Marketing restrictions could hit F&B sector

The UK Government recently announced plans for a ban on advertisements from 2023 for food high in sugar, salt and fat, which will include foods such as chocolate, soft drinks, cakes, ice cream, chips and pizza, as well as breakfast cereals, yoghurts, ready meals, chicken nuggets and battered fish.

Global marketing restrictions across the alcohol, confectionery, savoury snacks and sugary drinks industries could result in more than a US$500 billion (AU$665 billion) loss to businesses, according to a report from Brand Finance.

The latest Brand Finance Marketing Restrictions 2021 report — building on the analysis in 2017 and 2019 — was built on insights from more than 6000 consumers across 12 countries.

The report looks at nine of the world’s biggest food and drink brand-owning companies: AB InBev, The Coca-Cola Company, Diageo, Heineken, Mondelēz International, Nestlé, PepsiCo, Pernod Ricard and Treasury Wine Estates, as well as the industry as a whole.

The nine major brand-owning companies could lose a total of AU$355 billion in enterprise value should marketing restrictions be implemented. On average, the companies in question could each lose nearly a quarter of their enterprise value and over 50% of brand contribution.

Looking beyond simply the nine companies analysed, and extrapolating this to the entire endangered industries globally, the industry could lose a total of $693 billion, the research found.

“Brands are integral to how the world operates. In times of crisis, brands — especially those most valuable and strongest in their categories and markets — become a safe haven for capital,” said David Haigh, Chairman and CEO of Brand Finance.

“Well-managed, innovative and reputable brands are what the global economy turns to in the hour of need. Severe marketing restrictions are catastrophic, not only for brands, but for all stakeholders, from consumers and society to investors and governments.”

Given the importance of brand in the soft drink industry, imposing plain packaging or further limitations on advertising would cause severe damage, the report said.

Little appetite for sweeping marketing restrictions

While there have been other surveys that indicate there could be an appetite for some restrictions on unhealthy food being marketed to children, the Brand Finance survey showed that consumers do not generally seek curbs on the most frequent marketing channels, regardless of product category. Across the global sample, fewer than 10% of consumers felt that there should be a ban on TV advertising, billboards, in-store demonstrations or distinctive packaging — with little variation across product category.

Marketers and consumers are wary of over-regulation, as marketing restrictions — in particular, plain packaging — can facilitate fraud and present a danger to consumers.

“Low-quality and illegal products are made up to look like a regulated beverage, which is confusing and endangers consumers. It is not easy to tell the difference between established brands and illicit products,” said Shiyan Jayaweera, Head of Marketing, Lion Brewery.

The survey report said most consumers accept that brands should be allowed to promote themselves in a responsible fashion.

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