The plain packaging ruling intended World Trade Organisation (WTO) could severely affect the food and drink industry.
Brand valuation and strategy consultancy firm Brand Finance estimates that plain packaging could contribute to businesses losing USD 300 billion globally if the food and beverage market is included in the ruling, particularly alcohol, confectionary, savoury snacks and sugary drinks.
Brand Finance CEO David Haigh said: “The WTO decision is a major setback for the branded goods industry and opens the floodgates to similar actions being taken by governments against other product categories, like alcohol, sweet drinks, confectionery [and] salty snacks. It is not just about tobacco; it is about a much broader range of perfectly legal branded products that will be constrained from trading profitably and effectively. It will destroy many well-known brands that have built up huge market shares over the years. We sincerely hope that the WTO changes its mind and, on appeal, the decision is reversed.”
A thread to the brands
AB InBev, Coca-Cola, PepsiCo, Nestle, Danone, Mondelez International, Pernod Ricard and Heineken are the main companies predicted to lose around USD 187 billion if the plain packaging rule is extended. These eight organisations control 1242 brands, with over 900 in the markets predicted to be affected the most. PepsiCo is expected to be hit the worst, with 27% of its total enterprise value at risk.