Endangered Species 2017 Briefing

THE POTENTIAL FINANCIAL BLOW TO BRAND VALUATIONS MAY MAKE BUSINESS WAKE UP TO THE PLAIN PACKAGING THREAT AT LAST.

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Disruption can take many forms and it is not only technology-led, much as the VC and tech communities would have you to believe otherwise. Far less glamorous is the slippery slope of other FMCG marketing and branding restrictions that the threat of further global plain packaging legislation represents. From restrictions on advertising at particular hours to controlling messages to certain demographics, there is a path to eventual outright bans that is clearly delineated by the prospect of plain packaging legislation.

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” No, this time we’re not using Bill Gates’s famous aphorism to refer to AI, AR, VR - or any other scarcely-understood acronym behind the new, new thing that potentially poses the next threat to western civilization. In this instance, the change “being underestimated” is wrought not through new technology but the curbing of old skill-sets: design, branding, advertising.

It’s a story that has been bubbling under the business world and media’s radar, in part because – with the exception of the existing packaging restrictions on tobacco products – there is little tangible evidence of the threat with which to capture and engage the public imagination. To date, feared plain packaging restrictions relating to alcohol, sugary soft drinks, savoury snacks and confectionery have been more mooted than meted out.

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Such hard evidence as there is has happened piecemeal, mostly in non-primary markets, and largely – as in South Africa, South Korea, Thailand  or Mexico – in the form of increased size health warnings rather than plain packaging restrictions per se. 

And for brand owners and the global marketing community this comparative lack of evidence can give rise to complacency. “Don’t let yourself be lulled into inaction” is the sentence that followed the Gates aphorism quoted above, It is often left off the media’s citation of one of the business world’s more profound truths.

“Don’t be lulled”. Too late for the seemingly endless stream of legacy companies in verticals that continue to find no answer to the digital disruptors that have eaten their lunch. From retail to publishing, taxi services and restaurants, too many have watched the sands disappear from beneath their feet, doing too little too late.

We tend to forget that disruption does not come merely from technology, because the pace of technological revolution is so relentless and – by necessity - public. Disruption via legislation creeps up on us more by stealth – perhaps being debated in what would once have been “smoke–filled rooms” first and then made public through legislation that can take the pubic by surprise. 

There is a long and depressing history of what is forbidden.
— Stephen Bayley, Signs of Life

Look at the Trump administration’s sudden reversal of Obama-era defences of net neutrality. Who among the general public really saw that coming? Truly understands its implications? What does the public really understand about the difference the advent of EU GDPR legislation will bring next year? 

You might argue that it’s not the public’s job; that it’s the role of the politicians and other law-makers to protect us, taking into account factual evidence and the impact on wider society – navigating a course between conflicting lobby groups in so doing. Which is where the plain packaging issue hoves back into view.

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There are few governments globally that would lose votes by dressing up plain packaging restrictions in the clothing of health concerns. Worries about alcohol, sugar and other addictions, the global obesity crisis, and the ever greater power of NGOs and other lobby groups mean the latterare pushing against largely-open political doors. Branding’s defenders have so far relied largely on emotional and hypothetical arguments.

The emotional defence of branding relies on suppression of choice; the creeping Nanny State versus passion, flair and gaiety in public life; the right to freedom of choice and the need for plurality. They can sometimes appear difficult lines to take,because the argument is largely still hypothetical.  Plus, in the one area where it is not hypothetical, it is likely that most ordinary people would not now advocate a return to distinctive branding on cigarette packaging. The other argument surrounding potential “theft of intellectual property” is even more removed from the general public’s emotional engagement.

However, this past month has brought a step change in awareness, in part because – arguably - for the first time there was a serious attempt to put a value on the potential threat to brands in the “at-risk” sectors via the Brand Finance consultancy’s “Plain Packaging” report.

The primary finding was that brand owners like The Coca-Cola Company, PepsiCo, Heineken and Nestlé are in danger of sleep-walking into a multi-billion hit on their finances if they don’t wake up to threatposed by plain packaging regulations being extended to other areas. The potential losses to brand valuations ($47 billion to Coca-Cola’s brands, $43 billion to PepsiCo’s, 24% and 27% of their total enterprise values respectively) made for stark reading – even without a thorough contemplation of the resulting job losses.  They are figures of a magnitude that journalists find impossible to resist; that can actually capture and engage the public’s imagination.

Which begs the question, why isn’t there more outrage, more pushback, more campaigning and lobbying by both those threatened brand owners plus the global advertising, design and marketing agency networks whose business could be decimated? “Don’t let yourself be lulled into inaction” exhorted Bill Gates. The focus on quarterly and annual profits and inter-sector competition can do just that. Meanwhile, the global incursion of plain packaging may look very much more tangible in a decade’s time, if not next year. And the only way to really get business to notice is to focus on the money.


"IT STARTED WITH A KISS, NEVER THOUGHT IT WOULD COME TO THIS" HOT CHOCOLATE.

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Over the last twelve months, I have been on the road explaining my idea for a ‘thingamajig’ called Endangered Species, but without any real idea of what shape it should take. In September I finally got my idea to fly, helped in no small way by Mahesh and Danny at Mr.D who created the animated identity to reflect the regulatory ‘Dangers Ahead’. 

The kiss that started it all, was the one that a Dad gives his son, loaded with love, but shouldered with the responsibility to guide this boy to adulthood, no balls dropped and no hospital passes, as he makes the hard yards of growing. Sugar was on my mind, and I had just downloaded the ‘Change For Life’ App, with a view to helping my boys get a better read on what was a healthy intake. This new bit of tech elicited some major wows and shrieks as the two lads ran up and down the supermarket aisle scanning every pack they could. 

The sugar debate still rages on, however, it seems that a more balanced approach is being adopted by Public Health England, as their CEO Duncan Selbie saying last week that they would be moving from a single focus on sugar to a wider debate all about ‘all calories’. This has to be a more healthy approach, and a more informed strategic decision, and one that will that allow brand owners and manufacturers to innovate and respond in a positive way rather than being treated like naughty children.

As we all know, ‘sugar turns to alcohol’, hic not (sic), and having spent my design life to date advising and designing for alcohol brand owners, my attention was drawn to an earlier report from PHE at the end of 2016, saying there was strong evidence in support of “a range of policies” to clamp down on harmful drinking, including plain packaging and tobacco-style health warnings. 

At first, I thought this a bit ludicrous, but a recent bill being readied for the Irish Parliament has put the reality of the challenge in clear view. From the Irish Times, December 2017: “Health warnings about alcohol, its ingredients, calories and links to cancer will take up one-third of the space for labels on bottles and cans after the Irish Minister for Health Simon Harris accepted amendments to drinks legislation. The controversial Public Health (Alcohol) Bill, which tightens down on the sale of alcohol, initially provided for labelling through regulation, the label warnings will be in both Irish and English. Mr. Harris also changed provisions so that alcohol can be imported without the labels but an offence will be committed if alcohol is sold anywhere in Ireland, including airports, without the health warning labels.”

landmark legislation, the first ever piece of public health legislation on alcohol
— Simon Harris, Irish Minister for Health

So the game is afoot as you might say! Last month I had an informal breakfast with industry friends to test what knowledge and insight were in the creative industries and what were our plans to address it. The answer was pretty simple, low to medium awareness, a sense that it may not happen, but no real plan if it does. So I am calling on the creative community, through Endangered Species, to gather together, discuss, debate, inform and educate so that we can help lead both our clients and government in a positive and responsible approach to labelling, packaging and communication.

‘It’s better to be a pirate than join the navy’, said Steve Jobs, and although I have often quoted the man in extolling creative disruptance, in this case, I do not want to stick the Jolly Roger on the front of my favourite spirit bottles, or even on the back. 

My plan for 2018 is to publish an Endangered Species Briefing each month, this document will have all the relevant media content from around the world, summarised and ready to share with your clients, agencies and friends. In addition, we are planning a one-day event to be held in London in March, this will provide a forum and platform for healthy debate and planning. If you would like to be a part of Endangered Species, email me at ron@endangered-species.co.uk and we can discuss how you can help.

Best for 2018,

Ron Cregan, Founder.

I am an Endangered Species.