How much of an effect does packaging have on your brand? Hadi Sleiman, corporate affairs and communication director, Middle East, Japan Tobacco International (JTI), explains what the future holds for brand owners and calls for an open dialogue with the authorities.
Food and drink companies across the globe are under increasing pressure of excessive regulation and risk being excluded from discussions on their industry’s future. As tobacco style regulation is now being actively applied to these categories, brand owners should be worried about this domino effect.
One such example is plain packaging, which in effect is a ban on branding or brand censorship. By imposing these strict rules and regulations, the legislator requires manufacturers to remove all branded features from external packaging, except for the brand name written in a standard font on a surface in a standard colour.
An increasing number of countries are considering and already introducing restrictions on the marketing and advertising of food and drink products in an attempt to prevent obesity and lifestyle diseases. With calls for more intrusive measures, the prospect of further application of plain packaging looks increasingly likely despite the lack of evidence on its effectiveness.
Fast moving consumer goods (FMCG) categories including confectionery, savoury snacks and drinks may lose billions of dollars if the plain packaging legislation is applied to them, according to a study from Brand Finance, a UK-based independent brand business valuation and strategy consultancy.
The Brand Finance Plain Packaging 2017 study follows calls in countries like Australia and the United Kingdom to extend the plain tobacco packaging legislation to food and beverage, confectionery and savoury snack categories.
Brand Finance predicts that eight major brand-owning companies chosen for the study would see $187 billion of total implied loss in value, while the impact across the global beverage industry would be at least $293 billion.
To apply plain packaging in the food and drink sector would render some of the world’s most iconic brands unrecognisable, changing the look of household cupboards and supermarket shelves forever and result in astronomical losses for the holding companies. According to Brand Finance the predicted loss of brand contribution to companies at risk is only the tip of the iceberg. Plain packaging also means losses in the creative industries, including design and advertising services, which are heavily reliant on FMCG contracts.
On the other hand, plain packaging is a gift to illegal traders who can copy packaging with ease and not worry about the trademarked colours, fonts or images of branded packs. This would lead to an increase in illegal trade to the benefit of criminals and a sharp decline in tax revenues for the government. By fostering an unregulated, untaxed marketplace, plain packaging results in a significant impact on the business climate and public security.
Businesses need to have a voice in regulatory decision making and governments should organise meaningful consultations with all relevant stakeholders when considering new regulations. Open dialogue between businesses and governments fosters an environment for regulations that are fit for purpose and this generates business confidence in the operating environment therefore fuelling further economic growth.
The UAE has always been a regional leader in establishing a balanced, modern regulatory framework and developing such a dialogue here will be of great benefit to all stakeholders and consumers in the GCC.