Plain packaging would render some of the world’s most iconic food and drink brands unrecognisable and wipe billions from their value. But would people’s health improve? By David Burrows
In 2017, at the Scottish Grocers Federation conference, chief executive Pete Cheema gave his opening address against a backdrop of images depicting tobacco-style health warnings on packets of crisps and popcorn, plus bottles of beer and whisky. His members were worried that the government – in a bid to tackle rising levels of obesity – were conjuring up a plan to introduce similar rules for unhealthy food. “Don't worry – it's not part of our plans,” reassured Daniel Kleinberg, the Scottish government's deputy director for health improvement.
Two years on and the debate bubbled up again – this time as part of the outgoing chief medical officer’s recommendations to the UK government. The voluntary reformulation programme doesn’t seem to be working (as Footprint reported recently businesses are struggling to lower sugar levels), so there needs to be either a fiscal lever or standardised packaging, like there is in tobacco, said Dame Sally Davies. For the food industry at large, that’s pretty much a toss up between the rock and the hard place.
But let’s focus on the hard place: plain packaging. After all, this posed a significant threat to the tobacco industry when it came into force in May 2016 (with compliance by May 2017). In 2018, the industry claimed it had been a failure, with more smokers rather than fewer. However, this was never a policy designed to make committed smokers quit: this was about discouraging young people from starting. It was also one part of decades of concerted effort from government and campaigners – and the gains to date have been “hard won”.
“We now have one of the lowest smoking rates in Europe with fewer than one in six adults smoking,” the government noted in July’s greenpaper on new public health interventions. “Obesity is a major health challenge that we’ve been less successful in tackling.”
Indeed, obese adults outnumber smokers two to one, according to Cancer Research UK. Meanwhile, one in three children aged 10 to 11 are now overweight or obese, and these obese children are five times more likely to become obese adults.
It’s no surprise, then, that the government and its advisors are looking at what’s worked for tobacco and the policies that might translate well to tackling childhood obesity, in particular. After all, these are health issues that put a similarly large dent in the public purse; and if voluntary action isn’t working then marketing restrictions are often policymakers’ first port of call (not least because the Treasury can be kept at arm’s length).
So, could plain packaging work? This question was debated at a recent Food Policy on Trial event organised by the Food Ethics Council (FEC). It wasn’t long before the challenges for such a policy were laid bare. Where do you draw the line on what is acceptable and what’s not? Which products, brands or categories (if any) should be categorised as ‘worst impact’ or ‘unhealthy’? How do you weigh the negative impacts on society (poor health, low nutritional value) with the positive ones (jobs)?
Then you (inevitably) come to the economics of this. The impact on brands is pretty ugly. Roll out the plain packaging policy globally and Brand Finance reckons you could wipe $234 billion (£181 billion) of ‘enterprise value’ from just eight companies (AB InBev, Coca-Cola, Danone, Heineken, Mondelēz International, Nestlé, PepsiCo and Pernod Ricard). Ouch. Nestlé could lose 8.4% and Mondelēz International 8.8%, while for Coca-Cola and PepsiCo there could be a 25% hole in its value. This policy “would render some of the world’s most iconic brands unrecognisable”, the consultants said.
It would be interesting to understand the impact on foodservice chains too. Is the packaging they use as important to their brands? If not, then would they escape this legislation relatively scot-free, thereby undoing any gains made through whitewashing supermarket products?
Plain packaging would certainly make the marketing men (and women) mad, but they wouldn’t give up. A recent paper in the BMJ highlighted how tobacco companies had adapted to the standardised packaging rules: 97% of factory-made and 98% of roll-your-own (RYO) products are compliant with the law but brand differentiation lives on. “In line with the power of colour in brand identity, this study shows that tobacco companies changed ‘full-flavour’ variants to red, original, or real; menthol variants to green; and smooth variants to bright and blue (or yellow for RYO),” the researchers wrote, adding: “Given that the tobacco industry is attempting to circumvent standardised packaging legislation, other countries considering the policy should consider how to make regulations as comprehensive as possible to prevent the exploitation of continued marketing opportunities.”
The marketing muscle (and brains) of the world’s leading food brands should not be underestimated. However, they can breathe easy for the moment: the FEC’s panel concluded that packaging “needs to be much better regulated, and that regulation needs better policing and enforcing”, but plain packaging is currently a “crude” approach best kept back if other interventions fail. Politicians aren’t exactly chomping at the bit to roll out plain packaging laws.
However, the (credible) threat of regulation can sometimes be enough, especially when it’s clear which way the wind is blowing. Companies are already repositioning themselves in order to reduce the risks of potentially radical policies, however far in the future they may be. Danone, for example, would come out the other side of plain packaging regulations relatively unscathed, thanks to a more diverse portfolio of healthier products, according to Brand Finance. Others with fat profits to protect and shareholders to appease will surely want to take note.