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Big Alcohol: Plain Packaging Threatens Industry Profits

Big Alcohol: Plain Packaging Threatens Industry Profits

Presumably plain packaging is going to threaten Big Alcohol profits. A report by Brand Finance says the alcohol industry could lose up to $430 billion if plain packaging were to be introduced for alcohol products. This shows the value of labels to the alcohol industry and reveals a reason why they have fought aggressively to even include health warnings on labels.

The Plain Packaging report builds on Brand Finance’s original 2017 study, which predicted a loss of almost US$300 bilion for the global beverage sector. The report looks at the potential financial impact that a plain packaging regulation could have on four industries: alcohol, confectionary, savoury snacks and sugary drinks.

The study was updated as plain packaging has been implemented in a several countries for tobacco products and there have been calls for plain packaging on other health harmful products.

If implemented plain packaging could have significant impact on public health. Brand awareness, recognition and loyalty are key factors in driving increased consumption. This is specially true for alcohol and is proven by research. Therefore, by introducing plain packaging and and driving down brand identity, consumption could be decreased, thereby reducing harm from  alcohol. 

The Brand Finance report claims companies would lose enterprise value if plain packaging is implemented. Enterprise value is the company value, as opposed to market capitalisation. Some of the major Big Alcohol companies affected by plain packaging would be Heineken, Pernod Ricard and AB InBev.

As predicted by the CEO of Brand Finance, if this would gain traction, it would be cause for fierce opposition of the alcohol industry against another public health policy. The question is when the time comes, will public health be rightfully prioritized over company profits?

Source Website: The Spirits Business