Marketing Restrictions 2021

A global brand impact analysis and market research report on attitudes to brands and marketing

Over US$500 Billion across Food and Drink Industries at Risk from Marketing Restrictions

• Brand Finance has estimated that a global imposition of marketing restrictions across the alcohol, confectionary, savoury snacks, and sugary drinks industries could result in a whopping US$521 billion loss to businesses
• PepsiCo would lose the most on company level, with a potential loss of nearly US$62 billion, but rivals Coca-Cola could see the single largest loss on brand level with estimated US$43 billion at risk
• Top alcohol companies face 100% revenue exposure. AB InBev would lose the most in absolute terms, with nearly US$40 billion of value at stake
• Original market research into opinions on brands and marketing restrictions, conducted among over 6,000 consumers across 12 countries worldwide, shows 70% - 90% levels of awareness of positive impacts of brands
• Little appetite for sweeping marketing restrictions - fewer than 10% of consumers felt there should be a ban on TV advertising, billboards, in-store demonstrations, or distinctive packaging
• Consensus that marketing restrictions aggravate the illicit trade problem – 80-90% of consumers acknowledge the role that brands play in supporting legal sales channels

Following the introduction of marketing restrictions for tobacco products and repeated calls to extend the legislation to more sectors, Brand Finance once again analysed the potential impact of such policies on food and drink brands. The latest Brand Finance Marketing Restrictions 2021 report – building on the analysis conducted in 2017 and 2019 – estimates potential loss to businesses at over US$500 billion and seeks to understand popular attitudes to brands and marketing restrictions thanks to insights from an original global consumer survey and qualitative interviews with industry leaders.

What are marketing restrictions?

Marketing restrictions are any regulations placed upon legal products relating to expression of brand identity and communication with its customers. Marketing restrictions can range from requirement of health warnings, introduction of rules around advertising, imposition of targeted taxation, to interference in visual branding, all the way to plain packaging. Aside from tobacco – where stringent restrictions have been rolled out in many markets globally – food and drink brands operating in segments that are deemed unhealthy are at high risk of being affected by marketing restrictions. The introduction of stringent marketing restrictions, such as limitations on advertising and plain packaging, damages a brand’s ability to differentiate itself from others in the market, reducing the value it contributes to the business.

Over US$500 Billion at Risk

Brand Finance analysed the potential damage across alcohol, confectionery, savoury snacks, and sugary drinks brands which can result from the imposition of marketing restrictions across the globe. The analysis models the impact on enterprise value from potential reduction in the added value that brands contribute to the business – known as brand contribution.

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 US$267 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, alcohol, confectionary, savoury snacks, and sugary drinks brands could lose a whopping US$521 billion.

David Haigh, Chairman and CEO of Brand Finance, commented:

“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. 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.”

Losses to soft drink giants

Given the importance of brand in the soft drink industry, imposing plain packaging or further limitations on advertising would cause severe damage. PepsiCo would lose the most in absolute terms among all companies studied, with a potential loss of nearly US$62 billion. PepsiCo’s flagship brand Pepsi is estimated to suffer the most within its portfolio, with US$23 billion at stake. However, The Coca-Cola Company’s flagship brand, Coca-Cola, would stand to lose US$43 billion – considerably more than bitter rival Pepsi and any other brand in the analysis. It constitutes the majority of the US$57 billion potential loss estimated for the company.

Top alcohol companies face 100% exposure

Alcoholic drinks giants, AB InBev, Heineken, Diageo, Pernod Ricard, and Treasury Wine Estates could face 100% revenue exposure should marketing restrictions be imposed on their sector on a global scale, due to their portfolios consisting entirely of products that would be affected by the legislation.

In relative terms, Treasury Wine Estates’ enterprise value would suffer the most compared to all companies analysed, with the potential to lose a significant 38.9%. At the same time, in absolute terms, AB InBev would lose the most among alcohol corporations studied, with nearly US$40 billion of value at stake.

Global survey on attitudes to brands and marketing restrictions

Given the risks to brands from marketing restrictions, over 6,000 people were surveyed across 12 countries globally with respondents asked their opinions on brands and marketing restrictions. Additionally, 13 CMOs, who are currently or who were recently overseeing brand marketing in leading organisations in the sectors covered in the research, were interviewed about the contribution that brands make to economic and social wellbeing, as well as their concerns about marketing restrictions.

Global attitudes to brands

The general public recognise the positive impact of brands globally, both on their everyday lives, as well as on wider societies and economies. Over 90% of respondents agree that brands encourage product quality and improve choice, and nearly as many point out the role of brands in limiting illicit trade. At least three quarters of respondents also recognise the positive impact of brands on the economy, job market, media, environment, and supply chains.

Jane Reeve, Chief Communication Officer, Ferrari, commented:

“Strong brands support stronger economies which support employment.”

High expectations that brands should be a force for good

Consumers expect brands to be a positive force in society. They do not want brands that are silent on the causes that matter to them and there is a general expectation that brands should be doing their part to support society. As such, 79% of respondents expect brands to provide superior product safety and production standards, 74% expect brands to undertake ethical sourcing and supply chains, and 73% expect big brands to have better employment practices than smaller businesses.

Doug Place, CMO, Nando's - Africa, Middle East, South Asia, commented:

“Whether it's environmental concerns, labour practices, renewable energy...we should leave the world in a better place as a result of our brand, not worse.”

Little appetite for sweeping marketing restrictions

Both the general public and CMOs understand that brand benefits can only be delivered if brands can market themselves, from product quality control to the added value for society.

The survey shows 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.

Consumers are brand literate but will not forego their own interests under the influence of marketing and advertising. Consumers are aware that brands are there to help them make informed decisions.

Marketing restrictions aggravate the illicit trade problem

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

Shiyan Jayaweera, Head of Marketing, Lion Brewery, commented:

“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.”

Consumers emphatically acknowledge (80-90% agreement across markets analysed) the role that brands play in supporting legal sales channels, as well as helping to navigate between real and fake goods – and this brand literacy helps explain why most accept that brands should be allowed to promote themselves in a responsible fashion.