded packaging in the U.K. since May 2016 , with similar rules in Australia, France and Ireland. Packs also include graphic images of how smoking affects health. Calls for similar regulations to be enforced within the food and beverage industry have been made by bodies such as The Tobacco Atlas (a venture between the American Cancer Society and World Lung Foundation) and Public Health England, while a group of scientists won a high-profile neuroscience prize in March for their work revealing how attractive packaging of high-calorie foods encourages people to buy them . "We should not advertise, propagate or encourage the unnecessary ingestion of calories," said Wolfram Schultz, a professor of neuroscience at the University of Cambridge, according to The Guardian. Large food and drink companies have been looking at ways to reduce sugar, salt and fat in their products, with Coca-Cola to test stevia-sweetened drinks next year and PepsiCo set to reduce calorie counts and salt in its products by 2025. Brand Finance calculates the value of a brand to a company by working out a number of factors, including the cost of licensing a brand name, and a "brand strength index" that includes measures such as consumers' familiarity with a brand, as well as its margin. Plain packaging: How much food and beverage giants could lose from their enterprise value The Coca-Cola Company - $47.3 billion AB InBev - $43.3 billion PepsiCo - $43 billion Nestle - $24.3 billion Heineken - $12.2 billion Pernod Ricard (Euronext Paris: RI-FR) - $10 billion Mondelez International - $6.2 billion Danone - $299 million
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